SME nation: an IT strategy for the future

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SME nation: an IT strategy for the future

Helen Beckett

There are more small and medium-sized businesses in the UK than ever before, and their role in the economy has never been more important.

Computer Weekly's SME month in October and the SME strategy clinic series that followed in November revealed a business community with widely varying levels of sophistication in its use of IT - from the crude to the cutting edge.

The coverage highlighted some SME success stories and also exposed patterns of underperformance and some gaps in knowledge and resource.

Exclusive research, conducted by Computer Weekly in association with BT, questioned 1,200 IT professionals working in SMEs about how they integrate IT with their business. The results helped construct a fresh picture of the SME nation.

Unsurprisingly, as the sector is so diverse, this picture is highly fragmented. At the vanguard are the 49% of respondents who said they had an IT strategy, where 58% of these had an IT manager who formulated it. A further 71% of respondents were confident they had sufficient information to maintain an IT strategy.

One of the most encouraging findings of the survey was SMEs' appetite for information about emerging technologies, demonstrating their awareness of how critical IT is to business success. This information need was named as a priority by 62% of respondents, coming ahead of integration and even security.

However, this thirst for knowledge may have masked some ongoing problems experienced by the SME sector. Those that felt a need to know more about IT undoubtedly included some of the 51% of the sample who admitted that they had no IT strategy. The survey also pointed to a lack of a source for SMEs of clear, uncomplicated advice about IT issues.

Although technology can power competitiveness, a cautious approach to its implementation may safeguard SMEs from the problems sometimes faced by early adopter enterprise users. The survey showed that drivers for IT investment in the SME community are "efficiency" (77%) and "cost cutting" (54%).

Falling behind these were "ambitions to grow the customer base" or "increase revenues", from 35% and 33% respectively.

The focus on efficiency and hammering down the cost base is seen right across the business spectrum and represents a healthy response to the dotcom fall-out of three years ago, according to Jonathan Cummings, director of e-business at the Institute of Directors.

Another common factor in the SME community was that it was not generally known for its innovative attitude towards IT. This too brings strengths and weaknesses to SMEs.

For IT, the downside of a conservative outlook is the tendency for SMEs to be reactive, rather than proactive when faced with technological problems. This is reflected in the survey, where many respondents said they had modest expectations of what the internet and broadband can deliver to business.

Some 62% of respondents looked forward to faster internet connections and 26% wanted to capitalise on teleworking opportunities for their staff. Yet the survey found that just 8% viewed the internet as a gateway to managed services.

This would appear to be a missed opportunity, as 70% of the sample cited a lack of resources as the main impediment to IT deployment.

This lack of resources is an issue suppliers are trying to address. This week, BT announced it was launching an on-demand Siebel customer relationship management service for SMEs. At the same time, Cable & Wireless, Centrica, Energis, Freeserve, Tiscali and Brightview launched the Broadband Industry Group, which will call for deregulation. The group believes this will allow them to offer more innovative services to businesses.

SMEs have yet to be convinced about the new services suppliers are planning to roll out, and are extremely concerned about security. A total of 60% expressed serious concern about hackers, viruses and other security issues and a further 32% expressed moderate concern.

For many SMEs, IT remains the final frontier that, if conquered, can bring competitiveness and productivity to their business. Computer Weekly, through its research and coverage over the past two months, has helped to provide SMEs with insights on how to build on their strengths and plug the gaps in their IT.

Perhaps combining common sense - the defining characteristic of all successful SMEs - with better access to IT will put success within the reach of many more of the organisations that are the bedrock of our economy.

SME Month stirred up lots of industry feedback

"Smaller businesses spend 5.3% of their revenue on IT. They often invest in IT only when their systems fail. It is not hand-to-mouth, but it is not the land of plenty either."

Alan MacNeela, research vice-president at Gartner

"Campaigns such as SME Month can make a difference. The more information SMEs have in a straightforward format, the better. If suppliers come to us to pitch a product, I ask them to explain the value in terms of simple business benefits. And they really struggle."

Steve Benson, Business Link

"Doing business with government offers the opportunity to get involved in the delivery of complex public sector projects. SMEs are now able to access government opportunities through an electronic tender portal. "

Suzy Fenn, government market adviser at the Office of Government Commerce

"Anything that raises the IT awareness of SMEs' needs is a good thing. There is such bewilderment of products and it can be hard to make an informed choice."

British Chamber of Commerce

Broadband

The arrival of affordable broadband has permanently changed the SME IT landscape. Some 43% of Computer Weekly's SME respondents were already hooked up to ADSL and 62% welcomed the faster internet speeds broadband can deliver. But faster download times and "always-on" access are just the start of the SME metamorphosis.

SMEs are also starting to look at second-generation issues, such as using intranets and extranets to hook up with their customers and suppliers. "This sort of access may still be a little bit unusual among SMEs, but it is by no means a show-stopper," said David Bunting, treasurer for the Communications Management Association.

Wireless

The growth of Wi-Fi will make a profound difference to many smaller businesses. It enables the office to be extended beyond a physical location without huge investment.

Broadband over mobile means the businessman or woman without extensive office support systems can remain in touch and competitive while on the road.

The launch of services that send e-mails automatically to personal digital assistants and mobile devices also offer competitive advantage to SMEs.

Voice and data convergence

Voice over IP has been deployed by 30% of all UK businesses and is becoming a feature of the SME landscape, with 10% of the Computer Weekly survey deploying integrated voice and data technology.

Analyst firm Gartner has predicted that computer telephony integration, unified messaging and caller ID will all move into the mainstream and bring productivity benefits.

Technologies to give SMEs an edge

SME statistics   

  • 99% of all UK enterprises are small businesses 
  • UK enterprises employ an estimated 22.7m people - 44% of which are employed in SMEs  
  • The combined turnover of all UK enterprises is £2,200bn, with small businesses accounting for 37% of the total.   

Source: Department of Trade and Industry


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