How do companies like yours view and use information and communications technology (ICT)? Joe O'Halloran reveals the findings of recent research carried out by Computer Weekly and BT, the SME Audit.
While you might feel that you are equipped with all the information you need to maintain the way you use information and communications technology (ICT), you probably also feel that you need advice on identifying new ICT that could help your business.
It’s also very likely that, recently, you’ve had to alter what you have in order to improve efficiency. And you probably feel under pressure from your customers, and have that nagging feeling about the need to combat your competitors’ strategies.
If all of the above are true, then you are the average representative of the average small to medium sized enterprise (SME) in the UK today. These statements are some of the key findings of an audit of SMEs in the UK undertaken by Computer Weekly in association with BT. The purpose of the research was to take the temperature of the SME community and discern what are the trends and common concerns that your business, and those like yours, are facing. These trends and concerns should not be seen in the abstract; they explicitly show how your business shapes up in terms of ICT.
The good news is that the overall findings show that companies such as yours have engaged with ICT on a number of levels, and have recognised the various component elements that the successful deployment of ICT require. However, it also exposes the fact that recognising these elements and being in a position to do something about them are two very different things. The evidence is clear: even if there exists a number of businesses like yours lacking in an ICT-related area, be warned: there are businesses with whom you inevitably compete that do not lack the appropriate ICT technology and methodologies.
Engaging with ICT
Anyone concerned with the acquisition, implementation and deployment of ICT knows already or should know that, contrary to the bold promises made by some technology vendors, you don’t just get anyone to plug in the ICT solutions and expect them to work immediately. Getting the best from your investment in ICT requires dedicated personnel to implement and deploy it according to your company plans. Addressing these issues again reveals some mixed findings about companies like yours.
Firstly, more than nine out of ten companies with 50 to 500 employees have a dedicated IT department. The survey shows that on average there are seven employees in this department, although detailed analysis shows that one-third of all firms have between one and two members of staff in their IT departments and 60% have five or fewer. However, the manner in which dedicated IT staff – quite likely doing jobs that you do – do their work in companies such as yours is very much open to question. Just over half of all companies with up to 500 employees don’t have a formal IT strategy in place, and this includes 40% of those with a dedicated IT department.
To industry experts, such a state of affairs is no real surprise. Says Alan MacNeela, vice-president of research at analyst firm Gartner, as quoted in Computer Weekly’s recent SME Month feature: “These findings hold no surprises. SMEs are much less formalised or structured in their thinking about IT. They have a more opportunistic approach to IT investment.” He adds: “Many SMEs have an older infrastructure and want to sweat these assets. This focus makes any new implementation of IT that would effect significant business change almost untenable.” Something for you to reflect on if your company falls into this category.
Desktop automation systems aside, virtually none of the leading business enabling technologies are what could be described as commodity products. The success of ICT depends totally on your company having a well-constructed and thought-out business plan to which all of your ICT is aligned. It’s an evens bet that you don’t have such a plan; if you don’t it’s similar odds that a competitor does have a plan, and will gain a vital edge on your business when involved in a tender or even regular day-to-day operations.
A further revelation from the audit is that two-thirds of companies with a dedicated IT department enable IT managers to make the strategic decisions about ICT. Yet in those companies that do have a formal ICT strategy, 40% do not empower and entrust to dedicated IT managers the fundamental decisions to realise these strategies.
Proprietors and managing directors make the call in just over a quarter of all firms (just under half in all companies over 50 employees) and, surprisingly, at face value, one in eight firms look to their financial directors to make the strategic decision regarding ICT. Or not surprisingly as the case may be.
Commenting on the SME Audit, Mick Hegarty, general manager ICT for BT Business/BT Retail, says that all ICT suppliers’ conversations with companies like yours these days are veering away from the purely technical, focusing instead on strategic business issues. He notes a number of issues standing out from the audit. “One thing that stands out is that there is still an issue about the recognition of ICT as a business enabler.
“Most of the companies don’t have a IT strategy and most of the smaller companies are not big on ICT strategies, but what it really says is that they don’t have a plan about ‘how I exploit ICT to change the way my business works’.”
He adds: “There’s a concern there because I think that what’s happening is that broadband is rolling out everywhere and effective, affordable ICT solutions are becoming available. That is a business issue for leaders of SMEs.”
Battery of affordable solutions
BT and other suppliers have a battery of solutions aimed at your company. What is revealing is that they wish to engage with a more varied type of prospective buyer; that is to say colleagues of yours from the more business-related functions in your company.
Hegarty says: “It’s a question for us of how can we help [SMEs] recognise the changes that [ICT] means for their business, as in how they deal with their customers, how they deal with their supply chains, how they manage their internal businesses, and how they make the best use of the people they have got. BT has been working to engage with business leaders and not just the IT department. We are being careful; we’re not trying to distance ourselves from the IT community. What we’re trying to do is to get more recognition in the boardrooms of medium-sized companies of the role that ICT can play. We have Project Blade, a succession of events that gets directors and financial directors engaged in talking about business issues that they have. We’re using our experience from working with large companies [and telling SMEs] what solutions are affordable and available now.”
Affordability is still very much a key issue. Not surprisingly, a large number of companies like yours, over three-quarters, identify resource as the biggest consideration that prevents you from deploying ICT solutions. Intriguingly, despite the lack of a formal ICT strategy in 50% of firms, more than two-thirds of companies report that they don’t see the practical difficulty of mapping new systems onto existing process as the key deterrent to investing in ICT, despite the fact that difficulties in ICT implementations are a near certainty without a solid business plan. Does this mean that you and your colleagues have a lot of faith in the solutions’ robustness?
Your faith in ICT, typically to the tune of no more than £1,000 per employee, has to be repaid and ICT has to deliver the prime business benefits of improving efficiency and of reducing costs. These are the top two reasons cited in the audit by just over three-quarters and just over half of companies respectively to change an ICT strategy or introduce new solutions. The external drivers for making such a change should be apparent: that is the need for you to combat your competitors and pressure from your customers.
Ever greater pressures
You should bank on these pressures being ever greater throughout 2004, but there will be a commensurate wider availability of affordable and available ICT.
The increasing rollout of broadband will be one signifier of this and you should be looking to exploit cheaper, faster, more functionally enabled Internet connections. It’s not too far fetched to suggest that the availability of the new broadband services will remove some of the advantages that your larger competitors have enjoyed.
In general, this principle should apply for all aspects of ICT. The key, as the SME Audit shows, is how you shape up your business to take best advantage of these advantages.