Startups and SMBs: Who's really in charge when it comes to tech decisions?

Thanks to the cloud and BYOD, startups and small businesses have access to more high-powered technologies than ever before to help them to compete more easily with their larger rivals.
Written by Steve Ranger, Global News Director

In many small businesses, making the initial decisions about technology is just one of the multitude of jobs that need to be done by the owner: according to one recent survey four out five small businesses do not employ any external IT support, preferring instead to manage this in-house.

At enterprises with less than 10 staff it's the business owner who will typically be responsible for making IT procurement decisions, regardless of whether it's their area of expertise or not, says Patrick Rusby, research analyst at Analysys Mason. "In such a situation, trusted advisors such as VARs and agents play an important role in helping the business owner make these decisions."

Sometimes this is not always the best approach, as not every business owner is also a tech genius: nearly one in five UK SME owners in a survey by Simply Business admitted they did not possess the basic IT skills needed for their business, and said this had has had a negative effect on their business — leaving them reluctant to invest.

In contrast, three-quarters of those who view themselves as knowledgeable about technology believe it gives them a competitive advantage.

But in most small organisations the business owner makes the tech decisions, and also considers themselves to have the best skills too do so, according to research by the UK's Federation of Small Businesses (FSB).

How do you rate the level of IT skills within your business?

  Excellent or Good Averge Poor or very poor Not applicable
Business Owner 58 percent 35 percent 7 percent 1 percent
Most competent IT employee 55 percent 20- percent 2 percent 23 percebt
Staff overall 37 percent 33 percent 8 percent 22 percent

Business owners think they know best when it comes to IT  (Source: FSB research)

Somewhat inevitably, according to the FSB research, IT companies have the highest levels of tech skills across the organisation overall, followed by those in financial services and real estate.

The overall level of IT skills tend to be worst in SMEs in hotels, restaurants and catering businesses, and transport — and a quarter of businesses said greater skill levels for themselves and their staff would help them invest more in technology.

Here's what is really worrying CIOs, right now

It's hard to make too many generalisations about the state of technology adoption in small business: after all, the IT requirements of a bakery will be significantly different to a startup working out of Silicon Roundabout. But there are some common trends around the technology decisions they will be making, says  Adam Thilthorpe director of professionalism at the BCS, The Chartered Institute for IT: "Because we live in a digital age, people are quite savvy — even if they're not from a technology background — with how they invest their money around infrastructure and some of the solutions that are available to them through the cloud. With regards to technology, those challenges come thick and fast at the beginning because it's hard to think of an organisation that doesn't rely on technology."

"Some of those behaviours, early on, set trends for how technology is dealt with once scale is happening," Thilthorpe added. For example, small businesses that get used to cloud-based applications when they are in startup mode are unlikely to feel a pressing need for on-premise kit later on.

Cloud and the SME

Most small businesses will find they have a significant requirement for technology very early in their lives — whether that's around the basics of providing email to staff, or setting up a transactional website, taking orders to or promoting their products and brand through social media. But that doesn't necessarily make hiring a tech specialist an immediate priority.

As the FSB report notes:

"The introduction of IT as a service into a small business is a cost efficient and powerful way for SMEs to punch above their weight...Best of all, many cloud based commodity services such as email, office software and data storage are all available on a per user cost. These services are usually offered with a higher degree of quality than owner operated services can achieve, because of the scale of the suppliers operations."

As such, for some small businesses the arrival of the cloud, and the advent of consumerisation and BYOD, is a huge boost, and helps put off the day when in-house IT staff are required, while allowing a small business to operate with the same efficiency as a much larger one.

Indeed, the existence of free or very cheap web-based tools has made it much easier for small businesses to get established, as the Simply Business research notes:

"The reluctance to invest in IT can be explained in part by the large number of SMEs and start-ups that are making the most of the wide variety of free resources available online...enterprising business owners are capitalising on free web-based software, such as WordPress, in order to create their own websites, build apps and implement cloud computing for many, or all, aspects of the business."

SME tech decision priorities

For ambitious small businesses, finding technology that supports growth, efficiency and security are the three top priorities, whereas for larger or more stable businesses those priorities might be shuffled with efficiency and security taking priority over growth.

This means that when an SME decides it's time to hire its first tech specialist, it won't be looking for someone who's happy hiding in the server room. The inward-looking IT manager is out: SMEs are looking for an someone with tech skills and entreprenuerial smarts too.

"As an enterprise grows, the ICT that was set up piecemeal for a micro business in a single office becomes over-complex and unsuitable, and new, more scalable systems are required. This will happen in most enterprises, and will often be the point at which a specialist ICT decision maker is brought in to the enterprise", says Rusby.

So what should a small business look for in an IT decision maker?

"They need to be enablers, and to have the end-user experience front of mind. Good ICT can enable employees to work more efficiently, save the business money and greatly simplify processes, and good ICT will aim for a good end-user experience," says Rusby.  "Put another way, an IT decision maker should say 'I'll see what I can do' rather than 'no' to end-users in the business — after all, the CEO is one of those end-users," he added.

As  Thilthorpe points out, with early hires — especially when it's expensive tech staff — the return on investment is key. "If you are hiring too specialist they won't have an impact on the wider organisation, so with technology professionals you are looking for someone who can quickly gauge what the organisation is trying to achieve and who can exploit their knowledge of tech and digital to meet that requirement."

That means these early hires need to be multi-skilled.

"They can put in place a strategy for networking and infrastructure, but also they see how the organisation can pivot and open up new markets — how e-commerce might be the solution or a certain architecture would allow them to grow a different business model," says Thilthorpe.  "All these things will have real impact on the bottom line."

But for a small business with little experience of hiring tech staff it can be hard to pinpoint exactly the skills needed. At this point, something like Sofia (Skills Framework For the Information Age) can help managers build the right job spec to attract the right candidates.

Thilthorpe points out that it's not just about delegating those decisions to the specialist: especially in growing organisations, it's down to the founder to help find the answers by doing the legwork and talking to peers.

"Sweat the network. Serendipity is key. Take the meetings, go meet with people. Seek advice and talk to people who have dealt with the same-scale issues."

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