"The Internet is a multi-faceted tool," says Kalyan Banga, research analyst at AMI-Partners. "It is both a facilitator for simple tasks, as well as a key differentiator among organizations that provides them with a competitive edge in this digital era."

For medium businesses (MBs, or companies with 100 to 999 staff), the Internet has become a way of life and has reached near-complete saturation. However, a significant growth opportunity exists within small businesses (SBs) since only around 25 percent of them currently possess an Internet connection.

A year-to-year usage analysis reveals a similar finding - that SBs are embracing the Internet by leaps and bounds. The penetration of Internet-enabled SBs is anticipated to rise by more than four percentage points this year.

 "Technology penetration for most Internet-related technologies is significantly higher for MBs, since almost all of them have stepped into the second wave of technology adoption," Banga says. "However, there is potential here for a rise in penetration of Internet-related technologies for SBs and even for MBs in case of e-commerce, intranet, etc. For example, the strategic technology adoption attitude of SMBs indicates that adding or enhancing e-commerce capabilities is a priority of almost 28 percent of SMBs in the next 12 months."

Improvement of Internet speed is a must, as mentioned by more than 50 percent of SMBs. About 37 percent of respondents would like to opt for a total revamping of their Internet-access infrastructure, such as replacing or upgrading their Internet access routers. Broadband usage has taken a forward leap, thanks to the efforts of ISPs who have significantly increased its affordability and availability. A glimpse into ISPs reveals the dominance of BSNL/ MTNL and Bharti, which enjoy an SMB penetration of 44 percent and 33 percent, respectively. They are followed at a distance by VSNL/ Tata Teleservices and Reliance.

"Web 2.0 is one of the revolutionary Internet-related technologies that have taken the world by storm," Banga says. "Indian SMBs have not been too far behind in following this global trend. Web 2.0 technologies - like social networking, blogs, podcasts, etc - are gradually being adopted by India SMBs for information dissemination, marketing and communication modes, etc." For example, currently almost 10 percent of SMBs use social networking services. An additional 33 percent are aware of this technology. Usage of blogs and podcasts for advertising & promotional activities is higher among MBs.

SMBs are also heavily dependent on information sources like vendor websites and search engines for gaining awareness about IT products and services. These are used by about 45 percent of SMBs. The importance of online advertising also displays an upward trend within SMB media-related activities. The two websites that show maximum usage for online ads by SMBs are Google and Yahoo.