Who controls IT is moving to the top of the agenda as small and
medium-sized enterprises gain a greater grasp of the importance of
implementing IT and communications technology to best effect. Helen
Beckett offers an overview of the findings of this year's Computer
Weekly/BT SME ICT Audit - exclusive research into how SMEs view and
use technology
Concerns about cash flow, inadequate resources and frustration with
bureaucracy are the perennial concerns for small firms. But
although these business basicsremain the same, the Computer
Weekly/BT SME ICT Audit has uncovered a shift in attitude towards
IT and communications technology by this segment of the private
sector since last year.
SMEs are realising that IT has to be done well in order to be
effective and consequently control of IT is moving to the top of
the agenda.
Proprietors, beset by ongoing technology problems and disillusioned
by the lack ofreturn on IT investments, have reached out to grasp
control of IT spend and decision-making.
Results drawn from 1,300 respondents representing the entire
spectrum of SMEactivity show that managing directors/proprietors
decide IT strategy at 40% of the businesses surveyed and dedicated
IT managers are in control at 42%. This compares to last year's
survey where just 27% of owners were in the driving seat with IT
managers deciding strategy at 58%.
"This is entirely in line with what we have measured in surveys of
our membership," says Jim Norton, senior policy adviser with
theInstitute of Directors. "Among our members, we're finding that
control has been vested in the proprietor or managing
director."
Far from being something to worry about, he believes this is
healthy for IT and will result in continued investment, rather than
the brakes being applied. "The difference is, they will not buy in
the first place unless they know exactly what to do and what it
will accomplish for the business," he says.
One thing that commentators agree onis that it is impossible to
generalise about SMEs and their attitudes towards IT.
Thedemographics of SMEs range from the one-or two-man band and the
micro company of10 employees and less to the medium-sizedenterprise
of 250-500 employees. The IT landscape varies again according to
whether it is a rural business or set in the heart of a
metropolis.
"The latest Trojan or virus is unlikely to dominate conversation
in a non-office based environment," says Peter Scargill, IT
chairman of the Federation of Small Businesses.
But for all their differences, the shifttowards greater owner
control among SMEs is confirmed by the experts consulted by
Computer Weekly. "More owners now have a good understanding of IT,"
says Jeremy Beale, head of e-business at the Confederation of
British Industry. Where this is the case, "They are more likely to
take the decisions than leave this to a geek," he says.
"It is something that we have seen happening progressively over the
past year," says Tony Lock, chief analyst with Bloor Research.
Consequently, IT suppliers are increasingly attempting to
communicate with managing directors and business managers, in
addition to their core target group of IT managers.
This year's audit found that even more owners or managing directors
have charge of IT within organisations with fewer than 50 staff,
where up to 60% of them wear the IT hat. But the swing towards
proprietor control was seen in all constituent groups surveyed.
"When things are going well managers leave IT to get on with it.
But top management is gettinginvolved if there are problems," says
Scargill.
Many of the problems arising during the past year have come in the
shape of unmanageable volumes of e-mail and accompanying issues of
spam and security threats.
"Almost everyone I know has to handle boatloads of e-mail. It is
a question of having to stand back and ask what difference this is
making to the business," says Scargill.
As the use of IT becomes more pervasive, legislation that small
firms may in the past have ignored, such as the Data Protection
Act, is now having to be reconsidered to be sure that they
comply.
Another reason cited for top management seizing the reins is the
oft-heard complaint that IT staff fail to communicate the impact of
IT systems on business performance. "This trend reflects the fact
that IT is not explaining it in the right way," says Lock.
Poor communication tends to occur in companies at the top end of
the SME scale with between 50 and 500 staff, where 65% - rising to
94% in the biggest companies - have a dedicated IT
department.
In these medium-sized companies, which may have the luxury of a
dedicated ITdepartment, keener interest from the top manifests
itself in other ways. "Evaluation is no longer left to the IT
department," saysSimon Woodward, SMB territory manager at IBM UK.
Whereas it used to be left to the senior accountant or financial
director, theevaluation process now tends to include a board member
and other business heads.
A panel-led approach to evaluation is aresult of companies having
problems with IT the first time round and then again on thesecond
go, says Woodward. One advantage of a broader evaluation for the
business is that it can reduce the time taken to implement IT. The
decision to move from using an in-housecapability to outsourcing
may take no longer than 10 weeks in Woodward's experience.
The Federation of Small Businesses applauds the more vigorous
interest that topmanagement is taking in IT strategy. "For far too
long now, IT has operated as an independent domain, separate from
the business. Once upon a time, IT was something that managing
directors would have been quite horrified at getting involved with.
But owners have found increasing numbers of problems that IT cannot
deal with," says Scargill.
High on the list of concerns is security. In this respect the SME
landscape has not changed much from last year when security was the
most visible item on the IT radar. Then some 60% of respondents
registered a high level of concern about the threat posed by
hackers and viruses and 32% expressed moderate concern. One year on
these concerns have edged up to 63% and down to 31%
respectively.
Meanwhile, the renewed pragmatism of the managing director
operating in the IT sphere translates into diminished expectations
of what IT can deliver to the business - but adetermination that it
will deliver something. "SMEs are saying that we want to use IT but
that we want it to be real," says Norton.
His observation follows Computer Weekly's findings that business
drivers for implementing IT, whether performing better against
competitors or finding new customers, rate less highly this year
than in 2003.
"Expectations of what IT can deliver have declined across the whole
of industry," says Beale. There was an overselling of IT, often by
the finance people in the dotcom era, he maintains, particularly of
what the web and the internet could deliver in terms of generating
new customers and revenue streams. While large corporations apply
hard-nosed pragmatism to IT in the wake of recession and
unfulfilled dotcom promises, small businesses take an even dimmer
view.
Thrift is practised instinctively by small businesses that often
have to rely on last month's cash flow to finance any new IT
initiative. This year's audit results suggest they have no
intention of repeating the hurt of spending on IT that gives no
clear return.
The Federation of Small Businesses and the CBI both report that
investment in websites has declined over the past year. "In the
early days, companies threw caution to the wind for fear of being
left out," says Scargill. "Now they have given up following the
crowd."
The Business Growth Programme run by the Cranfield School of
Management confirms this picture of SMEs being primarily concerned
with using IT to tighten up operational efficiencies. "In smaller
businesses, IT is something that is used in a supportive rather
than strategic way," says programme leader Gerard Burke.
Given that course attendees come from among the most innovative
SMEs in the UK, Burke has witnessed original thinking about IT,
such as one language translation agency that has used
communications to deliver just-in-time literature to
customers.
Stories such as these of a commercially-driven approach to IT
suggest that the UK's SMEs continue to make strides since last
year, when we reported that many smaller companies were struggling
just to keep the lights on. Recent exposure to viruses combined
with disappointing returns from websites have caused top managers
to sit up and take notice.
IT is now being treated like any other aspect of business,
believes Norton. More encouraging still, he says, "Small businesses
have learned how to do IT."
Profile of an SME and IT innovator
A company attending the Cranfield School of Management Business
Growth Programme provided multilingual literature to big business.
One of its contracts was to provide menus to a major airline at
airports around the globe.
Although the customer was satisfied with the quality of the
product, it never knew exactly how many passengers would be on a
particular flight until check-in time and consequently wasted money
through over-ordering of menus.
The proprietor of the company came from a marketing agency
background and hired his brother, an IT professional, who came up
with the idea of developing relationships with a series of digital
printers based locally to airports. This meant menu orders could be
placed once passenger numbers were known. Menus could then be
printed locally as required and delivered without any waste.