Small and medium sized enterprises (SMEs) in the South West are not meeting the growth in demand for e-business, according to a comprehensive report developed by the Centre for Future Studies, an independent forecasting think-tank.

The IT Skills Report, commissioned by BT Business, shows that only one per cent of SMEs in the South West host pure online operations and derive all their sales through the internet and this is despite 92 per cent of businesses in the area using their IT technology and communications systems every day.

In addition 63 per cent of those surveyed in the South West say they could not function in the office without their technology.

Richard Auld, regional director, BT Local Business South West, said: "Customer demand is driving the use and adoption of e-business, and technology is now a 'must-have' rather than a 'nice-to-have' in business in the South West.

"With an estimated 400,000 SMEs in the South West, smaller businesses represent a key component of the area's economy and it is critical they stay competitive. There are easy to use IT and Communications (IT&C) systems out there for them, many with excellent IT support services in place that allow businesses to concentrate on their business rather than their day to day IT issues."

Significantly, of those who have started to do business online, 54 per cent of SMEs in the South West have attracted new customers in the UK through the internet, and in most cases these online sales are additional to, rather than a substitute for, conventional sales.

Mr Auld said: "Our report shows that many SMEs in the area, because of their size and resources, are unable to employ a dedicated IT&C professional and instead are reliant on family and friends to provide IT advice. The report highlights that often a lack of training and investment in IT results in a lack of basic IT knowledge and this can hold an SME back from truly e-volving."

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