Welcome to the first edition of the TekEfficient SMB Tech Blog! Over the next six months and beyond, we will be exploring a variety of topics surrounding small businesses and technology. The intent will be to provide small businesses with resources, trends, best practices, and more as it relates to technology. It is our hope that this blog will help you not only raise awareness and maximize efficiency as it relates to technology, but also how to use it as a key element in the success of your business.
We are defining small business using Gartner’s employee and revenue counts, then added a “startup” classification.
- Small Business:
- Mid-Sized Business: <1,000 employees, <$1B in revenue
Our goal is to post during the second and fourth week of every month. Insights will be provided by our team of business technology specialists, suppliers and partners. If you would like to contribute to the story, please email firstname.lastname@example.org.
Now onto the episode 1.
5 Technology Challenges Facing Small Businesses in 2015
1 | The Cost of Technology Can Exclude Small Businesses from the Conversation
No shocker here. Technology can be really expensive and as the Internet of Things takes over, keeping up with the larger players in your space can become increasingly difficult without comparable resources. According to independent research firm Ipsos, 9 of 10 small business owners identify the costs of maintaining and upgrading technology as their most significant challenge. Also only 46% feel their budget allows them access to the same technology tools as a large company.
So, how much does the average company spend each year on IT? According to the 2015 Spiceworks IT Spending Survey, the average US IT budget is $303,879. Another research firm – Structure – recommends 4% to 6% of revenue to be spent on IT as a company matures its revenue streams. This may explain why so many small businesses feel as though the tech playing field is less than even.
What are small businesses spending money on according to Ipsos?
- Email (84%)
- Laptops (66%), desktop computers (62%)
- Smartphones (55%)
- Outsourced tech support (48%)
- Landline telephones (45%)
- Cell phones (43%)
- Cloud computing technologies (30%)
- Tablet devices (29%)
- Online storage (27%), File sharing (24%)
- Website development tools (21%)
- Video conferencing (15%)
- Online collaboration tools (12%)
- VoIP (11%)
- Development platforms (8%)
- Specific applications such as Office Suite, CRM, payment processing, and many others were not included in this list and are just another source of IT spend for growing businesses.
With cash flow at a premium, every dollar spent on technology should be well thought out. Small businesses without the bench strength to make informed decisions as it relates to specific or all technology needs should seek out a partner who can help. There is too much at stake to go in willy nilly.
Which leads us to the second technology challenge facing small businesses.
2 | Lack of IT Skill Set / IT Human Resource Constraints
As was referenced in challenge number one, nearly half of small businesses outsource most or all of their technology management and support. For those companies, IT human resources are limited by budget and the capabilities of the services provider of their choice. This can be a scary proposition as many non-technical business executives have no or little technical training, which can lead to overdependence on the recommendation and as a result possible wasted spend and technology that is not a proper fit.
For those who do bring IT in-house, the challenge of recruiting and retaining talent can be daunting. According to UPP.com, IT unemployment in 2014 ranged from 1% and did not exceed 2.5% in any state at the time of data collection. The overall unemployment rate ranged in excess of 7%.
To say IT talent is in demand would be the understatement of the decade. Not many are on the market and even if you land a gem, competing salaries from other companies in desperate need of your talented personnel is a constant worry.
According to CIO Magazine’s 2015 State of the CIO report, the top 5 skills shortages include big data/business intelligence, security and risk management, application development, mobile technologies, and enterprise architecture. Others include cloud architects and engineers, network engineers, and project management.
3 | Rapid Rate of Change & Proliferation Leading to Difficulty in Vetting/Understanding
There are more than 1.2 billion active websites at the time of this blog’s creation according to Internet Live Stats, up from 10 million as recent as 2000. Technology continues to change at an exponential pace making it nearly impossible for those outside of direct interaction to fully understand and vet real technology and services provider capabilities.
If you buy into Moore’s Law, the computing power of a CPU doubles every two years. IDC estimated that the world will generate 40 zettabytes (40 trillion gigabytes) of data by 2020. Somewhere, Michael J. Fox is saying, “What the heck is a zettabyte”?! That’s a lot of storage. Storage technology has changed and continues to improve as well. For those who have yet to experience a solid-state drive (SSD) as compared to the traditional spinning disk, you are in for a pleasant surprise.
Software iterations can bring new functionality to the same application multiple times per year. New development platforms have made the creation of complex applications easier than ever before, leading to an explosion of online tools such as collaboration, business intelligence, automation and monitoring, and many more. A software challenge can be identifying what features are present and which are missing. Does the product really work as advertised or is it just an optimized demo? Will the company even be around next year and if not, what happens to your data?
