Global study of small businesses reveals growing demand for software as a service.

REDMOND, Wash., Oct. 29 /PRNewswire-FirstCall/ -- Microsoft Corp. today launched the results of a global study looking at how small businesses use and manage their IT, as well as their attitudes toward hosted IT services. The research highlighted that many small businesses struggle to compete with big businesses and are unsure of how to get access to higher-quality IT services that could help them. Government support is often widely used and well-received, but in some cases, it is thought to be too limited. Small businesses face numerous challenges with IT but are also seeing the benefits that mobile working and social networking can bring.

Despite global concerns about an economic slowdown, most small businesses reported that they had performed well in the past year. Globally, 39 percent of businesses had grown, while 36 percent had remained steady in the past year. Hosted IT solutions appear to offer some of the answers raised by the small businesses surveyed. Not only does buying software on a subscription basis reduce the reliance on IT skills and offer enterprise-class security protection, but it enables businesses to focus on other business priorities.

The research also highlighted that some emerging markets are outpacing western countries in terms of new technology adoption. About 87 percent of Russian small businesses surveyed have branded company e-mail, while 63 percent have a customer database and an above-average 24 percent use mobile e-mail. Similarly, Russian small businesses are the most likely to have IT (97 percent), while fewer (91 percent) U.S. small businesses used IT.

Meanwhile, 67 percent of Chinese small businesses use social networking applications to talk to existing customers and 57 percent use them to promote their business. That compares with just 26 percent and 24 percent, respectively, of small businesses in the U.K. -- typically seen as a mature market -- that use social networking to talk to existing customers or promote their business. The research also found that 65 percent of the small businesses surveyed would consider buying IT services on a subscription basis, such as hosted e-mail, shared calendaring and other applications.

"Despite their varying businesses and greatly differing needs, many small businesses are becoming increasingly dependent on information technology and the Internet for networking, communications and sales. As they become more Web-savvy, we're seeing that small businesses are starting to seriously consider hosted services to meet some of their IT needs," said John Zanni, general manager, Software + Services Industry team, for the Communications Sector at Microsoft. "At this time of economic uncertainty, the benefits of buying IT services on a subscription basis become ever more apparent."

The research, which surveyed small businesses' attitudes on a range of areas, also found that many have "IT envy" for the resources of larger businesses. A vast majority -- 79 percent -- think that larger businesses gain significant advantage from having access to better IT resources. Despite this, 37 percent still use Web mail, such as Hotmail, Gmail or Yahoo! services, rather than business e-mail services such as Microsoft Hosted Exchange.

Meanwhile, small businesses' main priority -- managing relationships and customer service -- was found to be highly dependent on IT, because 89 percent of firms also agreed that professional communications are important to their business.

Other findings from the research indicated that small businesses desire more developed capabilities for security and mobile services, with 56 percent of small businesses indicating they would prefer to have more protection from viruses and spam. Meanwhile, 44 percent of small businesses believe they would benefit from mobile e-mail and shared calendar functionalities.

"Today, using hosted software and services is an efficient way of getting high-quality and professional communications services at a predictable cost without the need for upfront investments or time-consuming implementations or maintenance. As businesses can pay on a per-user, per-month basis, they can greatly reduce the cost, while still gaining enterprise-grade professional communications services such as mobile e-mail," said Michael Korbacher, director, EMEA Web and Application Hosting, for the Communications Sector at Microsoft. "Microsoft envisions a world of software plus services that consists of a broad blend of traditional applications and services available over the Internet. As small businesses become more and more Internet-literate, the case for using software online will drive strong demand for service providers."

Key findings from the research include the following:


-- Half of the small organizations were found to receive some kind of information or support from public services or government bodies. The exceptions were Russia, where the figure is 32 percent; Italy, where it is 39 percent; and Japan, where the figure is 40 percent.

-- Overall, 61 percent of respondents said that professional-looking communications were either "critical" or "very important." Swedish, Russian and Australian small businesses are especially keen to promote the professional image, while Japanese and Chinese small businesses thought it a lower priority.

-- While only 15 percent of respondents noted "IT issues" as one of their top three time-consuming activities, in certain countries this task was seen as much more time-consuming -- for example, in Sweden and Canada.

-- Sweden was seen to be at the vanguard of IT utilization among respondent countries, with above-average adoption of technologies such as mobile e-mail, company-branded e-mail, customer databases and e-commerce Web sites. The U.K. and Russia also scored highly, with China and France showing less adoption of technologies.

-- The U.S. and France are the countries where small businesses are most likely not to have any IT, both at 9 percent. Only 3 percent of Russian small businesses have no IT.

-- Most of the time, IT support is provided by either the respondent or by someone within the organization, either a professional or an amateur. Occasionally, small companies will recognize that they need to invest in professional IT support; as suggested earlier, this is particularly so in Australia, where 34 percent of respondents used an external IT service and support company.

-- The local or national retailer of IT support is very important in this context, as is the online merchant. Around 89 percent of the respondent organizations use one of these three sources. While the British and French respondents use online more than most, Australian and Japanese organizations seem to prefer the local IT provider.

-- Overall, 65 percent of respondents said either "yes" or "maybe" when asked if they would consider using a hosting service.

-- About 47 percent of small businesses in total said their business would be better if they had more IT resources. Russian (72 percent) and Chinese (83 percent) small businesses felt most strongly about this, suggesting that small businesses in those countries felt IT provided a competitive enablement and advantage.

-- About 58 percent of small businesses revealed they use IT skills in-house, while 63 percent (in another question) said they believed larger enterprises with more IT resources gain a competitive advantage. Swedish small businesses were most likely (23 percent) to employ an IT specialist, while many Canadian (20 percent) small businesses also employed an IT specialist. About 34 percent of Australian small businesses used outside IT services and support, much more than any other country.


About the Research

The research report "Microsoft Global Small Business Index, October 2008" was executed by Vanson Bourne Ltd. between May and July in 2008. The research questioned more than 1,300 small businesses, including at least 100 in Australia, Canada, China, France, Germany, Italy, Japan, Sweden and Russia, plus 200 in the U.K. and the U.S. A copy of the full research report is available through mscsemea@webershandwick.com.


About Microsoft

Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.


SOURCE Microsoft Corp.