Small firms use IT to seek new opportunities, study says

Small companies in a growth phase are more likely to use IT systems intensively to seek new opportunities, while those consolidating will use IT to reduce costs.

Small companies in a growth phase are more likely to use IT systems intensively to seek new opportunities, while those consolidating will use IT to reduce costs.

This is the conclusion of a research report into the growth and use of IT among 401 businesses with fewer than 110 employees for Microsoft UK by Durham University's Bill Snaith and Ian Stone.

The researchers found growth firms scored higher for hardware sophistication, networking, more use of more advanced software, and an understanding of the relationship between IT and the business.

They have a better appreciation of the return on investments in IT, and will seek different avenues for information about the technology and purchasing options. They will also spend more on IT to enhance their competitive stance and growth, which they believe IT will enhance.

The researchers found that the larger the firm, the more likely it was to use a networked server to store and deliver centralised data.

The killer applications remain e-mail and web browsers, but more than half also use remote access software, marketing websites, financial applications and diary and document management systems.

More sophisticated applications, such as business intelligence and performance management are relatively rare. Growth companies were more likely to invest in IT to improve reporting and productivity, while non-growth firms were also looking to cut costs and "gain insights into the business". Both sides believed IT would boost productivity, but growth firms had explicit expectations of improvement from revenue growth and productivity.

More than 90% of firms said IT had delivered the expected benefits, but growth firms were more enthusiastic by a margin of 97% to 92%. Almost none said any IT system had failed completely.

Government legislation and competition topped the list of future worries on both sides, but growth companies are more worried about growth compared with non-growth companies, which worry more about retaining customers and reducing costs. All sides agree that customer relationship data is the single most inmportant information for their organisations.

Read more on IT for small and medium-sized enterprises (SME)

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