IT strategies at small firms seen differing from big companies

Computerworld - Small and medium-size businesses have much different IT strategies than larger enterprises.
Technology purchases by small-to-midsize businesses are often dominated by cash-flow issues. In addition, such businesses are more likely to tap value-added resellers and other vendor partners to fill technical skills gaps -- and they usually buy IT for immediate fixes to problems, according to analysts who spoke yesterday at The Yankee Group's 2003 SMB Forum in Waltham, Mass.
Small and medium-size businesses "expect ROI on technology purchases in six months or less," whereas larger companies typically have more time to realize a return on investment, said Helen Chan, an analyst at Boston-based Yankee Group. Because of cash-flow issues and small budgets, small and medium-size businesses "spend only on what they think they need."
That maps with Joe Trentacosta's experiences. Trentacosta, who joined Southern Maryland Electric Cooperative (SMECO) as CIO last year, agreed that there's a tendency among small and medium-size businesses to acquire technology only when a piece of equipment breaks or an upgrade is needed. He wasn't at the conference, but was interviewed later by Computerworld.
"When I came on board, applications were purchased and there was no strategic vision from the organization on how these applications would be pieced together to have one integrated system," he said.
SMECO has an IT staff of about 40 people. Half of those people manage the cooperative's PC, WAN and telecom operations under an outsourcing agreement with Lockheed Martin Information Technology. The other half are a mix of in-house staffers and independent contractors.
Unlike larger companies, which might have a broader range of in-house skills, SMECO has a small staff and a limited set of technical skills. That has pushed SMECO frequently to work with Bangalore, India-based Wipro Technologies to develop industry-specific applications, including a metered data repository written in J2EE and powered by an Oracle database.
"We look to Wipro because of their subject matter expertise in the utility industry, as well as their technical skills," said Trentacosta.
Vendors such as IBM, Microsoft Corp., Hewlett-Packard Co., Avaya Inc. and Verizon Communications are making an effort to capitalize on the IT needs of smaller businesses, because IT spending among large companies "has dried up," said Mike Lauricella, an analyst at Yankee Group.
But attendees and analysts at the forum admitted that it's much harder and more expensive to identify sales opportunities with the fragmented base of 5.6 million small and medium-size businesses located in the U.S. That could change again once IT spending begins to lift among enterprise buyers, althoughconference attendees were mixed on whether big vendors would retreat from the small-to-midsize-company market and refocus on bigger clients.
Said Lauricella, "It's more exciting to hunt for elephants."

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