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Businesses that use technology innovatively realise significant gains. This is fact; a recent report from Cisco Systems,...

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Businesses that use technology innovatively realise significant gains. This is fact; a recent report from Cisco Systems, conducted by London Economics, found IT investment led to a 25% increase in total output growth and 47% of total labour productivity growth in the period between 1992 and 2000. We are seeing again and again that technology can make a real, measurable difference to the business.

So, with facts such as these, what is stopping SMEs from using more IT? One reason is the lack of understanding of return on investment and another is the apparent gap in skills.

There is still a hangover from the dotcom boom days when businesses took on technology for technology's sake and where the focus was very much on growing revenues. However, the current economic climate has forced business leaders to tighten and scrutinise their budgets more than ever before. Businesses today need to be able to measure the benefits of technology and to see the rationale for investment.

Savings can often underpin the implementation of new technologies, but businesses also need to consider the return on investment for IT over the longer term and, rather than just looking at purely financial objectives, to take into account the many intangible benefits.

These may include improved customer satisfaction (and therefore potentially improved revenue and profits) and increased staff morale, which can lead to lower attrition rates and higher productivity.

So how does a business go about realising its return on IT investment? To begin with, business leaders need to accept that some aspects of their business may need to be changed and to be willing to use IT innovatively. If they are brave enough to use IT creatively in the workplace, for example, by encouraging mobile working, they will be ahead of their peers and their staff will realise greater productivity.

It is also important to note that increased use of IT in itself will not provide real gains. For the impact of IT investment to be felt, it must be aligned to a process or structural changes. Businesses must consider how they use technology and also the impact on staff, customers and suppliers. This is the only way they will enjoy optimal results from their investment.

IT has also produced another major challenge for SMEs: a skills gap in the workforce. The rapid growth of e-business has increased the demand for e-skills which has resulted in a deficit.

To ensure an e-business strategy is implemented successfully, a business needs the right people with the right skills. E-business is also changing the way we work, particularly through the rise of mobile working and the increasing demands for flexible working.

It is not only the mobile worker who needs new skills in managing technology and change - their managers may also need assistance to ensure they can effectively manage their staff remotely.

Companies should look first to close such skills gaps by training existing employees with technical and professional skills, as well as interpersonal competencies. This training could be traditional classroom instruction, self-learning or through e-learning.

Recruitment is another way to bring in new skills. Online recruitment has increased dramatically over the past five years with over 12.5 million people in the UK using the internet every month to hunt for jobs. Look for a site that will support the organisation's overall recruitment strategy, values and brand.

Finally, if there are short-term specialist skills required, or to prevent staff from being undermined by repetitive tasks, it is worth considering sub-contracting or outsourcing. Others may be better positioned to deliver high quality services, allowing staff to focus on the core business.

I have only touched upon two IT issues which businesses are facing today. There are many more, including e-security and the need to ensure business continuity as reliance on technology grows.

What is key is the approach businesses take; they need to commit to the vision of where to take the business, understand the technology and then apply that technology to business procedures.

Most importantly, they need to have the courage to take the next step. It is easier to invest in IT after seeing other businesses benefit, but it takes a lot of nerve to be the one who leads the way.

Liz Grant is director of e-policy at UK Online for Business (part of the Department for Trade and Industry)

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