Study: tech still biggest concern for Euro businesses

European business leaders see investing in technology as their most important concern, with almost 80 per cent of them citing it as the key driver to their continuing business success, according to research conducted by International Data Corp. (IDC) and sponsored by Microsoft Corp.

Despite the downturn in U.S. markets, technology spending will be maintained through the coming year at 93 per cent of the 500 companies with more than 750 employees surveyed by IDC for the study. Eleven per cent of the board-level executives questioned said they planned to increase IT spending, according to a statement from Microsoft and IDC.

Defending this kind of investment is a challenging task: Only 14 per cent of those surveyed said that IT brought increased revenues and profitability.

One of the biggest lessons to be learned from the research is that, even though the deadline for the introduction of the euro, the single European currency, is less than 200 days away, Europe cannot be treated as one homogeneous market.

“It’s not like that,” said Richard Robinson, the IDC analyst responsible for the research.

The survey, conducted in France, Germany, Italy, Sweden and the United Kingdom, reveals that while executives in the United Kingdom and Germany think that the “new economy” has changed their competitive environment (71 per cent in the United Kingdom, 73 per cent in Germany), their southern neighbors are less convinced. Only 42 per cent of French executives and 39 per cent of Italians questioned had noticed a change. While 57 per cent of Germans questioned thought the new economy had made their market more global, only 12 per cent of French executives agreed.

The increased competition in the United Kingdom comes down to language, according to Robinson.

“Companies coming from the United States tend to come to the United Kingdom first, as it’s easiest for an English-speaking company to come to the United Kingodm first,” he said.

The uptake of technology has its part to play, too. “Northern European companies tend to be utilizing technology to a far greater extent,” he said.

Curiously, according to some measures, Sweden stubbornly refused to fit its stereotype of northern European new economy powerhouse, with only 59 per cent of Swedish business leaders saying they face new competition as a result of the new economy, midway between the French and German experiences. Only six per cent of Swedes questioned said they face competition from companies they never imagined they would compete with or had never heard of before, against 13 per cent of French executives, 29 per cent of Germans and 28 per cent of Britons. In this respect, the Swedes had most in common with the Italians.

Robinson was at a loss to explain the anomaly, offering two possibilities. One theory was that the big Swedish companies questioned were in traditional, infrastructure-heavy industries such as forestry and papermaking, where IT has little impact. But it was also possible, he said, that the recent new economy phenomenon changed little for the already heavily computerized Swedes. The country has featured near the top of the table in IDC’s information society index, a measure of the take-up of the Internet and other related technologies in daily life.

Other cultural differences are less technological. About 60 per cent of companies surveyed listed “soft” issues, such as company culture and lack of talented staff, as the biggest obstacles to succeeding in the new economy, according to the statement.

Here, said Robinson, the north-south split is neater. “Company culture tends to be a southern European thing, and the skills shortage is mainly a United Kingdom and German thing.”

Understanding spending plans is important for the study’s sponsor, said Microsoft’s vice-president for Europe, Middle East and Africa, Simon Witts. “Historically we used to spend a lot of money to understand what PC shipments would be doing. Now it’s as relevant for us to understand what business decision makers are planning,” he said.

Although Microsoft sponsored the research, they would not be the only company to benefit, according to IDC’s Robinson. “Companies are very pragmatic, they are getting on with business and they see technology as an underpinning of that. That is encouraging for Microsoft, but it is encouraging for other players as well. This is a very positive message that technology investment is still going ahead,” he said.

International Data Group Inc., the parent company of the IDG News Service, owns IDC, based in Framingham, Mass.

IDC can be reached at