Ict, e-business and Small and Medium Enterprises

Cost of developing and maintaining e-business systems  

Most SMEs will not adopt e-commerce if the benefits do not outweigh the costs of developing 

and maintaining the system. The issue is costs relative to benefits expected, not cost itself. Nevertheless, 

SMEs are generally concerned about the costs of establishing and maintaining e-commerce since they 

generally suffer from budget constraints and are less sure of the expected returns on the investment.  

Some SMEs cannot afford to adopt sophisticated ICT solutions (e.g. a Web site with a secure 

environment for credit card transactions). Some small businesses, especially micro-enterprises with 

1-9 employees or the self-employed, may adopt a simple Web site without any e-commerce function if the 

cost of basic Internet use is well within their marketing budget. For example, in the United States, typical 

Internet charges – USD 10-35 a year for a domain name (i.e. Web site address) and USD 10-100 a month 

for Web site hosting, are low compared to traditional advertising in printed media (Bricklin, 2002). 

E-commerce maintenance and upgrades can be very costly, especially when firms prefer a highly 

sophisticated virtual shop. The Australian study indicates that Web site maintenance is the most costly 

element of ongoing costs, ranging from AUD 800 to AUD 103 000 (Figure 8). Other elements include 

telephony, Internet service provider (ISP) charges and Web site hosting. Web site maintenance and 

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upgrades may increase over time as the volume of on-line transactions grows, and this may raise costs and 

generate excessive workload in terms of staff time. In fact, some small shop owners, especially those that 

outsource Web page design and updating, have found it difficult to contain site development costs which 

are more or less beyond the firm’s control (Ernst & Young, 2001).