UK small and medium enterprises (SMEs) lost about £8.3bn in earnings as a result of not upgrading their tech equipment during the downturn, according to financial firm GE Capital's SME Capex Barometer.
In fact, one in eight SMEs (12.5 per cent) said they had lost out on new income or new business opportunities as a result of dated or inefficient equipment.
Many of these firms put off replacing their equipment as a result of the downturn.
On average, each SME claimed it lost around £8,301.
However, these businesses are looking to make up for lost time, with UK SMEs planning to invest a total of £13.7bn in IT equipment over the next 12 months, according to the survey.
On average, UK SMEs plan to spend £18,415 each on IT hardware and £12,502 on software.
IT hardware refreshes are a particularly high priority, with 85 per cent of companies stating that they were looking to invest. The companies plan to spend a total of £8.6bn upgrading existing company laptops, servers and other hardware.
"Despite popular belief, the appetite for investment in growth among UK SMEs is actually very strong, with many businesses having reached a tipping point where putting off investment is no longer possible without compromising the business," said John Jenkins, chief executive of GE Capital UK.
"Many businesses not planning to invest in the next year have already recently upgraded, further illustrating that we are in the midst of significant renewal."
Why do so many of today’s systems replacement projects end in disappointment? The problem is that, typically, the amount that most companies feel able to spend on a new system is barely enough to replicate the functionality of their current one. A limited implementation budget is quickly eaten up by mundane, unavoidable stuff: the monthly and statutory reporting, the basic management information.
After all the pain of a six to eight month systems replacement project, a company can find itself with no more functionality than its current system is giving them - perhaps less. Who needs this kind of return on investment disaster?
Organisations are often astonished to discover what can be achieved with the current version of the system in use, let alone the latest updated version. With the majority of companies typically using a fraction of the functionality paid for, a modest investment in consultancy can reveal forgotten capabilities, or suggest simple enhancements that will deliver big returns and restore confidence in the existing system.
There are always times when new software is required. But this should be the last, not the first choice. To make best use of a limited systems budget, Financial Directors and IT Directors should temporarily forget about the march of technology and instead ask what aspects of their business have altered since the original system was implemented.
In all probability, for less than the cost of implementing that flashy new package at the most rudimentary level, it is possible to increase the usefulness and sophistication of the current system beyond recognition. It will cause considerably less disruption to the business, and deliver the key business requirements and that elusive ROI!
Gary Waylett
CEO
Eclipse Group
www.eclgrp.com
Posted by: Gary Waylett 13 Jul 2011
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