21st Century Start-Ups invest wisely in IT

Many will remember the trends of the late 80s and early 90s, where the most important investments for successful businesses were seen as company cars and salubrious offices. Stories abound about businesses investing in “experts”, to check the feng shui of the office. All very well but not exactly key to drive productivity.

However, as we enter the 21st Century, it appears that small to medium sized businesses have realised that these investments will not help them become leaders of their respective industries. Recent research indicates that there has been a marked shift in attitudes and that small businesses are now turning to technological solutions to help them become successful.

Technological solutions do not just mean telephones and Internet connection; these businesses are now looking to high-performance advanced technologies that have a major impact on business connectivity and competitiveness. This means tools such as high speed servers, laptops with wireless Internet connectivity, PDAs and VoIP communications, which have traditionally been the mainstay of large enterprises, are now of growing importance within this sector.

Indeed, when asked how small businesses would spend a £20,000 windfall, the top choices are technologies that would help their business to grow, such as servers and computers for their staff. Only two percent admitted they would spend this money on company cars.

Small businesses in the UK are now more inclined to follow the same pragmatic approach to IT , that larger Enterprises adopted some time ago, if they are to achieve similar levels of success. hey know that they have to punch above their weight to remain competitive and now acknowledge that the use of advanced technologies is an effective way to do this.

We are now at a stage where small businesses are no longer confined to an office to execute their operations. Mobile working is now a reality with technologies such as virtual private networks and wireless communications now available for smaller businesses. Previously, these types of solutions were only available for large companies and small businesses that tried to adopt them struggled to find products that fitted their requirements. Vendors had tended to assume that small businesses were simply small enterprises and had little understanding of the challenges these companies might face.

However, now some vendors have realised that small businesses are not only ready for these types of technology, but also that they represent a vast opportunity for themselves. According to the DTI, 99% of businesses in the UK fall under the small business category equating to 4,100,000 companies. If even a small percentage of these begin looking towards using advanced technologies, vendors are going to have to start to produce versions of their products that have been adapted from the enterprise for the needs of a small business.

As well as wanting to implement these technologies, it should be pointed out that most small businesses are already making their way down this road, and are more advanced than many vendors may realise. Nearly all companies have a high speed Internet connection, and are increasingly integrating their voice communications onto their IP networks. This allows them to cut call costs and provide a portal to an electronic collaboration environment. Also, it is estimated that over half of businesses are now aware of the value of their data and the need to be able to retrieve it in the future, and so have invested in information storage systems.

One trend that has emerged that is rather startling is that, although there has been this sudden take-up, it is the smaller companies, which are newer to the market, that are making the biggest investments in technology. It is these companies that seem to have the better understanding of the potential of IT for their business for them. More established businesses, which have perhaps been trading for longer, seem to be struggling to understand the value that can be unlocked by implementing these technologies for maximum advantage. This could be attributed to the fact that they have been able to settle into their respective industries and have adopted the “If it’s not broken, don’t fix it” attitude.

However, these companies are now in danger of being overtaken in their sectors by the younger ones that are willing to invest in advanced technologies. The latter will be able to implement more effective working practices (such as mobile working and storage techniques) and it is likely that they will be able to close the gap on their more established counterparts, as technology will allow them to cut corners and reach their targets more efficiently.

This demonstrates that the more experienced small businesses may benefit from counsel from the vendors supplying the solutions highlighting that they need to adopt these solutions if they are going to remain competitive in their market places.

In conclusion, it is greatly encouraging to see British small businesses turning to technological solutions to further their standing in their sectors. It demonstrates that we are experiencing a very important transition period in attitudes towards the use of IT to gain market share. Gone are the days of company cars and feng shui as a priority and now is the time for these businesses to further their lifespan with the assistance of advanced technologies. The fact that small businesses are becoming more “tech-savvy” and increasing their return on investment as a result is welcome news for the small business sector, and the technology sector, which can only strengthen the state of the British economy.

This article was written by Bernadette Wightman, Head of SMB at Cisco.