Extrasys, a provider of technology as a tailored service for the SME sector, has announced the results of its national survey on SME views surrounding their main business challenges over the next year.

It targeted owners, CEOs and MDs of UK-based businesses ranging in size between five and 500 employees.

The report found:

Overall results from all respondents found that competition (35 per cent) and rising costs (28 per cent) were the two main challenges for SMEs in 2006

A quarter of respondents cited business continuity, risk and disaster recovery as the third most significant challenge

More than 80 per cent of business owners recognised that the development of new business solutions is changing the culture of the SME market and is strategically important to the growth and competitive success of their enterprise

Overall factors influencing the choice and implementation of business solutions were cost (68 per cent), customer service (31 per cent) and the ability to upgrade (30 per cent)

Accessibility (29 per cent) and customer service (33 per cent) were the main factors influencing IT decisions by companies in the smallest segment of respondents - five to 25 employees

Security (26 per cent) was the main factor influencing IT decisions by companies in the largest segment - 251 to 500 employees

One of the main findings in the research found that small business owners across the UK are concerned about the security of their IT infrastructure with 60% believing their existing infrastructure is not secure enough

Conversely, six per cent of respondents recognised that business continuity was going to be a key expense for 2006, yet a quarter of respondents predicted that business continuity would be one of the main challenges facing their company in the coming year.

Nearly half of all respondents agreed that their competitive position would improve by investing in new technologies

Nearly half of all respondents agreed the economic climate in 2006 has not changed since last year whereas a third of mid size SMEs (101 - 250 employees) believe the economic environment is worse than 2005

Simon Arbuthnot, operations director, Extrasys, said: "The research is significant because it highlights the disparity between the majority of companies who feel their existing IT infrastructure is not secure enough and yet still do not consider this one of their main challenges.

"This could be because of the inherent costs associated with wholesale IT upgrades or the lack of knowledge regarding new solutions which can change a company's culture and the way it operates.Nearly 70 per cent of the respondents in this survey indicated cost was the main factor influencing their choice of technology. "However, it is significant that a large majority of respondents agree that technological innovation is a key component in developing a successful and competitive business.

Investment in the right solutions can strategically position a company to develop both its market position and secure far more efficient, flexible and secure operating processes. It is very clear that accessibility, security and customer service are the main drivers influencing smaller companies' moves to greater technological innovation."