A shortage of money, combined with a lack of technical expertise, is keeping half of small businesses in a technology "dark age", according to a large survey.

In an alarming trend, fax machines are still used far more than smart phones by small businesses, the research of 3,000 IT decision makers found. The interviewees work in businesses of less than 250 employees.

In spite of the financial crisis, a quarter of IT decision makers in small businesses have no understanding of cloud computing, a type of technology often touted as saving upfront investment.

Many businesses also have a lack of awareness around data security regulations and technology, the survey found.

According to the Intel Small Business Index, a third of small businesses have no plans to buy any new laptops, desktops, tablets or smartphones in the next year.

Graham Palmer, UK managing director at Intel, told Computerworld UK that the IT industry needed to do "much more" to advise businesses how they can save large costs with a small investment in technology.

While tablets and smartphones offer flexibility to staff, only 1.4 percent and 16.2 percent of staff use them respectively, he said.

"It's important that IT decision makers weigh the advantages, such as the increased efficiency and flexibility delivered by mobile devices, against the cost," he added. "In many sectors, such as the creative industries and retail, using outdated legacy technologies could even result in the loss of your competitive advantage."

The research also revealed some concerns around security measures. Two thirds of small businesses spend under 10 percent of their IT budget protecting their businesses against attack. Thirty six percent of IT decision makers are also entirely unaware of data protection legislation on mobile devices.