An end to one size fits all
- Posted:
- 16:25 15 Sep 2004
IT and communications suppliers realise that there is
value in the SME market and have begun to produce cut-down versions
of corporate systems. In this overview of the main issues and
technologies, Jane Dudman looks at how SMEs can get the most out
the options available
Statistics show that 99.7% of all employees in Europe
work for small and medium-sized companies. But it would be a
mistake to see such firms as a homogenous group, particularly in
their approach to IT. Some are innovative; others stick to tried
and trusted technologies.
"We approach things piecemeal, targeted to a particular need,
rather than try to revolutionise our business processes," says
Jacques Rene, head of projects at insurance specialist Airclaims,
and this is typical of many medium-sized companies.
The lack of IT resources makes SMEs more likely to implement
systems that need less in-house support and makes them more reliant
on their relationships with external providers.
Those relationships may not always be straightforward. "When a
company gets beyond about 50 staff, it generally employs a
dedicated IT person and, by that point, the situation is already
relatively complex, with multiple departments running multiple
applications," says Neil Ward-Dutton, director of technology
practices at research firm Ovum.
Ward-Dutton believes many medium-sized firms have a problem
maximising their use of IT. "Companies like this are doing
something right and they understand their own business," he says.
"That often feeds back into the IT. They bring in an IT person who
may be very technical and do a good job keeping everything running,
but they tend to think they know what is best and are very bad at
taking advice. Firms like this need to work with a channel partner
that talks their language and understands their niche in the
market."
Desktops and laptops
The price of desktop systems is falling and yet many mid-sized
firms find themselves trapped with older systems that do not really
do what they need. The clich' is that staff in such firms often
have better systems at home than on their desks at work.
IT managers in firms of all sizes would love to upgrade their
desktop and laptop systems regularly, but justifying the expense
can be difficult and in smaller firms, where IT resources are
always stretched, other things are top of the agenda.
Here, too, getting the right technology partner is crucial. "Most
suppliers are getting bigger," says Ward-Dutton. "They cannot scale
down to address the needs of the smaller customers, so it is being
done through the channel, and sometimes that is difficult."
Resellers working with smaller firms need to understand how much
their customers will invest in regular upgrades. One of the reasons
leasing is not used as much in the UK as in the US to finance
technology deals is because the contracts often commit customers to
regular upgrades, and they find that too inflexible.
This is beginning to change. Finance houses and technology
suppliers with leasing options now recognise the need for a more
flexible approach, so mid-sized firms wanting to upgrade, but not
wanting to get locked in, now have more options.
Networks
Networking is one area in which smaller organisations find it
easier to be innovative. Two technologies have made a huge impact
in networking: converged, IP-based networks, able to run both voice
and data, and broadband.
Broadband, in the form of ADSL, has brought higher-speed networking
to companies of all sizes, providing a backbone from which they can
transform the way they do business, and IP-based networking
provides a cost-effective alternative to expensive leased lines. IP
virtual private networks, in particular, give almost all the
advantages of private networks at a fraction of the cost.
The drawback with both technologies is that they are not based on
service level agreements and so service is not guaranteed. But this
is not deterring firms from making the switch to newer
networks.
"These companies have less invested in the older technologies such
as X25 and are able to get into newer technologies, such as voice
over IP and IP VPNs," says Ward-Dutton.
Wireless networking is also taking off. Earlier this year, BT
launched two wireless broadband products, including its Openzone
software and a subscription service. BT Indirect Channels is also
running a training programme to help resellers understand the needs
of users in the mobility market.
Brigitte Bell, IT manager at logistics specialist Cert, which
employs 500 staff, says partnership is vital. Cert has recently
moved from Frame Relay to an IP network, supplied by BT, to support
a new thin client Citrix infrastructure. "On the Wan/Lan side,
there are just two of us, so my role is very much project
management," says Bell. "We considered a third-party partner, but
BT did a good job of persuading me that was not necessary."
Storage
Most smaller firms rely on simple file servers to provide direct
attached storage, but this is limited, particularly in terms of
data retrieval. Many are now looking at other options to streamline
data storage and make it more manageable.
Until recently, storage area networks or network attached storage
were beyond the reach of smaller firms, but prices are falling,
making it feasible for SMEs to centralise their storage management.