Software as a Service has changed the game for small businesses, but also made things more dangerous. When using SaaS CRM tools, companies entrust their proprietary lists and sensitive data to the software provider’s infrastructure. What happens to the data when the customer leaves? Is there a data destruction policy? And which of the 100s of CRM providers is the right one anyways?
Integrating applications is another challenge. You may have all of the features you like in one application, but if it doesn’t talk to your other application, than all of those features make no difference. While many applications are built with open API in 2015, there are still plenty with high fences around their applications or a “pay for play” integration business model where there are costs associated with blocks of API calls.
Translation: if your team is more than busy trying to keep up with the current pace of your business, it is unrealistic to think you will have the time to understand what technology is right for your company. They key – as in all of the challenges – is to find the right partner who can do this for you, while you focus on what you do best.
4 | Security & Compliance
While this doesn’t apply to all small businesses, for those who operate in the realm of government regulations and compliance it can be a serious challenge.
And, even though security and compliance may warrant their own category, they go hand-in-hand as one of the core pillars of compliance framework such as HIPAA and PCI is privacy and by direct extension the security of sensitive information.
At a high level, if your company in any way transacts and/or stores information that should not be made available to the public, you are probably governed by some kind of regulatory rules. For example, a government contractor working on a classified project, would be expected to protect all files associated with the project from being exposed publicly.
Law firms are governed by eDiscovery regulations that take this even further. In order to provide for full disclosure of all relevant case data, all digital copies must be available for recovery/distribution immediately upon request, which mandates special software that not only backs files up for long periods of time – but also offers an easy way to segment and recall the segment with a few clicks of a button.
The recent hack of healthcare giant Anthem is a chilling reminder to small businesses that even the largest of players in healthcare and beyond are susceptible to security breaches.
So, if the largest can’t keep their security and compliance up to date, how can small businesses with microscopic comparative budgets be expected to do any better? Security hardware adds huge costs and configuring security infrastructure takes skilled IT labor or partner personnel. Backup and DR mandates additional storage and compute resources and the backup software at a minimum to be able to create a repository to draw from if an emergency declared.
Then there is the cost, time, and follow-through associated with compliance audits.
For small businesses operating in a regulated industry, engaging experienced technology services partners and vendors with the proper compliance audit reports is critical to long-term success – even if IT is brought in-house. There is just too much at stake not to have every cog in the technology services delivery not be well-informed and experienced dealing with sensitive information.
5 | Scaling IT as the Company Grows
So, your new social monitoring software has hit its stride and droves of users from around the globe are lining up to leverage its innovative intelligence and automation tool sets. You now need to hire more people to help keep up with the demand. Spin up new infrastructure to store the new user data and process it efficiently. Your Google shared drive or free trial Dropbox account probably isn’t going to cut it any more.
Congratulations. And, welcome to the next phase of your business. It’s a challenging one, especially as it relates to technology.
Step one should be to go get a technology services consultant who has helped other small businesses do this before and one who relationships with and understanding of a wide-range of technologies that will help your business successfully evolve past the growth stage.
The choices you make now will dramatically affect cost, performance, integration, ease of use, security, elasticity, compatibility, speed to market, potential talent pools, and many other business variables related to IT. Thinking big picture from a technology perspective will help prevent being architected into a corner at your next stage and the pain and costs that go along with undoing what you decided at this stage.
The 30% of small businesses referenced in the “cost” section of this blog who are using cloud may be at a distinct advantage when it comes to scaling in a more cost-effective and operationally efficient way. Cloud offers a pay-as-you-go (PAYG) model that allows users to map IT infrastructure like servers and storage to needs as they present themselves, with the ability to scale up and down in real-time as demand warrants. You pay for what you need only and are in essence “never” out of resources when you need them most.
Cloud is still relatively new though and skilled cloud architects can be hard to find. Also, for companies in the security and compliance buckets, there is a degree of control that is lost with outsourcing to a cloud infrastructure provider. Their servers, storage, and data handling policies and procedures are standing between you and some pretty hefty fines should a breach occur.
Closing and Our Next SMB Tech Blog (Small Business Technology Checklist)
It takes a lot of courage to start your own business, especially in the highly competitive global economy that is 2015. We applaud those who have taken the leap and are pouring everything they have into creating the next great thing.
To summarize, there are numerous technology challenges that must be overcome for small businesses to succeed long-term. Getting some basic knowledge of technology if you are not a tech-driven company is a good idea. A better one, is to ensure you have highly capable partners and employees that can steer you in the right direction.
Now more than ever before, your technology team can make or break your success as a business.
In our next blog, we will look at a small business technology checklist for those considering a new business venture or those looking to see what tech addition is next.
If you would like to talk with TekEfficient about your company’s technology environment and the challenges you are facing, we would love to help and there is never a fee for our consultation.
Thank you for your time and best of luck to all small businesses out there!
~Patrick Etheridge – TekEfficient President & CEO