SINGAPORE: Small and medium businesses (SMBs, or companies with up to 999 employees) across key countries in ASEAN—Singapore, Malaysia, Thailand, Indonesia, Vietnam and the Philippines—are set to spend $13.4 billion on IT this year, up 15 percent over 2007. This increase in spending is due to a boom in the economies of most of these countries and a rise in the number of SBs (small businesses, or companies with up to 99 employees).

This forecast comes from the latest study by New York-based Access Markets International (AMI) Partners, Inc. Computing spending will account for just over 50 percent of total IT spending in ASEAN. Indonesia, Malaysia and Thailand will drive approximately 67 percent of the spending.

"PC-owning SBs will account for up to 78 percent of total IT spending among SMBs in 2008," says Cindy Tan, Singapore-based Research Data Analyst at AMI-Partners. "A substantial number of SBs in ASEAN— especially those in the emerging markets such as Indonesia and Vietnam—are still in the First Wave of IT adoption. This First Wave involves building the basic IT infrastructure, such as deploying PCs, productivity suites and accounting software."

Among the vertical sectors, the manufacturing industry is expected to be the largest contributor to IT spending and the one with the highest growth rate over last year, across ASEAN countries. "Retail is the most preferred channel among SBs in these countries," Tan says. "Offering sales promotions, boosting marketing collaterals, outlining the benefits of PCs in automating business processes will entice SBs to buy more desktops and notebooks. According to an AMI study, sales promotions and automating PC business processes to increase work efficiency are the top two drivers for PC purchases among ASEAN SBs."

As for MBs (medium businesses, or companies with 100 to 999 employees), about 40 percent of IT spending will be on computing hardware this year. The bulk of IT spending will continue to be on basic infrastructure. However, IT services, Internet and storage will make up another 42 percent of MB IT spending in the ASEAN countries in 2008.

"Improving Internet or networking bandwidth/connection speed, adding IT storage and deploying in-house or hosted backup and disaster recovery solutions are rated the top three most important IT priorities among ASEAN MBs this year," Tan says. "With the demand for data sharing, data back-up and collaboration among employees, there is an increasing need for storage and data management software solutions among these companies. Moreover, IT security investments are essential for protection against electronic threats, data loss/corruption to ensure business continuity in the long run."

The ASEAN region is on track to maintain a strong growth momentum this year. It will see robust domestic consumption, exports as well as strong private and public investments. Buoyed by positive sentiments, SMBs in ASEAN are planning to hire more employees this year. "Almost 50 percent of SBs said they plan to hire an average of two employees in 2008," Tan says. "Over 60 percent of MBs plan to hire an average of 17 employees this year. This is directly related to SMBs overall expectation that they will experience an average 10 percent growth in sales revenue this year."