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Tech Industry

Small companies are big tech spenders

Small businesses are spending a bundle on technology, particularly the banking and finance industry which shelled out more than $20,000 per office last year.

Small businesses are spending a bundle on technology, particularly the banking and finance industry which shelled out more than $20,000 per office last year.

An International Data Corporation (IDC) report released today says small businesses spent $57.3 billion last year on technology, including telecommunications equipment, PCs and peripherals, office equipment, printers, LANs, Internet, modems, and software.

The report, called Small Business Vertical Market Profiles, collected information on technology used within 7.4 million small businesses.

In the study, Framingham, Massachusetts-based IDC unveiled that financial services firms with fewer than 100 employees spend more than three times as much money on technology than do other small businesses, such as retail firms.

Banking and finance, which represents about 12 percent of the small business market, reported per-site spending of $20,324 in 1998, followed by legal services ($9,642), insurance ($8,294), manufacturing ($7,822), business services ($7,698), and retail trade ($4,514).

The small-business market is driven in part by strong PC sales. IDC last year reported small-business PC sales would grow 32 percent in 1998, outstripping growth in the consumer and corporate markets. Additionally, the percentage of businesses using or planning to use PCs, software, printers, and the Internet in 1997 jumped to 78 percent after several years of flat or modest gains.

While small white-collar businesses typically spend the most on the latest technology, about 22 percent of the companies IDC surveyed fell in an "other" category, which includes personal services, auto services, lodging, recreation, education, religious membership, and social services.

Although less technology driven than the banking and finance industry, these companies are more likely than most to add a local area network, advertise on the Internet, and build a home page, the study found.

While the huge diversity within the small business market poses a challenge for companies trying to cross-sell, vendors can appeal to different markets by focusing on services to meet the needs of their most technologically advanced customers, the report states.