IT Strategies in IT Strategies in SMEsSMEs

Presented By Group 6: DJ Monzyk | Angela Lieb | James Campbell

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

What is a SME?What is a SME?

0

5

10

15

20

Number of companies

Survey Results

MicroSmallMediumLarge

Size of Company

• 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

SpendingSpending

30% of companies interviewed were manufacturingOn 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

SpendingSpendingSurvey results

• 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

Reasons for Adopting ITReasons for Adopting IT

• 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

Adoption of InternetAdoption of Internet

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.

Adoption of InternetAdoption of InternetSurvey 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

0%

10%

20%

30%

40%

50%

REVENUE

LocalNationalGlobal

SME StatisticsSME StatisticsSurvey results

0

20

40

60

80

100

% of companies doingbusiness globally

LocalNationalGlobal

• 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

Adoption of Ecommerce

Adoption of Ecommerce

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

Survey results

0

20

40

60

80

100Website

Brochure

Ecommerce

Customerservice

• 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

Adoption of Customer SolutionsAdoption of Customer Solutions

Adoption of Customer SolutionsAdoption of Customer Solutions

• 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

Survey results

• 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

Adoption of Knowledge Adoption of Knowledge ManagementManagement

IT in the small businessIT in the small business

• 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

Case Study: Host Analytics

Interview: 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

IT in the small businessHost 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

IT in the small businessHost Analytics: Jim Eberlin,

CEO

• 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

Adoption of ERPAdoption of ERP

• Reasons for adoptionCreate competitive advantage13

Improved efficiencyValue creation

• Issues to considerFind the right supplier14

Define CSF’s14

Determine how business processes must change14

Adoption of ERPAdoption of ERP

Adoption of ERPCase Study: Edge

Manufacturing

• Background Information– Employees: 60 – 2003 sales: approximately $7

million– 2003 profit: $30,000– Spending on IT: 1.2%

• Reasons for adoptionBetter Inventory ControlUpdate product costing regularlyStreamline production planningReduce tribal knowledgeReduce time to close month

• Review of projectScope of projectProblems/IssuesState of Project

Adoption of ERPAdoption of ERPCase Study: Edge

Manufacturing

• 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

Adoption of ERPAdoption of ERP

• Areas ResearchedSpending on ITAdoption of ITAdoption of EcommerceAdoption of Customer SolutionsAdoption of Knowledge ManagementAdoption of ERP

• Best PracticesReview of VariablesConclusions

SummarySummary

• 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

Summary of Strategies used by SME’s

1. 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.

2. 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. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. Jeffcoate, Judith, Chappell, Caroline, and Feindt, Sylvie “Best practice in SME adoption of e-commerce” Benchmarking, Vol. 9,  Iss. 2, 2002, p. 122-132.

9. 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.

10. 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.

SourcesSources

SourcesSources

11. “Spending fastest in small business segment last year; increase expected:, MSI, July 2004, Vol. 22, Iss. 7, p. 29.

12. Solomon, Howard, “Mid-size enterprise resource management applications”, Computer Dealer News, September 12, 2003, Vol. 19, Iss. 12, p. 4.

13. 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.

14. “Production Management: No pain, no gain”, Metalworking Production, March 19, 2003, p. 22.

15. 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.

16. 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.

1. Rick Sartori, CFO, CDM Fantasy Sports, interview by e-mail by Angela Lieb October October 19-November 1, 2004, www.cdmfantasysports.com

2. Lynn Potts, Publisher, Concierge Preferred Magazine, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.conciergepreferred.com

3. John Pawlikowski, President USA, Deloro Stellite, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.stellite.com

4. Chris Shocklee, VP, Drumtech, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.drumtechus.com

5. Jim Campbell, Edge Manufacturing, www.edgemfg.com

6. Erman Ramos, CEO, Foundation Mortgage, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.foundationmortgagellc.com

7. Jim Eberlin, CEO, Host Analytics, interviewed in person November 1, 2004www.hostanalytics.com

8. Ken Cox, Director Internal Operations, Hostirian, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.hostirian.com

9. Donald Ficken, CEO, Leapfrog Performance Services, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.ileapfrog.com

10. OffiStart Business Centers, Angela Lieb, Founder, www.offistart.com

11. David Prouhet, CEO, Pronett Solutions, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.pronettsolutions.com

12. Ken Lauer, CEO, Rising Media, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.risingmedia.net

13. Tom Sears, CEO, Riverbend Capital Group, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.riverbendcapitalgroup.com

14. DJ Monzyk, Signs Now, www.signsnow.com15. Mary Schanuel, CEO, Synergy Group, interview

by e-mail by Angela Lieb October October 19-November 1, 2004 www.synergy-pr.com

16. Tom Jordan, CEO, US Net, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.us.net

17. Mark Giannotti, VP, Venmar Solutions, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.venmar.com

18. Craig McCallum, COO, Vistawiz, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.vistawiz.com

19. Toni Davis, Partner, Wetrak, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.wetrak.com

20. Shannon Brewer, CEO, Zarchivist, interview by e-mail by Angela Lieb October October 19-November 1, 2004 www.zarchivist.com

Survey/Interview SourcesSurvey/Interview Sources