Six smart ways to grow small business IT

The enterprise has a lot to teach small businesses -- like these six lessons (some painfully learned) from the big boys on the technology block

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Obviously, a small business can't always afford a dedicated IT manager, so it's fair to ask when the ROI on hiring one makes sense. "I'd say the break-even point is in the $30 [million] to $50 million revenue range," says Baschab. "Good IT governance can save 20% of expenditures. So if you do the math, once you get to that point, you've saved enough to pay for your IT manager. That's when IT governance will start to pay for itself."

Take care of the basics

Part of knowing how to allocate your IT budget is understanding what has to work. "Apply Maslow's hierarchy of needs to IT," says Baschab. "The lowest level of the pyramid, the physiological needs like food and water -- that's your operations and infrastructure. It only applies to a few areas -- backup, security, disaster recovery, reliability of Internet connection and e-mail -- but they're the ones that'll kill you if they fail."

Some of these needs are like the heat in your house: They operate in the background and you don't notice them until they fail. Others are like electricity: You use them every day, and they have to work when you call on them. Baschab points out that your needs as a small company aren't going to be different in terms of sophistication as those of a big one, just different in scale.

"Your firewall needs to be just as secure as the one at a Fortune 100 company," he says. "They may have hundreds of network devices, and maybe you only have two or three, but you must be just as buttoned up as they are."

As further examples of areas in which even a small business has to meet the same standards as a large corporation, Karcher cites security and privacy. Corporations may have more to lose from security breakdowns, but small businesses also have to understand the laws that are in place and the risks that may arise from honest mistakes.

This is particularly true for companies doing business internationally. "There are many different security requirements to navigate in other countries," Karcher says, "and many new privacy regulations to comply with globally."

Then there are the public aspects of IT, which have to work like the telephone, says Hoover -- that is to say, users expect them to be there every single time, just as every time they pick up a telephone they get a dial tone. This is the expectation your staff has for e-mail, printers, fax machines, instant messaging, teleconferencing, backup and recovery and so on.

Large corporations give high priority to ensuring that the IT components that keep the business running smoothly are as reliable as possible, and so should you. That means redundant Internet connectivity and backup plans for e-mail going down, for example.

Beyond that, make sure you know what is core to your business -- what only you can fully understand and manage, advises Hoover. Own these IT assets and manage them from inside your IT organization. For example, a marketing communications firm would want to own the IT equipment and software that are used to create designs for advertising or marketing for their clients, but they may decide to outsource the billing system used to send invoices to their clients. Creating design is a core competency, but when it comes to creating invoices, someone else can likely do it better.

And also know what you don't have to take care of yourself. Help desk services, monitoring server uptime, disaster recovery, some application support and maintenance -- all of these may be candidates for outsourcing to a provider that has already developed efficient operating models.

"It's like plumbing," Karcher explains. "You don't have an in-house plumber; you get one when you need one."

Choose your vendors wisely

"Enterprise IT organizations have learned that suppliers of IT hardware, software and services are key to their success," says Hoover. "These relationships must be managed well, and partnerships of trust with clear expectations must be established."

Part of managing your vendor relationships is knowing when your current vendors no longer serve your needs. "As you grow from really small to small to medium, you need to know when to graduate to a new vendor," advises Brewer. "People tend to feel comfortable working with companies their own size, but they'll outgrow their vendor without realizing it."

When that happens, he says, a business runs the risk of losing out on scale-pricing advantages, and not getting the appropriate level of expertise and help." Brewer's rule of thumb: "You should always be slightly mismatched with your vendors."

Hoover agrees: "There are a lot of choices out there. Get one that's just a little bigger than your organization so you can learn from them."

Before you can learn, you need to be clear about your expectations. Don't assume that a vendor understands your needs. "Buyers often keep their needs close to the vest," says Karcher, "but that may not be in your best interests. Be open and clear with your vendor about your present state, your attitudes and your priorities. You may end up spending more money, but you'll get a superior solution that delivers greater value and lower risk. The best relationships are always mutually beneficial."

Keep learning

And finally, follow big companies' example by continuing your company's IT education as the firm grows. Get in the know about what other companies in your field are doing, says Hoover.

Large corporations have learned the benefit of meeting with noncompetitive IT teams from other companies to gain insights and hear about experiences with technology. IT groups and industry organizations can also be a source of valuable information -- Hoover points to the Data Management Association, the Society for Information Management and user groups for any business systems you might be using.

And when that doesn't work, there's always the Web. "Unlike the old days," says Hoover, "there's enough information online that your research can be on a par with that of large companies. The Net is a big equalizer -- you can know as much as the big boys."

If all this sounds like a lot to absorb, especially when you're in the middle of trying to grow your company, remember that you don't have to do everything at once. Pay attention to the basic rules -- think strategically, and stay at least a little bit ahead of where your company is technologically right now.

And on those days when you're feeling really small, keep in mind that you have some advantages over the big guys. As Hoover says, "Large enterprise IT organizations do not have all the answers; they make mistakes every day that SMBs would more easily avoid."

Small and midsize companies have fewer layers of management, which enables top brass to have more intimate knowledge of what goes on in IT. They can see the whole business environment at once and make decisions accordingly. And they are nimbler than corporations and often able to adopt new technology quicker and more easily.

By combining the advantages of being a small business with the lessons of enterprise IT, you can make sure your growing business is dressed for success, no matter what its size.

Jake Widman is freelance writer in San Francisco.

Copyright © 2008 IDG Communications, Inc.

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