It's a much riskier business getting into e-commerce if you're an
SME. Financial outlay, poor supplier service and the daunting
prospect of hiring a consultancy are just some of the hazards, says
Julia Vowler.
Does size matter? When it comes to doing electronic commerce the
answer is both yes and no. Whether you're a major blue-chip
corporation with a cast of thousands or a small- to medium sized
enterprise (SME) with a dozen or 100 employees, e-commerce presents
the same core challenges: how to offer a new business opportunity
(requiring a new business model), and how to reconcile that with
the existing model.
But, says consultant Monica Seeley, whose e-commerce leadership
masterclass series starts this week at Imperial College, London,
the e-experience for SMEs is a scaled-down version of their bigger
brethren's - not an exact replica.
"Major corporations and SMEs both need to use the same
principles, such as understanding the importance of making the
business case for doing e-commerce, or appreciating how the Web
front-end will tie in with the back office and fulfilment," Seeley
says. But beyond that the experience will not be the same.
That is because every SME is considerably closer to the coal
face than the average blue-chip. For an SME, every risk is riskier
than for a blue-chip, and e-commerce is definitely risky. If an SME
gets its e-commerce initiative wrong, then unlike a major company,
there's nowhere to hide.
"For an SME, all change has a far higher risk," she points out.
"SMEs need to be more thorough [in e-commerce] because if it goes
wrong it's far more difficult to cover up, write off or bury."
An e-commerce initiative will represent a much larger slice of
the overall pie for an SME. "It's a much bigger gamble," says
Seeley. "SMEs don't want to keep restarting. If they buy software
and the market moves on they can't afford to write it off."
That should make the idea of using an application service
provider (ASP) to deliver e-commerce platforms attractive. But
there isn't a great deal of uptake yet.
The reasons are twofold, says Seeley. "ASPs haven't yet worked
out the business models [that SMEs need for e-commerce], and SMEs
are far more cynical about IT suppliers in general and will
tolerate far less fuzziness and hype from them."
On the other hand, unlike large firms, SMEs do tend to be far
more reliant on their technology suppliers for input on IT
strategy. So there is an opportunity for the SME's key suppliers to
influence significantly the way the SME is going to approach its
e-commerce initiatives.
But Seeley points out that an SME needs to understand whether
its IT suppliers regard e-commerce as a core market. If, for
example, SMEs are only on the fringe of a supplier's radar, and the
supplier is really focusing on the big-ticket corporate accounts,
then an SME may not get the kind of personalised, customised
attention it needs.
Some suppliers, says Seeley, are only offering SMEs
"sheep-dipping" when it comes to e-commerce provision - dunking
them all in the same e-cocktail without any individual
treatment.
To discover how each SME could best exploit the opportunities
e-commerce presents, while minimising the risks, suppliers will
have to bite the bullet and seek consultation.
This, Seeley says, is another differentiation between the giants
and the SMEs. Whereas the former will think nothing of forking out
for consultants, SMEs are far more tight-fisted. But, warns Seeley,
this attitude could be more a case of penny-foolish than
penny-wise.
"SMEs need to appreciate more about buying in consultancy," she
says.
Nor is the cheapest consultancy always the best. In the end, an
SME, with every penny to be accounted for, may yet find that it
can't afford to buy cheap consultancy. However, SMEs can turn to
other sources of guidance on tackling e-commerce. Guidelines,
checklists and starter packs are beginning to emerge from the likes
of the Department of Trade & Industry which, although hardly
providing a customised e-strategy tailored to any one SME, do cover
the general issues.
An SME's smaller size and greater exposure to the coal face
does, however, give it an advantage when it comes to e-commerce. As
Seeley points out, an SME's IT function will inevitably be smaller,
and IT staff more general purpose than in a major organisation.
"In an SME, IT has to be many things to many people," says
Seeley.
Because SMEs do not regard IT as rarefied their IT staff must be
more open-minded about shouldering more specialisation.
Even better, she points out, because SMEs are smaller, the IT
function is less likely to become insulated from the real world
than in a major corporation. This means that the IT staff are far
more exposed to the business potential of e-commerce.
The drawback is that the smaller size of an SME means there is
less flexibility available when it comes to the culture-change
issues that e-commerce inevitably brings in its wake.
"What does an SME do with staff who find IT very difficult but
who really understand the business? They may be valuable to the
business but very reluctant to change what they do [for the sake of
e-commerce]," says Seeley.
"In a big organisation you can make them redundant or move them,
but in an SME there aren't too many places you can use for
relocation."
Is e-commerce different for SMEs?
The principles of doing e-commerce are the same whatever the
size of organisation, but there are still important differences
when comparing with the attitude of major corporations. SMEs
- Live closer to the edge. Failures are less easy to absorb and
recover from
- Are simultaneously more dependent on, yet more cynical about,
their IT suppliers for strategy and advice
- Are more conservative about technology investment
- Are traditionally highly reluctant to buy-in
consultancy
- IT staff tend to be multipurpose and flexible
- IT staff tend to be less insulated from the business world as a
whole.