Small Irish businesses have made dramatic progress in adopting e-commerce in the past year. A new survey has found that 17 per cent of small firms already claim to be trading online. However, revenues generated from such trade still remain low.

The second annual 3Com survey of the Irish networking industry covered 240 IT decision makers in firms employing less than 50 people in the Republic.

On the negative side, more than half of those interviewed said they had no intention of implementing an e-commerce strategy over the next year. And e-commerce only accounts for less than 10 per cent of revenues for three quarters of the small companies currently trading online.

However, the numbers of firms with Internet access are increasing steadily. Over the year, firms with access to the Net have grown from 67 per cent to 87 per cent.

A further development has been a shift in the obstacles to Internet use. Last year 58 per cent of firms restricted Internet access to staff because of the costs involved, this year only 17 per cent were concerned about cost implications.

Time wasting on the Internet was cited as a major concern for 45 per cent of businesses, while 32 per cent said security concerns deterred them from allowing widespread access to the Internet. Overall, 42 per cent of those surveyed said they would not allow their entire workforce access to the Internet.

According to Mr Jim McGovern, 3Com country manager: "There has been a dramatic decrease in cost concerns in comparison to last year's survey, reflecting new lower Internet connection charges."

E-mail is emerging as the "killer application" for small businesses with penetration increasing to 92 per cent of firms, compared with 75 per cent last year.

Of those companies using email, 65 per cent said they used it for contact with third parties, while only a quarter use it for internal communications across their networks.

Although e-mail has been almost universally adopted, just 68 per cent of companies currently view it as an "indispensable" part of their business. Some 29 per cent took a less enthusiastic stance, viewing the technology as a "necessary evil". A further 2 per cent said they were sorry email had ever been invented.

In terms of return on investment, networking technology expenditure appears to be viewed more favourably than other technology implementations. More than 87 per cent of those surveyed said they saw a definite return on their network investment.

The value of the Internet as a marketing tool is evident with nearly a quarter of respondents using it to source information about technology and products. However, computer industry publications were cited as the most useful source of technology information, while 32 per cent said they referred to business media for this.

However, planning remains poor among small enterprises, with two thirds unable to estimate how much they would spend on their network infrastructures over the next 12 months.