Internet popularity raises bar much higher for SMEs

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Small-to-medium sized enterprises (SMEs) are having to work harder, as growing use of the internet by both customers and suppliers has created and a more competitive marketplace, research has suggested.

Nearly half (46 per cent) of SMEs said that the internet has made running a business more complex, while only 16 per cent believe that the internet has improved their operational efficiency.

The main reason wasn't that the internet was difficult to work with, but the opposite in that its ease of use had made the market much more competitive and easier to enter. Consumers and businesses enjoy the same benefits from online trading, levelling the playing field.

"There is no question that the internet has enhanced the performance of SMEs by enabling them to be more innovative, more up to speed, negotiate better with suppliers, make greater use of outsourcing and to operate more flexible working hours," said Professor Andrew Burke, a leading authority on SMEs and head of the Cranfield School of Management.

"The sting in the tail is that the uptake in internet use by SMEs has been so dramatic that most now share these same benefits and so few can garner a competitive advantage as a result."

The fact that the internet has no international boundaries also worried SMEs, as 62 per cent acknowledged that the internet had increased competition from foreign traders. Security was also an issue, according to the survey one in three SMEs believed that confidential information was harder to protect.

"The depth of research into how the internet has changed working practices and the environment in which SMEs operate, has, surprisingly, not been seen since the internet really took off with Web 2.0 in the UK," Burke said.

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