Small and medium-sized enterprises (SMEs) are constantly having to balance the unique priorities of smaller organisations with the desire to invest in technology that can improve their competitiveness.
Computing recently hosted a web seminar, in association with Oracle, to discuss the challenges of SME IT and assembled a panel of experts to share their views and answer delegates’ questions.
The panelists were:
Tim Parlett, co-founder and IT director of internet startup Zopa, and formerly one of the co-founders of online bank Egg.
Jon Hillier, solutions director for the Oracle partner Teamsolve.
David Hall, a consultant who works with businesses of all sizes, and advises them on becoming more entrepreneurial.
Here they discuss three key issues affecting SMEs.
Q How well are SMEs innovating with IT to improve their business processes?
Parlett: We are in a revolutionary period. IT and the internet is really getting into the hearts and minds of everybody’s lives in a way that has never been seen before, and that is having a fundamental impact on small firms.
A number of SMEs are being created as a result of IT and the internet in a way that it is completely unprecedented. All I have to do is look at eBay, where a million people are making their primary income from the auction site, running small businesses as a result of eBay.
Look at YouTube, MySpace, Betfair, Skype. These are businesses that only a few years were small startups that are now large and substantial. Innovation can drive and create new small businesses from scratch.
With an existing business, there is a real challenge about how to use IT effectively to innovate. Very often, I see businesses that get mired in operational things, using IT just to support the business and keep it going and not really adding any value. So, what needs to happen?
Look out on the internet for new tools. Think about how those new tools apply to your business. Every day I look, there is new stuff I never imagined was going to be there. I have been in the IT business for 25 years, and in the past couple of years I have seen more innovation than in the preceding 20.
Make sure everything is led by the business. The business has to know what IT tools are out there, and when it leads that and enables the IT people and the business people to come together, huge innovation can be created.
Q What is the best approach to take for software and systems within smaller firms – to buy the application or to build it yourself?
Hillier: One of the major problems with any change in business, specifically with software implementation, is that the organisation does not necessarily understand why it requires the change. That will ultimately lead to failure in the implementation.
Whether you take the buy or the build approach, you have to create a statement of requirements. You need that checklist of why you want the change. What are the business drivers? What is it that you want out of this piece of software?
Mistakes can happen if people do not engage in creation of a statement of requirements. It could be that they do not have the resource or the time, but that can end with them having too big a choice of suppliers.
If you have perhaps four members of staff evaluating each supplier, and taking several hours on each, the cost to the business goes up significantly. But if you go out with a statement of requirements you can easily whittle down to two, three, maybe even four core suppliers.
The whole process will be swifter, and you will not be relying on the most dazzling salesman or the most polished demo.
A good approach is to build a roadmap, looking at what the business pains are and the current situation with IT, and then trying to phase it in.
Instead of going for the solution that has been made for you as a 50-person company, go for a scalable system that can go from 50 to 500 to 1,000. Then you are not repurchasing all the time and you are not losing out on that initial investment.
Q What is the role of new or emerging technologies in smaller firms?
Hall: When you think of organisations that really made big gains or boosted the business significantly, consider what they have done and how emerging technologies helped.
For SMEs getting control is a key issue – 50 per cent of SMEs will start up and then they will get into crisis mode, and one of the things they need to do is gain control.
Software systems can help you to do that very practically, and although it may not be rocket science it certainly has real value for businesses.
Sixty per cent of the time that I am called in to help small businesses is to discuss how to improve sales. What we learn from large firms, such as customer relationship management (CRM) systems, can be adapted to SMEs to provide focus and direction.
CRM systems can add real volume – on average, sales growth of between 30 and 50 per cent is not uncommon.
And another area is innovation through teamwork. How can you use technology to share wisdom, to share problems, particularly when people are spread geographically?
Collaboration products such as Microsoft’s Sharepoint work very well in that way. You can link up your entrepreneurs and they can come forward with innovations. But for me, the key is to ask the question: what do I really need to do to move this organisation forward, and then turn to the IT guys and say, how can you help me to do that?
Watch the web seminar online
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