Apply common sense to reduce IT costs

Gartner offers advice on how SMEs can make better use of their IT resources

Businesses with fewer than 500 employees tend to have a conservative attitude to their use of IT. This means they often fail to take steps to reduce costs and risks while maintaining effectiveness.

Smaller businesses spend about 5.3% of their revenue on IT. This is similar to the proportion larger companies spend. But smaller businesses often invest in IT only when their systems fail.

Conservative attitudes are evident in the systems, support staff and services they use. This year, the most frequently used server operating system is likely still to be Windows NT, followed by Windows 2000 and Netware.

These rankings are expected to be unchanged from those revealed in a Gartner survey of small and medium-sized enterprises in 2002. Upgrades planned in 2003 are likely to mean that 57% of SMEs will still be using Windows NT and 39% will be using Windows 95 or 98.

For the desktop, the most popular operating system is likely to be Windows 2000, growing from 55.1% to 63.7%. Last year, the most popular operating system, used by 65.4%, was Windows 95 or 98.

To support their use of IT, SMEs have, on average, 4.4 IT staff and have support contracts with an average of 3.2 external service providers. Their IT staff are worked harder than those in larger firms. They perform for themselves eight out of 11 service and support activities that are typically provided by IT service operations.

With this busy IT environment and limited resources, SMEs might be expected to be perfect candidates for outsourcing. However, Gartner research indicates that SMEs, particularly mid-sized businesses, generally do not consider themselves to be open even to the concept of outsourcing. This is not surprising, given the strong, often pivotal, role the internal IT function plays.

SMEs want to retain control of technology processes inside the business. In many mid-size firms, chief information officers are likely to feel that using external services companies to deliver IT process fulfillment would be an admission that they could not do the job effectively themselves.

A similar situation can be seen with systems for customer relationship management. Only 2%-3% of SMEs in the US use CRM software. Considering their need to make the most of what limited sales and marketing resources they have, this level of adoption looks low. But it is largely due to negative reports about how larger enterprises have failed to see the return they expected from CRM.

So what should SMEs do to get more out of their IT and bring it under control? The following are lessons from successful IT deployments.

Action points

Upgrade desktop systems. Migrate desktops running Windows 95, 98 or NT to Windows 2000 or XP. Gartner believes that running Windows 2000 or XP can reduce the total cost of ownership of desktops by as much as 11%.

Reduce diversity. Limit the number of desktop operating systems and system images. And limit end-users' abilities to change their images. This can significantly reduce support costs.

Simplify physical moves. Deploy technologies that enable lower-cost physical moves. Examples are wireless Lans and profiles for roaming users.

Clarify user counts. Make sure that software licences cover the actual number of users. SMEs often buy licences for more users than will use the software.

Anticipate hardware and software upgrades. Not having a previously negotiated price for future upgrades means non-negotiated prices can turn out to be up to four times higher.

Develop a managed desktop IT environment. Implement best practices such as having tools and processes for change management, standardising system images and establishing virus protection, performance monitoring and event and asset management. Gartner believes that a well-managed desktop environment can be up to 37% less expensive than one that is managed on an ad hoc basis.

Automate server configuration.

Deploy centralised management tools. Deploy monitoring and reporting tools at all levels of server operations - hardware, operating system and applications.

Develop robust security safeguards.

Many would say these are basic management common sense. But that is what SMEs usually excel at. They should not baulk at the apparent scale of the challenge but apply the same common sense to their IT.

Alan MacNeela is research vice-president at Gartner

Click here for more SME features >>

Click here for Part One of the SME supplement >>