Japan's SMBs lead ICT adoption in Asia

By SMBWorld Asia Editors | Jan 27, 2012

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For the first time, AMI-Partners releases its Business ICT Adoption (BIA) Index to measure the ICT adoption levels of small and medium businesses (SMBs, companies with less than 1000 employees) around the world.

While the top range of the BIA Index is dominated by European countries, 12 markets with high SMB ICT spending are spread across all regions. Among these top 12 large markets, Brazil, China, and India have the lowest BIA Index scores; while Germany, the United States, Japan, and the United Kingdom not only have high BIA Index values but also considerable SMB ICT spending.

Based on its long-standing research on SMB markets across the world, AMI developed its Three Waves of Adoption model to help vendors understand and segment their SMB customers based on their ICT consumption.

In particular, SMBs in Wave 1 are classified as those mostly concerned about building their basic IT infrastructure with PCs and fundamental software; while SMBs in Wave 2 have more advanced needs, such as connecting their businesses with LANs and servers, and protecting them with network firewalls and intrusion detection technology.

By Wave 3, SMBs are more systematic and proactive in their ICT investment, and are seeking to actively extend their enterprises with intranet, WANs, storage systems, IP-PBX technology, and sophisticated software solutions like CRM and ERP.

"Building upon our three-wave model and using data from our worldwide annual research, we developed the Business ICT Adoption Index to measure the level of ICT adoption of SMBs in different markets. Qualitatively, it is a common under- standing that SMBs in developed countries like the US and Germany have higher and more sophisticated ICT deployment than SMBs in emerging markets, such as China and India. However, we have had no quantitative index to measure and compare their ICT adoption levels until now," says Dr. Vu-Thanh Nguyen, who drives the BIA Index research at AMI.

"When looking at the number of businesses using PCs, the BIA Index, and ICT spending of different countries, we can roughly see how different markets are developing and their potential. For example, China and India markets have a similar number of SMBs with PCs and a similar BIA Index score, but China's SMB ICT spending is more than double that of India. This means that if SMBs in both countries maintain the same ICT adoption pace in the next few years, the relativity of SMB ICT spending between the two countries will probably not change significantly. Meanwhile, Germany has a higher number of PC SMBs and nearly three times higher BIA Index value (63 vs. 24) than China, but its SMB ICT spending is only 35% higher than China's figure (US$66 billion vs. US$49 billion). This means the Germany SMB market has matured and  become stable in size, while there is still significant room for growth in the China SMB market," Vu-Thanh added.

In the Asia Pacific region, SMBs in Australia, New Zealand, Japan, Singapore, and Hong Kong are leading in ICT adoption with the highest BIA Index values (63, 58, 55, 48, and 40, respectively).

These markets not only have high penetration of PCs among SMBs but also have a sophisticated ICT usage among their SMBs. While China, Korea, and India are not among  the top five markets in terms of BIA Index scores, they are some of the biggest markets in terms of ICT spending in 2011, trailing only behind Japan. Meanwhile, Vietnam is still the smallest SMB market in terms of ICT spending (US$3 billion) and also the least developed market in terms of BIA Index (10 out of 100).

"AMI's BIA Index offers another component for vendor to utilize when analyzing the business ICT market. Instead of focusing only on the ICT spending numbers, vendors can use the BIA Index to understand the ICT deployment trends in each country, enabling them to provide suitable services and products to each particular market," stated Venu Reddy, Vice President of AMI, Asia Pacific. "Tracking BIA Index over a period of time in a specific country also allows vendors to observe the expansion of business IT in that market and adapt their business plan accordingly."