Suppliers are now producing cut-down versions of their top-end
products, using cheaper serial ATA drives. This is also making it
easier for firms to back up their data onto low-cost hard
discs.
"There is growing demand here for storage, not just because of
database, but because we are expanding into photographic services,"
says Dave Oakley, IT manager at London art group and frame
manufacturer John Jones, which has 80 staff. "We have made a lot of
effort in the way we organise our data and we are doing OK now, but
we will have to put in some sort of storage system soon." The most
likely option, says Oakley, will be to look at network attached
storage.
Applications
How independent-minded should small and medium-sized firms be when
it comes to applications? They face a huge and daunting range of
choices when it comes to software, particularly now suppliers of
large-scale software products, such as enterprise resource planning
and customer relationship management are fighting one another to
get into this mid-range market with cut-down versions of their
systems.
"A lot of companies in this space could stay as they are quite
comfortably, so we have to convince them they will be able to
improve on what they are already doing," says Barbara Weiner, head
of small and medium-sized businesses at SAP UK & Ireland.
"Having a clear return on investment is almost more important to
these companies in many ways, because the money really
matters."
As well as general applications, firms also have a good choice of
more specialised applications, usually from smaller, more
specialised suppliers, in almost all vertical sectors, such as
retail and manufacturing.
Smaller firms can also now decide whether they really want to run
their own applications. The market for various forms of
outsourcing, of all kinds of applications, from e-mail to call
centre systems, is growing rapidly and has many advantages, the
chief one of which is financial. By opting for a service, rather
than buying product, firms are able to switch away from capital
expenditure. Instead, they pay a set monthly fee, agreed in
advance, making it easier to budget. They also get regular software
upgrades.
Just to round off the choices, there is no need to be limited to
the current market favourites. Microsoft is not the only fruit and
a growing number of mid-sized firms are opting not just for
commercial alternatives, but also for open source software, based
on openly-available source code. The big advantage of this approach
is the community of developers able to provide support.
Strategy
Although most medium-sized businesses realise the importance of
investing in IT, not all approach that investment in the same
structured way as larger corporates.
"I look at ROI, but the company doesn't," says Oakley, whose firm
has implemented a system to improve its order-taking and sales
processes. "The technology has made a massive difference to our
business. That is easy to see, because the company has increased in
size. We can now take orders for thousands of frames and turn them
out in a couple of weeks."
Like many other firms of its size, John Jones opted to work closely
with a technology partner. It chose Anglia Business Computers on
more than just just technical grounds. "The ABC staff are able to
talk in a normal language to our people, which is important, and
they also give our directors the feeling that we are an important
client, regardless of the size of the business," says Oakley.
Technical knowledge is important, but most SMEs put a premium on
personal relationships with their suppliers.
IT security for SMEs
The biggest security headache for most medium-sized businesses is finding the time and resources to deal with the issues. Everyone knows IT security is important, but it can be tough to get the right balance between security that will protect vital systems and not over-protecting so that no one can get into any of the applications.
It is easier to get security right if it is built in at the time of purchase, rather than having to be bolted on as an afterthought. Tips on IT security on the Department of Trade & Industry's best practice website include:
- Have a clear security policy
- Build security requirements into the design of IT systems and outsourcing arrangements
- Keep security systems up to date
- Have contingency plans to deal with a serious security breach
Most medium-sized businesses have to manage without full-time security staff, so it is important to work closely with trusted partners that can fill in the gaps. Automate security processes wherever possible and ensure the weakest points in the network are covered.
Pay particular attention to laptops and ensure all remote access into the company network is secure, using firewalls, password protection, and regularly updated anti-virus software.
Top tips for SMEs
- Build up a relationship with a trusted partner
- Many SMEs prefer to take a cautious approach to implementing new systems, rolling them out gradually, but sometimes a big-bang approach works, such as switching networks
- Smaller companies do not always have to justify their IT spending: if it looks right and feels right, they can sometimes run with that feeling, rather than having to spend a lot of time on a business case
- Risk-taking is more natural in smaller companies and they do not always have to follow the flow when it comes to IT. But it is still a good idea to make sure any new system will do the job it is supposed to.
