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IT Strategies in SMEs

IT Strategies in SMEs. Presented By Group 6: DJ Monzyk | Angela Lieb | James Campbell. What is a SME?. Small to Medium size Enterprise No single definition USA: fewer than 500 employees Europe: fewer than 250 employees 1 Micro: 0-9 employees Small: 10-49 employees

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IT Strategies in SMEs

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  1. IT Strategies in SMEs Presented By Group 6: DJ Monzyk | Angela Lieb | James Campbell

  2. What is a SME? Small to Medium size Enterprise • No single definition • USA: fewer than 500 employees • Europe: fewer than 250 employees1 • Micro: 0-9 employees • Small: 10-49 employees • Medium: 50-249 employees • Large: 250+ employees9 • In US and Japan, SMEs count for 99% of businesses • In the European Union, SMEs count for 99.8% of businesses9

  3. Size of Company

  4. Spending • SMEs – fastest growing purchasers of IT products; led in spending growth vs. large firms in 2004 • Total of $156B spent nationwide (in 1999)3 • Typical manufacturer – 2% of budget on IT • Typical service company – 5% of budget on IT • Typical SME in US - 6.4% of revenue • Why such a large percentage?.....Fixed costs in infrastructure • Projected IT budget growth in 2005 • 6.6% for small sized firms • 10.8% for medium sized firms • Basic infrastructure accounts for majority of IT budget4

  5. Spending Survey results • 30% of companies interviewed were manufacturing On average, they spend .73% of their budget on IT • Our survey of SME’s averaged 14% on IT • 40% of the companies we surveyed were providing technology as a service or product

  6. Reasons for Adopting IT • No longer for competitive advantage, but trying to keep up4 • Enhanced entrepreneurship6 • More innovative workplace cultures6 • SMEs are using IT primarily for4 • Marketing Functions • Internet / E-commerce • Basic Web Access • Customer Management • Financial Management • Knowledge Management

  7. Adoption of Internet • 80% of all SMEs are connected to the web5 • Reasons for adoption of Internet5 • Used primarily for Marketing Function • Can extend efficiency and market reach • Flexibility and ability for strategic change • ….but must adopt further than marketing alone • Can create better marketing relationships with customers • Expanded virtual assets6 • Can enter global market6 • High costs due to6 • New infrastructure • Information skills • Constant reconfiguration • Separate online marketing methods

  8. Adoption of Internet Survey results • More opportunities to start businesses – website, internet, e-mail, contact management, cost effective • 70% of companies were launched within last 5 years • All companies are using the technology in the same formats as the research indicated – marketing, building relationships, managing client information, etc.

  9. SME Statistics Survey results Where are they doing business • 95% doing business nationally • 35% doing business internationally • 90% doing business locally Where does their revenue come from? • 46% Local • 47% National • 7% Global

  10. Adoption of Ecommerce • Reasons for adoption • Breaks down traditional barriers of competition • Growth potential • Process • Find market position of competitors • Build specific objectives • Start in niche market(s) • Define Critical Success Factors (CSF) • Adapt strategy to CSF • Barriers • Lack of time, finances, and expertise8

  11. Adoption of Ecommerce Survey results • 100% of companies interviewed are connected • 100% have web presence • 100% using e-mail • 50% of those surveyed are using the website as a brochure only • 30% are using their website for e-commerce • 25% are using their website for customer support

  12. Adoption of Customer Solutions • Reasons for adoption • Higher standard for customer communication • Large firms acting like small firms • Can identify customers • What is enabling SMEs to be able to finally obtain affordable customer solutions? • Economic downturn • New solutions • Need for CRM packages eliminated • More efficient and economical • Benefits of new solutions • Ease of use • Unified view of customers7

  13. Adoption of Customer Solutions Survey results • How SME’s are relating to customers via the web • New customers can purchase services online • Real time sales and technical support through online java- based chat • Current/future customers can initiate e-mail contact • Facilitate new sales partners through partner programs • Provide password protected access to tools for customers • Enable existing customer to make changes to their account/services • Clients can update their account information or profile • Answer FAQ’s

  14. Adoption of Knowledge Management • Reasons for adoption • Can provide competitive advantage • Value creation • Benefits for a SME vs. large firm • Smaller structures • Intimate relationships within firm supports KM • Corporate mindset • Decision making control is centralized • Downfalls for a SME vs. large firm • Trying to externalize their KM • Mechanistic • Limited vocabulary • Less sympathetic at sharing knowledge • Less formalization and standardization • Time issue for management • Low specialization of employees9

