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2.1 Introduction

Information and Communication Technology (ICT) has influenced the way in which business is conducted globally, resulting in, for example, a faster turnaround of products and production, smart products, and 24 hours of shopping around the world. Businesses are re-engineering their processes and investing huge sums of money in ICT solutions such as Customer Relations Management (CRM) systems and Enterprise Resource Planning (ERP), in order to take advantage of the changing environment. Knowledge is the cornerstone of this new environment, normally referred to as the “knowledge economy”. Customers in this new economy demand knowledgeable products and want to buy knowledge. For example, cars today have more knowledge about their surroundings than in the past, being equipped with tools such as rain sensors, night vision or driver’s assistance to ensure safe and comfortable journeys.

With their financial power, human capital (highly skilled staff) and resources (state-of-the-art equipment), big businesses have managed to take advantage of ICT to gain the edge over competitors, unlike small and medium enterprises (SMEs). According to Galloway and Mochrie (2005, 33), there is evidence that ICT is the driver of economic growth, which explains the drive by many governments around the world for SMEs to adopt ICT. The main reason for this drive is that governments acknowledge the considerable contribution of SMEs towards GDP and employment figures.

2.2 Problem statement

According to Ritchie and Brindley (2005) and Lucchetti and Sterlacchini (2004) ICT plays a very important role in the current “knowledge economy”. It is vital for SMEs to become a part of this economy in order to compete and thrive in the future. The problem is that SMEs are mainly using traditional tools to stay competitive. They need to take advantage of the power of ICT in order to take on

MIT 840

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