Embracing innovation

It is a function of necessity that small and medium-sized companies have become leaders in innovation. While traditionally such companies may have been deemed technology-trend followers rather than early adopters, they are now increasingly embracing a range of cutting-edge technologies to fulfil not simply tactical ends, but broad-ranging strategic business ambitions. However, with limited resources and little margin for error, they have to act creatively, applying new products and techniques with care.

Recent research by the Institute of Directors (IoD) shows that directors of small and mid-sized companies consistently link the use of IT to higher productivity levels – a connection many larger, inflexible organisations would find difficult to defend. Perhaps more revealingly, however, the research finds that, while companies of all sizes regard information and communications technology as a key strategic tool in achieving business goals, this was particularly the case for smaller mid-market organisations in the £12 million to £50 million turnover range.

In 90% of cases, this strategic goal is chiefly growth, with three-quarters of those growth-focused companies believing that IT will prove critical in serving this end. Revealingly, a paltry 7% regard cost reduction as technology’s primary function, while only 4% hope it will, first and foremost, save time – two of the pillars around which IT has historically made its business case.

Part of the landscape

The IoD’s results indicate that the relationship between IT, scale and competitiveness has been firmly established in the collective consciousness of the M business sector, and that medium businesses are now thinking big where technology is concerned. But exactly which tools do M businesses believe will enable them to realise this grand vision?

The IoD’s Business and Technology Report 2007 finds that, among mid-sized businesses, document management, company-wide mobility, desktop conferencing and integrated communications are regarded as the top four technology-enabled approaches. These are followed closely by business intelligence and collaboration tools.

In terms of driving future development, however, the top four technologies were very different: knowledge management systems, intelligent agents (such as those used in data mining software), virtual communities and social networking. Even grid computing, a technology predominantly deployed so far by the very largest and richest blue-chips, made it onto the roadmap at number six.

Few observers can now accuse the medium business community of being unadventurous. The question is whether an intrepid but resource-constrained business can avoid falling disastrously flat on its face when venturing into such uncharted technological territories as virtual communities and corporate social networking.

Professor Jim Norton, senior policy adviser for e-business and e-government at the IoD and an external board member of the UK Parliament’s Office of Science and Technology (which compiled the research), argues that, above all, such projects must be led by business change, not implemented for the technology group’s sake. As such, they should have buy-in from the chief executive, who in many medium-sized companies enjoys adequate visibility into IT-driven business projects to get involved effectively. “Business change is the responsibility of the CEO and the board; it must not be dumped on the IT director,” advises Norton.

Furthermore, Norton says, medium businesses have the advantage over larger rivals of not being so set in their ways; executives are able to make changes to business practices and processes to ensure the success of projects. Consequently, he adds, business managers must be regarded as “equal partners” in projects, with control over a large proportion of the budget. In any organisation, Norton argues, “there is no such thing as an IT project”, just business projects. But nowhere is this truer than in the mid-sized business.


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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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