  15. IT in the small business Case Study: Host Analytics Interview: Jim Eberlin, CEO • Host Analytics provides Business Performance Management Solutions which include: • Financial Budgeting and Planning, Forecasting Software • Sales Forecasting and Sales Budgeting Software • Financial Consolidation and Reporting Software • Balanced Scorecarding and Dashboarding • Employees – 35 in 3 locations • Locations: Texas, St. Louis and Technolgoy Center in India • Revenue – confidential, however would guess about $50M • IT Budget: 6% annual revenue is dedicated to paying expenses related to internal technology

  16. IT in the small business Host Analytics: Jim Eberlin, CEO • Customer Relationship Management system: use Salesforce.com and website analytic application • Architecture: Microsoft OS2000, 4 servers, 26 workstation, running XP • Website: is used as brochure, customer self-serve for information and registration for prospects • Customers: 5% of business is local, 80% national and 15% is international • Biggest technology Challenge: it’s that all of their expenses go to support sales, service and product development and they borrow from service for internal support- this works ok for now, but not for long – we will have to invest in internal infrastructure

  17. IT in the small business Host Analytics: Jim Eberlin, CEO • Customer Solutions • Focus on smaller companies • Make sure they are 100% satisfied • Save costs where necessary to make it affordable • Use their applications internally to manage customer data • Knowledge Management • Small team, therefore changes are easy to implement, corporate mentality – all employees are involved with decision process. New hires are company focused, not sales focused. • The company uses their Score carding and Dashboarding to help create Key Performance Indicators – this application helps manage the following areas: Financial, Customer, Internal Processes, Learning and Growth are

  18. Adoption of ERP • ERP for small businesses? • In the past ERP supplier ignored companies with under $100 million in sales10 • From 2002 to 2003 companies under $30 million increased ERP spending 14%11 • From 2002 to 2003 companies over $30 million ERP spending remained flat11 • Spending on ERP packages in Canada estimated to be $389 million by 200712

  19. Adoption of ERP • Reasons for adoption • Create competitive advantage13 • Improved efficiency • Value creation • Issues to consider • Find the right supplier14 • Define CSF’s14 • Determine how business processes must change14

  20. Adoption of ERP Case Study: Edge Manufacturing • Background Information • Employees: 60 • 2003 sales: approximately $7 million • 2003 profit: $30,000 • Spending on IT: 1.2%

  21. Adoption of ERP Case Study: Edge Manufacturing • Reasons for adoption • Better Inventory Control • Update product costing regularly • Streamline production planning • Reduce tribal knowledge • Reduce time to close month • Review of project • Scope of project • Problems/Issues • State of Project

  22. Adoption of ERP • Review of Best Practices in a SME mind frame12,13 • Secure the support of top management • Project leaders are veterans • Redesign business process before selecting • Change management goes hand-in-hand with project management • Do not underestimate the training, maintenance, and support costs • Insource the development, but buy in vendor expertise • Implement incrementally • Include business users on development team • A satisficing mindset prevails

  23. Summary • Areas Researched • Spending on IT • Adoption of IT • Adoption of Ecommerce • Adoption of Customer Solutions • Adoption of Knowledge Management • Adoption of ERP • Best Practices • Review of Variables • Conclusions

  24. Summary of Strategies used by SME’s • Maximize the use of the website to market, manage inquiries, take care of clients • When competing with the larger company, either collaborate with them as a resource OR serve the smaller companies who can’t afford their product • Utilize employees in several areas of the business and outsource what you don’t know – networking, web maintenance, telephone maintenance, etc. • Do invest in a contact management software that you can grow with and that allows you to track history of e-mails, correspondence, marketing, financials • Develop systems NOW • Read e-Myth Revisited by Michael Gerber

