12 Mar Barriers remain to small business technology adoption
Milwaukee, Wis. – Business solutions software is becoming vastly more cost-effective for small businesses, but owners and managers of those companies often are not aware of that affordability or are stymied by what can appear to be a dizzying pace of change in technology.
Not only are more solutions available, those solutions are usually richer in features and are coming from broader sources – sources that are seeking to position themselves as technology partners.
“I think the biggest trend we’ve seen with the small business segment over the past year is that there are more channels appealing to small businesses with technology services,” said James Browning, a Gartner research vice president. “So a couple of years ago, they were very dependent on local, trusted ISPs and resellers to help them not only install and support whatever technology they adopt, but to help them keep up with what’s hot and what’s not, and what they need going forward.”
Other companies seek to fill that role, offering advice, strategy, and ongoing support for businesses that don’t have in-house IT departments or that have very limited IT staff.
That contrasts with the old tech business model of installing hardware and software in a business, and waiting for something to break or fail before contacting the business again.
“What we’ve seen over the past year, however, is that there are some other channels that are expanding their services to support small businesses and actually try to be the IT departments,” Browning said, citing telephone companies as an example. “Most of them, like AT&T, Verizon, and others, originally came out with more infrastructure-related services like online backups and various security services.
“So we’ve seen more than we have in the past of small business owners or IT folks talking more to the AT&Ts of the world about what offerings they can provide them going forward, besides long distance and cellular-type services.”
It’s about strategy
The knowledge from such resources is even more important as the pace of change in technology increases.
“There is a realization among a lot of business people that they can’t keep up with it,” said Tim LaMalfa, executive vice president for sales at Capital Data, a Milwaukee-based company that supports companies with internal IT departments, particularly those with data centers. “The features of software are getting so great that it’s difficult to have someone on staff who can understand the full application.”
In smaller companies, Gartner’s Browning sees more interest in advanced customer- relationship management applications, especially those provided through the software-as-a-service model such as Salesforce.com.
“We see small businesses warming up more to software as a service than we do in mid-sized and large enterprises because, quite honestly, that’s really the only way they can obtain that functionality,” he said.
Because of that financial driver, Browning expects to see small businesses increasingly be first-adopters of on-demand baseline and standard applications. The need appears to be great, as many small businesses still rely on what Browning terms archaic business processes, still using e-mail and Excel spreadsheets for activities that could be more efficiently handled by newer applications.
Where’s the value?
Many don’t see the value, either, according to the most recent CDW IT Monitor. The report, produced by national IT products and services provider CDW, the parent of CDW Berbee, showed that only 39 percent of small businesses see IT as beneficial to their bottom line. That compares to nearly 80 percent of medium and large businesses that see the value of IT for the bottom line.
“The disparity in perceived IT value between small businesses and medium and large companies is largely reflective of an unsteady economy and how small businesses often bear the brunt of economic swings,” said CDW Vice President Mark Gambill, the executive responsible for market insights.
“The survey also shows that small businesses may not appreciate the benefits of technology toward growing their business,” he added. “In a number of situations, they do not have IT staff in house to help guide them in their IT investments.
“Another factor is that small businesses do not have a great deal of latitude in downsizing personnel when the economy slows and their business is affected, so they typically turn to delaying costly projects or canceling them altogether, and it’s probable that IT projects fall into that mix.
“It’s ironic, really, because technology is one thing that can help a small business improve productivity and compete with larger companies,” Gambill said. “Yet if they don’t have it, their ability to thrive in a tough environment is limited.”
The CDW report also found a narrowing gap between anticipated investment in IT and the perceived value of IT.
“The narrowing of this gap indicates expected investment in IT may be slightly more aligned with the perceived value technology brings to an organization,” Mark Gambill.
The IT Monitor found that small businesses anticipate increases in IT budgets over the next six months – despite the questionable economy.
“IT decision-makers are holding out some hope for 2008,” Gambill said. “However, even with 2008 budgets approved and IT decision makers looking forward to improving IT resources in the coming months, the greenlighting of actual technology investments will depend on the overall economic environment, which remains uncertain.”
Security a concern
Along with the CRM demand that Browning is seeing in small businesses, data security is a big concern among companies of all sizes, LaMalfa said. That includes disaster recovery, day-to-day backup methods, and issues involving data at remote locations.
“Archiving is becoming a big topic,” LaMalfa said. “With so much data, companies need to have some of it taken out of the way but still available when needed. Massive volumes of data and regulatory matters are driving archive processes.
“These companies want to get a better handle on the large volume of data that has accumulated over the years. If there is data they don’t need regular access to, we can move that out of the way.”
The second driver is regulatory, both from government regulations such as the Sarbanes-Oxley Act and from internal corporate policies that are often formed to provide evidence in the case of legal proceedings. While these regulations apply to publicly traded companies, small privately owned businesses are increasingly expected to apply the same standards. That expectation comes not from the government but from those who do business with them.
Other IT stories
• Milwaukee Institute seeks to build computational power
• Mark McDonald at Fusion 2008: Shift focus to distinctive IT solutions
• Increasing IT’s business value a highlight of 2008 Fusion symposium
• WTN Survey: CIOs have mobile applications on the brain
• WTN Survey: Is slowing economy placing a damper on IT spend?