Lack of IT expertise could stall small business growth

A new survey finds that a successful IT strategy is a key element in small companies that experience significant growth.

You can't get from here to there without it.

A new survey finds that the strategic use of IT is one of the biggest challenges for small business growth, and one of the most important keys to success.

Vernon Hills, Ill.-based value-added reseller CDW Corp. surveyed 152 business executives or business owners who had successfully grown their small business into a medium-sized company with 100 employees or more.

They planned for growth and saw technology as a means to achieve that growth.
Brad Purl
sales directorCDW Corp.
Thirty-eight percent of respondents said managing IT to their advantage was a significant challenge. The only challenge that eclipsed IT was recruitment and retention of employees, noted by 52% of respondents. Understanding customer needs, covering external costs of doing business and establishing and maintaining financial controls were barely a blip on the radar in terms of what they found challenging.

Laurie McCabe, vice president of SMB insights and business solutions at New York-based Access Markets International Partners Inc. (AMI), said IT is a challenge for growing small businesses, even as vendors compete to offer SMB-friendly technology. Technology might make workers more productive, but business processes must be considered when small businesses build their technology strategies.

"Even though we have a lot of solutions out there that are easier to use and don't require as much technology experience, they [small businesses] still don't have the business process expertise," McCabe said. "You and I could go online and find inexpensive Software as a Service solutions, but we don't have any experience in marketing business processes. Are we actually going to get any benefit out of it? Not if we don't have experts to help us to improve our business processes."

Seventy-four percent of these business owners said they were totally involved in IT decisions during their company's growth period.

"I do believe the owner has to be able to understand and be able to talk to people who can figure out how to apply the right solutions," McCabe said. "We always work with companies where IT is disconnected from the business and the owner is shaking his head and saying, 'Why the heck are they doing that? Why aren't they working on these things that can help the business?' When the business owner thinks strategically, he sets a model to put technology in a more positive light. He can say 'Hey we don't want to just buy IT to buy IT.' They have to think of every aspect of the business."

Brad Purl, sales director for small business at CDW, said, "These are successful individuals who planned for growth. It wasn't something they were hoping for and were going to deal with when they got there. They planned for growth and saw technology as a means to achieve that growth."

Ninety-eight percent of respondents said their companies had a defined IT strategy as they were growing from small to medium-sized businesses. And the majority of these companies had aggressive strategies. Forty percent said they considered IT a strategic investment that put them on the cutting edge, and 35% said they invested in the best technology they could find because it helped them level the playing field with larger competitors.

Only 14% spent just enough on IT to ensure their employees could do their jobs, and only 5% said they were conservative and spent money only on proven and cost-effective technology.

According to these business owners, aggressive IT strategy translated into stronger growth.

In fact, 61% of respondents who viewed IT as a strategic or competitive advantage experienced double-digit growth over the last five years. Yet only 43% of those companies that spent just enough on IT to ensure their employees could do their job experienced similar growth.

Small companies rarely have staffs dedicated solely to implementing IT strategy. However, when these companies did, they were likely to experience extremely high rates of growth.

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Just 24% of respondents said they had staff members dedicated to IT. Other owners handled IT on their own, outsourced it or had people with non-IT roles handle it. However, 49% of those companies that had their own IT staff experienced 20% or more annual growth as they worked toward reaching medium-sized status.

"There are definitely some small businesses where they say no one is really looking after IT," McCabe said. "They have people who are a jack-of-all-trades. They might have a couple people who have other jobs handling IT. At some point the business owner will say, 'We're going to really have someone focused on that.'"

Purl said, "The plan is growth. Leverage IT early and often. One of the biggest lessons we hear is that folks were not necessarily sold, but they saw the results of IT investment over time. And with that, make sure your technology can scale."

Let us know what you think about the story; email: Shamus McGillicuddy, News Writer

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