SMES Must Confront IT Challenges to Compete

Many of the UK’s small businesses are falling behind the competition as technology progresses, according to a new comprehensive report launched today and developed for BT Business by the Centre for Future Studies, an independent forecasting think-tank.

By failing to recognise the need for the effective management and use of their IT and Communications (IT&C) many small businesses are unable to meet customer demands and expectations. In a world of e-business and converged networks the report shows that business as usual could result in business failure.

This major study lifts the lid on the IT skills challenges SMEs face now and in the future, and confirms that:

– SMEs are missing out on the opportunities that technology presents – being small is not a disadvantage if the business’s IT&C capabilities are right.
– The technology skills, services and products that a business employs are critical to its growth and success as well helping to ensure swift and competent customer service levels.
– Owner-managers are unable to implement solutions on their own, because they don’t have the IT management skills to fully recognise the problem or the cure.
– There is no single source of trusted information or advice for them to go to about IT&C management and services.

The report shows that SMEs do understand the importance that technology plays in their business with 86 per cent acknowledging that technology is pivotal to their long term success. But whilst they are doing their best to embrace technology they are having difficulty managing it and ultimately identifying where their business is falling down.

The problem stems from owner-managers being specialists in their industry, but not in IT management, leaving them unable to adequately assess their own and the competency of their employees to optimise their IT&C hardware and applications.
Commenting on the findings, Phil Purssey, Sales Director for the Indirect Channel at BT Business, said: “SMEs understand that technology can benefit their business and they are ready to invest. This research underlines however just how much they rely on external advice and consultancy when it comes to IT. This creates a huge opportunity for the channel to become that trusted source of support and to help customers plan, buy and manage essential communications services.

“We urge resellers to face head on the challenge of expanding their customers’ knowledge base, developing their capabilities and ultimately creating greater demand and new revenue streams for the future.”

According to the research, the majority of owner-managers do not feel that they are missing the necessary expertise. Four out of five (79 per cent) do not think their business lacks IT skills and only nine per cent are dissatisfied with the technical skills of their staff. However, more in-depth interviews found that up to half of small businesses have deficiencies in their IT knowledge and skills and, as a result, are unable to manage IT&C technologies to optimise the benefits for their business.

This is further compounded by a lack of resources. They are unable to employ a dedicated IT&C professional and instead are over-reliant on family and friends to provide IT advice. What is clear is that, across the board, essential skills in managing, purchasing and operating IT&C are missing to a greater or lesser degree. SMEs lack a single and trusted source to advise them or provide an extension to their in-house team to manage through change and crisis.

Being able to get the most out of IT and services through good management is not just about gaining or maintaining competitive advantage, it is about keeping up with the demands and expectations of the customer, which now make IT skills mandatory: in particular, the rise of e-business and the growth in demand for online trading services from both customers and suppliers.

Dr Frank Shaw, Foresight director, Centre for Future Studies, said: “Consumer expectations are increasing as they experience a better level of service. All of this is driving IT investment and SMEs need to deliver on service whilst also accommodating changing work patterns which meet their employees’ expectations. Innovation is the key if SMEs want to compete in today’s domestic and world markets.”

The report is a comprehensive analysis of the capabilities of small businesses and how they match up to consumer expectations. With an estimated 4.3 million SMEs in the UK, accounting for half of the UK’s turnover and employment, smaller businesses are now generating twice as many jobs as large employers and are providing real growth in the graduate job market.