Executive Thought Leadership

SMBs Increasingly Resemble Enterprises

A recent study of Canadian SMBs highlights the need to integrate technology initiatives into business-planning processes.

Small and medium-sized businesses (SMBs) in Canada are looking more and more like large enterprisest least when it comes to investing in information and communication technology (ICT).

SMBs in Canada are using networking and related technologies to cement customer relationships and create competitive differentiation, according to the Net Impact Canada 2006 study conducted by Illuminas in partnership with Cisco and infoCanada, a premier provider of business and consumer data. This study surveyed 200 Canadian businesses with fewer than 250 employees in June and July 2006. The findings were also compared to previous Net Impact studies conducted in the United States among large enterprises with more than 1,000 employees.

Following the dot-com bust at the beginning of the century, enterprises and SMBs alike ducked into a preservation stance, where cutting costs and protecting their position were the hallmarks of business strategy. But like enterprises, SMBs are back on the offensive, according to the study, seeking to snuggle closer to their customers while turning up the contrast between themselves and competitors, all with the goal of growing sales. And ICT works into their growth strategies by bringing the customer closer to the business.

Align Technology with Strategic Business Vision

While the majority of SMBs surveyed believe their ICT investments are aligned with their business strategies, only half possess the skills needed to manage those ICT investments, according to the study. Additionally, investing in ICT is a top priority for less than half, and only a third of respondents have a consistent method to plan for and purchase ICT solutions. Only 25 percent has a method to measure the success of their ICT investments.

This is where SMBs may learn some lessons from large enterprises in order to align their technology investments more closely with their business vision. As SMBs invest to meet today demandsimproving response through Web sites, call centers, and always-on e-mail, for examplenterprises are looking farther down the competitive road. Enterprises recognize that over the next 15 years they need to focus on personalization, innovation, and collaboration, according to the Foresight 2020 report conducted by the Economist Intelligence Unit last year. Previous Net Impact studies in Europe, Latin America, and the United States also show that most enterprises have long recognized the need to reengineer their business processes in tandem with their ICT investment to cultivate a cultural change, and to measure their success.

hen a small or medium-sized business says it aligns its ICT purchases with business strategies, the business strategies are to sell, reduce costs, and be faster than the competition. They generally don have the experience to take their ICT investments to that next level,says Jay Shutter, lead researcher on the Net Impact Canada study and managing director for Illuminas.

A great opportunity thus exists for SMBs to be more forward thinking. Based on the research findings, here are some good questions for SMBs to consider:

How can we use ICT improve our customersexperience? How can we encourage innovation? What tools are available to help us collaborate more effectively?

SMBs would also benefit from improving their business processes, culture, and metrics to ensure technology planning becomes an integral component of their business strategies. Enterprises have already learned that achieving the benefits of new technology requires not just implementing the solution, but also changing the organization business processes and educating employees and customers to use the solution, and this is one area in which it makes sense for smaller organizations to follow suit.

Rely on Your Partners

SMBs are focused on one thing: generating revenue. They generally have one area of expertise, say dry cleaning or financial planning. What they don have are the time and resources to research and invest in the type of long-term technology planning which results in increased business value. This is where a healthy relationship with a trusted advisor such as a service provider, value-added reseller, or other technology implementation partner comes in.

The Net Impact Canada study shows that while most SMBs trust and are happy with their outsourcing partners, the partnerscontributions are currently limited to system installation and maintenance. SMBs would do well to mirror the enterprise and involve these partners in their business planning. ystems integrators and resellers often see what enterprises are doing and what other companies are using, and they have a better idea how to apply those solutions to SMBs,Shutter says.

These outsourcing partners also have an opportunity here. They can form tighter relationships with their SMB customers by helping them ensure their investments are aligned with their business objectives. Although SMBs say they trust their partners with the technical aspects of ICT, they don feel the partners understand their business needs, according to the Net Impact Canada study, so the challenge for resellers and other partners is to do a better job of proving their strategic worth.

Technology Potential Offers Real Opportunities

SMBs are on the right path to using their ICT investments to gain a competitive edge, according to the study. They are focused on growth, they are making the ICT investments, and they understand the need to align investments with their business objectives.

The study identified the need for SMBs to look farther down the road when planning ICT investments, so they better support long-range business objectives. SMBs can achieve this by establishing an ongoing partnership with a trusted advisor that can help align technology investments and establish realistic metrics that will lead to more informed decisions in the future.