Dashboard: August 2008

Strategic Technology

More-aggressive adopters of information technology tend to have higher annual revenues, recruit more new employees and expect growth of more than 20 percent in the next year, according to a recent study by New York-based AMI-Partners.

“What this shows is that if you are not figuring out how to use technology strategically, you will lag further behind your competition — whatever industry you are in,” says Laurie McCabe, vice president of SMB Insights and Business Solutions at AMI.

McCabe says AMI broke small and midsize business into four tiers: enterprise adopters, early adopters, value adopters and “needs help” adopters. Here’s a quick snapshot of each category:

• Enterprise adopters view IT as a strategic asset, much as larger companies do. IT is an integrated part of a company’s strategy, and it is used to drive growth. These companies make up the smallest portion (a bit more than 11 percent) of the SMB market.

• Early adopters embrace new IT solutions to enhance productivity, but lack the resources to support full-scale deployments. This group makes up about 20 percent of SMBs.

• Value adopters typically implement IT solutions after others have done so, with a sharp focus on costs. This group is the second largest tier, accounting for 34 percent of SMBs.

• “Needs help” adopters are the laggards who view technology merely as a support tool for business functions, not as a growth driver. This group shells out for IT only when absolutely necessary. They are the largest segment (roughly 37 percent) of the SMB universe.

When asked why more than one-third of the group was in the laggard category, McCabe says the sheer number of small businesses that are behind the technology curve skewed the data somewhat. However, her advice for companies in the “needs help” category is to study the habits of the enterprise adopters.

“It always makes sense to benchmark against the best,” McCabe concludes.

Virtualization: More Than Cost Cutting

A study on server virtualization by Forrester Research reports that cost cutting is no longer the main reason most SMBs virtualize their servers. The Forrester study found that 49 percent of SMBs cited disaster recovery and continuity of operations as very important reasons for adopting virtualization; 46 percent said improving server management and flexibility is also very important. Cutting hardware costs was third on the list, with 38 percent.

“SMBs have not been able to afford today’s expensive disaster recovery solutions and services that deliver high-end capabilities for critical applications,” says Frank Gillett, a Forrester analyst.

“The SMBs will be eager adopters of disaster recovery and business continuity capabilities built on x86 virtualization, which offers good-enough capabilities at a lower cost,” he concludes.

Gillett says virtualization’s popularity among SMBs is growing. The Forrester study found that 21 percent had already implemented server virtualization and 11 percent were planning to make the move in the next 12 months.

Video Power

Businesses that wonder if posting promotional videos on their websites will pay off should look closely at some recent research from FindLaw, the online legal information and marketing site.

In a survey of more than 300 consumers with legal needs, FindLaw reports that 58 percent say viewing a video on a law firm’s website increases the likelihood that they might contact the firm.

Joe Avila, director of marketing at FindLaw, says law firms that post videos see an increase of roughly 20 percent in customer contacts.
“Keep in mind that the people we surveyed are normal consumers, so if it could work for law firms it could work for other types of small and midsize businesses,” says Avila.

The FindLaw survey is based on responses from consumers who use the FindLaw site and other consumers recruited by FindLaw.

VoIP Perception Gap

Recent research by technology consulting firm Savatar finds that there’s a perception gap between SMBs that have deployed Voice over Internet Protocol systems versus those that have yet to purchase VoIP.

John Macario, president of Savatar, says SMBs that have purchased VoIP are pleased with the technology. Of those surveyed, 68 percent say VoIP is more cost effective, 84 percent say it offers more features and 84 percent say it is easier to manage.

While more than 50 percent of SMBs that have not deployed VoIP expect to do better on costs, 70 percent say an IP service will offer the same or fewer features than their current system; 81 percent say VoIP will be as hard or harder to manage; and 83 percent say that it will be as difficult or more difficult to set up.

“What we found is that there is a big education gap,” Macario explains. “Clearly VoIP is something SMBs see value in,” he says, but the service providers are not communicating that in a way SMBs understand, Macario adds.

Macario says more than 60 percent of SMBs purchase VoIP systems from value-added resellers. He says of the 14 percent who have already purchased a VoIP system, 95 percent either recommend or highly recommend VoIP.

Get Smart

More than 30 percent of small businesses are using smartphones, and 20 percent have plans to purchase a new one in the next year, according to research by New York-based AMI-Partners.

AMI estimates that small businesses — defined as companies with up to 99 employees — will spend $375 million on smartphones in the next five years.

“Small-business people are becoming more mobile. Many of them need to travel, meet with clients and stay in touch,” says Yedda Chew, an AMI analyst, who adds that low-cost devices such as the Palm Centro and BlackBerry Pearl have made smartphones more affordable.

Chew says that while most small-business people use a BlackBerry or a Palm device, competition from the iPhone is driving the more established providers to offer location-based and customer relationship management services.

False Sense of Security

Too many small and midsize businesses believe they are immune to cyberattacks, a perception that security company McAfee reports is increasingly dangerous.

Among 500 SMB IT managers surveyed, McAfee found that roughly one-third in the United States and Canada have been attacked by cybercriminals more than four times in the past three years. Of those that were attacked, 26 percent took at least one week to recover, a very long time particularly for small businesses that conduct sales over the web.

Here are some highlights from the report:

• Forty-four percent of SMBs think cybercrime is an issue only for larger organizations and believe it does not affect them.
• Fifty-two percent believe cybercriminals will not specifically attack them because they are not well known.
• Forty-five percent do not think they are a valuable target for cybercriminals.
• Forty-six percent do not think they could be a source of profit for cybercriminals.

McAfee reports that most SMBs fail to allocate an appropriate amount of time and resources to security. The research found that SMBs dedicate just one hour a week to proactive security measures, even though almost one in five (21 percent) acknowledged that a single attack could put them out of business.

McAfee says it plans to deliver products that are so easy to use that SMB IT managers will need to spend no more than an hour a day on security. The company says SMBs need to focus on strong malware protection; web protection; data security; and e-mail security. E-mail is especially important, according to McAfee, because 95 percent of e-mail traffic is spam and 25 percent of that spam is infected.