Does IT Matter for Small Business?

by Michael Anderson

October 19, 2010

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It’s small business week!  Did you know that over half the businesses in Winnipeg have LESS than 5 employees?  And that 86% have LESS than 20?

The message?  If you’re engaged in business-to-business services in Winnipeg, you’re either relevant to small business, or you’re simply not relevant.

For 365 Technologies, that presents an interesting question – Does IT (Information Technology) Matter for Small Business?

In 2003, Nicholas Carr wrote an article in Harvard Business Review titled ‘IT Doesn’t Matter’.  In it, he makes the case that as the availability of IT increases, and the costs of IT decrease, technology becomes ubiquitous, and is no longer a way for companies to gain a competitive advantage over their competitors.  As you can guess, the article generated a fair amount of controversy, and yielded a number of critical responses.

Today, many Small Businesses ask the same question Carr did – Does IT Matter? Given all the investments needed in staff, and inventory, and marketing and sales, do they really need to worry about IT? Technology might be necessary – but it’s not their core business. As long as the computers stay up and running, they’re happy.  In terms of strategic importance, or a way to improve their company’s performance, IT doesn’t matter.

Are there reasons to take a different approach? We think so.  Here are 4 ways that IT can have a directimpact on the success of a small business:

1. Delivering improved functionality

New technologies, and in particular, the shift to cloud / hosted delivery models are making enterprise-class technology available to small businesses.  In the past, where a small business owner would be faced with a large, upfront capital investment for hardware and software, he/she can now pay a monthly fee.  This eliminates the need for hardware maintenance/depreciation, conserves cash, and adds security/redundancy over an ‘in-house’ solution.

2. Improving performance

The largest expense in most small (and large) businesses is payroll.  The ability of IT to improve or hinder the efficiency your employees is significant.  Properly managed and maintained IT systems, where the risk of service disruptions is mitigated and uptime is maximized are absolutely essential.

3. Controlling risk

Recently, we wrote a blog series titled ‘3 Types of Technology Risk (and what to do about them)‘.  These risks are just as valid for small companies as they are for larger ones.  Small businesses are subjected to the same legislation as it relates to customer record storage and security, and need to be managing their risk exposure in this area.  Well-managed, secure access, archiving, and backup can achieve this.

4. Reducing costs

Technology represents a significant operating cost for most businesses.  Some general benchmarks indicate 14% of operating expenses can be spent on IT.  Often, IT does not receive the management that this level of expenditure warrants.  The majority of IT costs are hidden – in employee productivity.  Small businesses can benefit greatly from identifying these hidden costs, and taking appropriate measures to reduce them.

At 365, we believe that IT does matter for small business – as much, if not more than for large ones. The new technologies available to small businesses promise greater functionality at a reduced cost, and have the potential to significantly impact bottom line profitability.  Working with an expert technology partner like 365 Technologies is one way that small businesses can maximize the return on their technology investment.

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