Graham Muller: IT isn't just for the big guns

COMMENT

Small businesses are not spending enough on technology as most can't see the tangible benefits of such a costly investment. But anecdotal research suggests that small and medium enterprises (SMEs) that have made the jump are increasing productivity and efficiency.

IT spending is on the increase after a slow period. In recent years global events like September 11, Sars and the terrorist threat have affected New Zealand, bringing a tightening of purse-strings.

Many companies chose to delay IT investment and some put it off all together. Now companies are exploring technology with renewed interest to enhance their business and generate revenue.

Although many SMEs are spending very little and have yet to understand the opportunities available through IT investment, early adopters are reaping the benefits.

New Zealand businesses and Government agencies spend $4.3 billion dollars on IT every year but only a small portion comes from small businesses.

With 99 per cent of companies employing less than 100 staff, a lesson can be learned from the remaining 1 per cent about technology benefits. Smart use of technology improves efficiency, enhances productivity and increases revenue.

During 2003, Government agencies spent $500 million, or $8,372 for every employee, on IT. However, the SME sector spent only $787 million, equivalent to $1,097 an employee. The biggest spenders were the 260 companies with more than 500 staff, who spent an average of $12,000 an employee through investments in outsourcing, enterprise applications and enhanced technology infrastructure.

Technology investment is not just for the big guns. Even the smallest business can gain substantial benefits. There has been limited opportunity in the past for SMEs to access enterprise applications that have made large businesses so productive, but the tide is now turning.

New technologies like wireless and fast broadband open the window for SMEs, allowing better information management, remote working opportunities and access to a host of business management applications.

The single key IT challenge that small businesses face is that most do not engage full-time IT staff.

Without dedicated staff SMEs don't appear to have time to consider technology as a way to enhance their business and until recently IT companies have struggled to find a way to position their products for this market space. Vendors are now beginning to understand the untapped potential of the SME market.

IDC research has found that senior managers in 65 per cent of companies with less than 50 staff now consider IT to be a steady contributor to businesses management, and an additional 29 per cent believe it can add to competitive advantage. In 2002, only 10 per cent thought IT would be an advantage.

The lack of in-house IT resources has limited the access to the sorts of high-end technology that large companies take for granted. Continuing improvement of both technology and vendor understanding of the market is providing opportunities for the forward-thinking small enterprises. IT vendors and service providers are now able to offer outsourcing services that include remote applications and network management for SMEs through utility services where multiple businesses leverage the same infrastructure.

Traditional telecommunications providers are also increase their capabilities to provide converged IT and telecommunications services, such as being able to check email on a mobile device or access a business network from home.

Early adopters of new technologies are finding a number of business-changing benefits.

Being able to run your business from any location by accessing important business applications, technology partnerships with IT specialists bringing new ideas into the company, and better communications with customers are the benefits.

The technology is ready, the infrastructure laid out, and the IT vendors are providing the opportunity.

Most small New Zealand businesses are expected to miss the opportunity for exceptional growth through planned use of technology, but those that form successful partnerships with the best IT providers are destined to prosper.

* IDC's New Zealand clients include major companies such as IBM, Hewlett-Packard, TelstraClear and Telecom.

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