Technology Strategy: How The Best Small Businesses Differ From The Rest

Dharmesh Shah
Dharmesh Shah



I came across an interesting survey recently of 300 small businesses (with 10-100 employees).  The survey attempted to determine what the successful small businesses had that their less successful counterparts didn’t.  What made a small business more likely to be successful?  When the report cited “the ability to strategically use technology” as one of the five critical success factors, the report got my attention.  After all, the theme of the Small Business 2.0 blog is “Using Technology To Succeed”.
Here are a few points on technology from the report that I found particularly interesting, along with some of my comments:
  1. Select technologies that help you measure the effectiveness of key business processes.

Larger businesses have known this for a while and have been using key metrics as a way to identify problems and opportunities for a while now.  The challenge for small businesses has been that getting the right data about the business via a loosely connected set of IT systems is complicated and expensive.  Most small businesses do not know key pieces of information such as what their client acquisition cost is and what their return on investment is for things like marketing, sales and IT.
  1. Trade feature depth for technologies that work together so processes and information flow smoothly and flexibly.  The ability for technologies to work together well is more important than having the deepest feature set in some particular area.

I could not agree more.  Using “best of breed” IT solutions works for big businesses, because they have the resources to actually integrate everything together and make the various systems “talk” to each other.  Having spent over a decade in the enterprise software industry, I can tell you that a large part of the IT costs in most big businesses is not developing applications, but actually integrating the various applications that they have.  This integration is necessary for the right types of information to be available.  For small businesses, this cost of integration (which can often be 70% of the total cost of a project) is often untenable.  For very small businesses (less than 50 employees), there is often no dedicated IT resource who has the responsibility of making all the IT systems work well together.  As such, most small businesses are usually better off picking a set of applications that are “pre-integrated”, even if it means sacrificing some features and capabilities.  The reality is that most small businesses wouldn’t be able to leverage a large portion of features of the “best of breed” systems anyways.
  1. Leverage the Internet.  Information technologies should leverage the Internet so your people can work anywhere and get easy access.

Certainly, the ability to collaborate over the Internet is an important piece of value that small businesses can get from the Internet.  However, I think there is much more to be had there.  The value of the Internet can be extended outside of the internal small business team by using it to create and nurture client relationships.  Marketing, sales and service delivery can all benefit from the Internet.

The full report in PDF form can be found here:  “ Five Secrets Of High Performing Organizations ”. 

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