IT: small firms will get better deals as an identifiable sector.
Normally, I skim read stuff from so-called think-tanks but one recent pamphlet was different. Small Firms On-Line, produced by the Institute for Public Policy Research, challenges some of the IT industry's basic assumptions about small firms' IT requirements. IT suppliers generally view the vast and largely untapped SME market as a kind of Bermuda Triangle where many initiatives have sunk without trace. But perhaps, contends the pamphlet, these suppliers have been looking at the market from the wrong perspective. First, most IT services and applications are focused on the needs of large companies and fail to address the real but often niche requirements of small companies. Small companies come in an extraordinary variety of organisational shapes, sizes and IT competency. But IT system suppliers find this lack of homogeneity difficult to cater for and often prefer easier-to-identify market segments and 'expert' customers.
Second, most small businesses still use IT predominantly for automating repetitive or routine administrative activities such as accounting and stock control. SMEs have not yet realised IT's potential for improving relations with customers, suppliers, potential customers, and even government. Most small companies still view IT in terms of 'money saved', rather than 'opportunity created' or 'relationships improved' (or even transformed). While small business buyers often fail to appreciate how IT can transform business processes and relationships, IT suppliers usually don't understand the specialist requirements of the smaller firms. So what needs to be done to change this situation?
Better information would certainly improve matters greatly. The paucity of information about how smaller firms use IT leads suppliers to market many inappropriate goods and services. If small firms want more appropriate products, they must first ensure that IT companies have a better understanding of what they need. This may require smaller companies to form more visible 'communities of interest'. In my experience, as soon as a market segment can be identified, IT products and services arise almost magically to meet the new requirements.
Smaller companies may need some form of government intervention and organisation to facilitate the formation of recognisable market sectors. But such communities of interest could become extremely powerful by offering IT suppliers a ready-made and identifiable market sector. These communities could take a variety of forms. They could be geographic, product-or service-led, provide a platform for shared knowledge and information diffusion, facilitate joint activities leading to shared costs (for example, research and development), and offer economies of scale through joint purchasing, for example. To make themselves heard, small companies need merely band together. The Government has already given this process a helping hand through its Local Support Centres based at Business Links. It may well be worth seeking them out.
Rob Wirszcyz is head of the Computer Services and Software Association.