  25. Sources • Small Business Service (U.K.), “Small and Medium Enterprise (SME) – Definitions” http://www.sbs.gov.uk/default.php?page=/analytical/statistics/smedefs.php, viewed October 25, 2004. • Zimmermann, Jim, “2004 IT Spending Predictions Roundup” Bitpipe.com, http://wp.bitpipe.com/resource/org_973204426_74/Analyst_Views_Roundup__bitpipe.pdf, viewed October 28, 2004. • 3. U.S. Small Business Administration Office of Advocacy, “Small Business Expansions in Electronic Commerce” June 2000, p. 1-17, http://www.esa.doc.gov/pdf/DigitalAgePub.R1.pdf, viewed October 26, 2004. • Kraus, Bob, “SMB Spending Is Robust and Growing Into 2005” AMR Research,http://www.amrresearch.com/Content/View.asp?pmillid=17458&docid=11267, viewed October 27, 2004. • Martin, Lynn M., and Matlay, Harry., “Innovative use of the Internet in established small firms: The impact of knowledge management and organisational learning in accessing new opportunities” Qualitative Market Research, Vol. 6,  Iss. 1, 2003, p. 18-26. • Tetteh, Emmanuel, and Burn, Janice, “Global strategies for SMe-business: applying the SMALL framework”, Logistics Information Management, Vol. 14,  Iss. 1/2, 2001, p. 171-180. • O’Connell, Sean, “Leveling the playing field: Advanced customer service solutions for small and medium businesses”, Customer Inter@action Solutions, Vol. 21,  Iss. 11,  2003, p. 60-62. • Jeffcoate, Judith, Chappell, Caroline, and Feindt, Sylvie “Best practice in SME adoption of e-commerce” Benchmarking,Vol. 9,  Iss. 2, 2002, p. 122-132. • Wong, Kuan Yew, and Aspinwall, Elaine, “Characterizing knowledge management in the small business environment” Journal of Knowledge Management, Vol. 8, No. 3, 2004, p. 44-61. • Caldeira, Mario M., and Ward, John M., “Using resource-based theory to interpret the successful adoption and use of information systems and technology in manufacturing small and medium-sized enterprises” European Journal of Information Systems, Vol. 12, Iss. 2, 2003, p. 127-141.

  26. Sources • “Spending fastest in small business segment last year; increase expected:, MSI, July 2004, Vol. 22, Iss. 7, p. 29. • Solomon, Howard, “Mid-size enterprise resource management applications”, Computer Dealer News, September 12, 2003, Vol. 19, Iss. 12, p. 4. • Caldeira, Mario M., and Ward, John M., “Using resource-based theory to interpret the successful adoption and use of information systems and technology in manufacturing small and medium-sized enterprises” European Journal of Information Systems, Vol. 12, Iss. 2, 2003, p. 127-141. • “Production Management: No pain, no gain”, Metalworking Production, March 19, 2003, p. 22. • Subramanian, Ashok, and Lacity, Mary C., “Managing client/server implementations: today’s technology, yesterday’s lessons”, Journal of Information Technology, Vol. 12, 1997, p. 169-186. • Brown, Carol V., and Vessey, Iris, “Managing the next wave of enterprise systems: leveraging lessons from ERP”, MIS Quarterly Executive, Vol. 2, No. 1, March 2003, p. 65-77.

  27. Survey/Interview Sources • David Prouhet, CEO, Pronett Solutions, • interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.pronettsolutions.com • Ken Lauer, CEO, Rising Media, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.risingmedia.net • Tom Sears, CEO, Riverbend Capital Group, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.riverbendcapitalgroup.com • DJ Monzyk, Signs Now, www.signsnow.com • Mary Schanuel, CEO, Synergy Group, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.synergy-pr.com • Tom Jordan, CEO, US Net, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.us.net • Mark Giannotti, VP, Venmar Solutions, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.venmar.com • Craig McCallum, COO, Vistawiz, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.vistawiz.com • Toni Davis, Partner, Wetrak, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.wetrak.com • Shannon Brewer, CEO, Zarchivist, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.zarchivist.com • Rick Sartori, CFO, CDM Fantasy Sports, interview by e-mail by Angela Lieb October October 19-November 1, 2004, www.cdmfantasysports.com • Lynn Potts, Publisher, Concierge Preferred Magazine, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.conciergepreferred.com • John Pawlikowski, President USA, Deloro Stellite, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.stellite.com • Chris Shocklee, VP, Drumtech, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.drumtechus.com • Jim Campbell, Edge Manufacturing, www.edgemfg.com • Erman Ramos, CEO, Foundation Mortgage, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.foundationmortgagellc.com • Jim Eberlin, CEO, Host Analytics, interviewed in person November 1, 2004www.hostanalytics.com • Ken Cox, Director Internal Operations, Hostirian, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.hostirian.com • Donald Ficken, CEO, Leapfrog Performance Services, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.ileapfrog.com • OffiStart Business Centers, Angela Lieb, Founder, www.offistart.com

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