By Max Clarke

Small businesses in Britain are adopting internet-based software, storage and communication services more slowly than European peers, a survey of companies across Europe suggests.

The UK appears to be lagging behind the rest of Europe with the survey of 1,600 companies by VMware finding that on average 60pc of SMEs had adopted some internet-based IT compared to only 48pc in the UK. A report published by the centre for European business research forecast that adoption of cloud services across the EU could generate up to €763 billion, with a €233 billion surge in businesses’ profits. This unwillingness for UK businesses to adopt technologies at a time of continued downturn could see them outcompeted by their European counterparts.

The most common service used by SMEs (small-medium sized enterprises) was storing data remotely rather than on the office server or PC hard drives. Email and office software, like word processing and spreadsheets, were the most common software applications to be accessed from the cloud rather than installed directly.

Chris Jagusz, retail managing director at IT specialist Daisy Group, said: "The earliest adopters are technically oriented start-ups with no installed base of systems, people who are comfortable with putting their applications and data in the crowd.

"After that, it tends to be almost the opposite — services firms who don't want the hassle of managing the technology and are happy for a cloud firm to do it for them."

Industry consultants IDC estimate £9.8bn was spent globally by companies on cloud-related technology in 2009 and forecasts this to increase to $55bn by 2014. Spending by SMEs represents almost half the total.

Ashish Gupta, EMEA VP for HCL Technologies is a little more skeptical about the uptake of cloud:

“The cloud is nothing new, it has been in the industry in multifaceted forms for a number of years, starting with service bureaus, asp’s, msp’s etc. The only difference now is that the concept of cloud computing has matured and come into the enterprise mainstream and some “cloud type” offerings exist which enterprises can design into their future service needs.

“The hype on cloud is going thru the roof purely because people assume that cloud will mean — infinite capacity at near zero costs and 100% flexibility as what cloud will offer. These survey findings prove that current cloud services are far away from this truth.”