IT Investment, Emerging Markets Key to Business Growth

A survey sponsored by SAP suggests businesses are looking to make investments in IT and their workforce but struggle to find lenders.

Small and midsize enterprises in emerging countries are expanding and flourishing financially while their counterparts in the developed markets, while facing more difficult market conditions, said they are confident of an economic upswing in the near future, according to an Economist Intelligence Unit survey sponsored by enterprise application software provider SAP. The survey of more than 1,000 SMEs included businesses from the developed economies of France, Germany, Japan, the UK and the United States and the emerging economies of Brazil, China, India, Mexico and Russia.

Effective use of technology was seen as a key priority in achieving growth, and according to respondents, the three main internal obstacles to growth were finding and keeping new customers (79 percent), hiring and retaining people with the right skills (78 percent) and operating the business efficiently (76 percent). Fifty-three percent of those in developed markets and 55 percent of those in emerging economies said growth was a top business priority, with growing sales and earnings cited as a top priority by 60 percent of smaller companies and 47 percent of midsize companies.

"The survey findings are significant because they reveal a high degree of confidence among managers of SMEs that they can achieve growth in the period ahead," Christopher Watts, a contributing editor of the Economic Intelligence Unit and author of three articles analyzing the online survey, said in a statement. "Given the critical role of SMEs in driving both developed and emerging economies, this confidence is a very positive signal."

When it comes to technology, becoming more efficient and using IT more effectively over the next year is among the top three priorities of those surveyed, with 46 percent saying using technology more effectively was a top business priority. The survey indicated this was especially important in emerging countries, including India (72 percent), Brazil (75 percent), Russia (33 percent), China (44 percent) and Mexico (33 percent). In addition, 60 percent of respondents said they are automating more tasks and functions now than three years ago.

The measures that SMEs are taking to exploit their business opportunities include securing new financing (40 percent), hiring outside experts (33 percent), gathering information and market data (31 percent) and increasing or redirecting spending on training (31 percent), however SME executives also indicated the most significant obstacle in the external business environment is government bureaucracy and regulation — 88 percent cite this as an obstacle, while 85 percent cited the growing tax burden as a significant concern.

The biggest business opportunity cited by respondents was expansion into new markets or expansion of the markets themselves, especially into high-growth markets such as China and Brazil, and 60 percent of respondents said that they need to compete in more international markets. "We believe that especially in today's economic climate, entrepreneurs and small to midsize businesses make up the backbone of the economy — they have the ability to drive innovation, job creation and economic stability," SAP’s president of global ecosystem and channels Eric Duffaut said in a statement.