Jul 15 2010

The Evolution of Small Business IT

SMB leaders discuss how their IT strategies keep pace as their companies grow.

While the IT role is somewhat informal at their companies, technology decisions are critical to the business, say Taylor Mitchell (left) of TSS Radio and Gregory Ehrendreich of the Midwest Energy Efficiency Alliance.

More than one-fifth of all U.S. companies are considered small businesses — based on federal tax returns — yet, there is nothing small about their impact on the business world.

It’s easy to picture a slew of entrepreneurs working out of their homes and having just one or two employees. But in reality, many small businesses operate on a much larger scale and have significant technology needs.

These needs were addressed recently at the SB Immersion Summit hosted by CDW, which included a panel of CEOs and IT professionals from several small businesses ranging in size from 1 to 19, 20 to 49 and 50 to 99 employees. The one message that was consistent throughout the summit: They may all be considered small businesses, but their approach to IT varies considerably. 

Will the Real IT Pro Please Stand Up?

When Gregory Ehrendreich, research analyst for Midwest Energy Efficiency Alliance (MEEA) in Chicago, started at the 12-employee nonprofit organization (now grown to 18), there was no one person dedicated to working on IT. Leaders at the organization quickly recognized the need for someone to help manage their IT needs and allowed Ehrendreich to take on the role.

“I have no formal IT training, but was dubbed the ‘Alpha geek’ and started doing IT for the office,” says Ehrendreich, who spends half his time doing research and the other half handling the organization’s technology needs.

According to those on the panel, for many companies with fewer than 20 employees, technology can be an afterthought. Technology purchases are often done ad-hoc, and there usually isn’t an IT professional within the organization.

Taylor Mitchell, CEO of Chicago-based TSS Radio, says this is true of his company. “Big purchases are taken care of by my partner,” he says. Tending to the business is so time consuming that “time together is at a premium between the two of us. When we met regularly [to discuss the business], it was taking time away from our work.”

Although the IT role may be informal, these companies recognize the value technology can play in running a business. “It’s always important to make things more efficient,” says Mitchell.  “We have to buy new technology to support new employees,” he adds. “We put off other purchases before technology because most technology is a necessity for business.”

In the coming months, Ehrendreich plans to add equipment for new employees that MEEA expects to hire, and is preparing for an office move to accommodate future increases in staffing. “I have a passion for clean energy,” he says. “Energy efficiency is recession proof.”  

A Little Outside Help

Travis Powers (left), co-founder of human resources firm Escendent, outsources all his IT, while IT consultant Ken Sadler was recently hired for a project by the Chicago Children’s Advocacy Center.

As the size of a company grows, so does the role IT plays in the business. “We can’t afford to fail to plan for IT,” says Travis Powers, co-founder of Escendent, a human resources management firm with nearly 50 employees based in Chicago. “Transactional buying doesn’t work,” he adds.

Although IT is increasingly important to businesses with 20 to 49 employees, many companies don’t feel the need — or have the budget for — a full-time IT professional. Powers’ company completely outsources its IT. “We have IT experts who help with strategic planning, but the day-to-day work is outsourced.”

The Chicago Children’s Advocacy Center agrees with this philosophy. It hired Ken Sadler, an IT consultant, to work on the company’s IT needs more than a year ago.

When Sadler first arrived, the server room was in shambles. “You would need spaghetti tongs to get cables connected in the server room,” he says. The computers were 2002 models, and everything was running on an outdated server. This was problematic for several reasons, but as Sadler states, “There are two types of hard drives: Those that have failed and those that will fail.”

Sadler worked diligently to clean up the server room, replace the old server and block employees from visiting sites such as Pandora and iTunes, which puts further stress on the network.

In the near future, Sadler would like to upgrade the network with gigabit switches and replace the T1 connection. He also wants to look into an offsite, non-tape backup solution. “When tapes fail, you’re done,” he says.

At Escendent, Powers supports the idea of tapping experts in all areas of IT to make sure the company has its bases covered. As the company expands, Powers still thinks outsourcing is the best path for the business. But he is considering hiring someone to manage the outsourced IT professionals.

In terms of budget, Powers says that his company can’t afford to fail its customers by not planning adequately. This includes planning for technology.

Big Time

Alex Campbell (left) of Vibes Media believes in hiring the right technology person and letting him or her do the job, while Kim Russell-Ilario of Time Out Chicago magazine says she works within a defined budget every year for managers who understand technology.

In a small business that has 50 to 99 employees, there is more need for a structured approach to IT from within the company.

At Time Out Chicago magazine, Technology Manager Kim Russell-Ilario knows what her budget is every year and develops projects based on what can be accomplished with the money she is given. She reports directly to the president and has another IT person working with her.

“I’m lucky enough to be involved with a group of managers who understand technology,” Russell-Ilario says of her organizational support. “I don’t have to sell the concept of why they need a backup system or new servers.”

Vibes Media, a mobile marketing company based in Chicago, fulfills its IT needs by utilizing a team of technology professionals. “I believe in hiring the right person and letting them do the job,” says CEO Alex Campbell. “I expect my IT director and his team to be business focused. How can they save the company money?”

Russell-Ilario agrees with that statement. Even though she talks with executives about technology strategies and must get their approval for big-ticket items, she has the freedom to spend the IT budget in whatever way she thinks will benefit the company. “If you’re not aligning with the business, you’re just there to make sure computers are plugged in.”

At Vibes Media, the staff evaluates function in addition to price. Campbell says the company refreshes technology on a regular basis because, “I would rather have you using new equipment and being efficient than not having it.”