IT Best Practicesin the SME

Sean Patterson for Access VG

Goals of the study•Understand the demands of information technology in

the small business environment

•Determine information technology best practices

•Develop a metric for determining ROI success

•Understand how off-the-shelf solutions, that include technology from Apple Inc., can benefit a Small-Medium Enterprise (SME)

Biggest problems with IT for the small business

•Extraordinary capital expenditures

•Training costs - both real and opportunity costs

•Lack of IT-specific staff

•Misconception about benefits to developing IT best practices

•Short-term outlook

•Long-term outlook

IT as a capital expenditure• Leasing,: a good option for SMEs, with typical leases being approximately 36 months

• The maximum section 179 deduction you can elect for qualified property placed in service in 2008 has increased to $250,000.

• Computer software: use the straight line method over 36 months

• Hardware depreciated over a 5-year recovery period.

• 50% special depreciation allowance if the computer meets certain conditions.

• Web site expenditures: U.S. IRS has yet to issue formal guidance on the treatment of web site development costs. Informal internal guidance suggests that companies treat those costs like an item of software and depreciate them over three years. Taxpayers who pay large amounts to develop sophisticated sites have been allocating their costs to items such as software development (currently deductible like research and development costs) using the Code Section 179 first-year expensing election and even as currently deductible advertising expenses.

Challenges of IT as a capital expense

•Technology in a service business tends to be a significant startup expense.

•Off-the-shelf components tend to be far cheaper than custom equipment/applications, but can lead to interoperability issues.

• Implementing IT correction upfront is always cheaper than correcting it later.

Handling training costs

•Training should not be the first expense to be cut during hard economic times – must remain a strategic priority.

•Training should be continuous throughout the year, but business should be sure to emphasize training opportunities during off-peak periods in the business cycle.

Tracking ROI: sunk costs + opportunity costs = total expensesMetric: Success = training benefit > total expenses

Minimizing staffing costs•Setting a higher expectations for new employees, e.g.

younger workers tend to be more tech-savvy

•Keep systems simple to avoid excessive breakdowns and need to hire IT staff full-time.

•Outsource, outsource, outsource – web, help desk, and application development should all be done by a third party – qualified IT professionals can easily add $100K to annual expenses. Outsourcing costs occur on an as-needed basis.

Misconceptions of IT best practices

• “Common practices” – the new lingo – “best practices” don’t really exist

•Toolkits are necessary to adapt to each business need

•Difficult to measure best practices

• ITIL 3.0 – a library of IT best practices

• “Productizing” the technology allows you to “sell” the value proposition of a technology to the organization.

Bearing Point’s Frederic Veron suggests:

Dealing with IT problem areas•Cathedral Approach

•Most IT solutions tend to require some degree of customization, so no one-size-fits-all approach can be applied.

• IT remains a secondary or tertiary priority for SMEs.

• IT tends to be approached from top-down, not bottom-up, which can limit user buy-in and innovation – transparency may be the answer to this concern.

ADKAR in minimizing BP implementation failure

Asking the question: how do we change?

Awareness

Desire

Knowledge

Ability

Reinforcement

Short-term technology challenges in the SME

•Huge credit challenges limiting access to capital necessary to implement IT strategies

•Challenge to get buy-in in traditionally low-tech companies

•Move toward Open-Sourced Solutions (OSS)

Long-term technology challenges in the SME

•Future will require further utilities development in developing internet infrastructure – e.g. WiFi everywhere, 3G/4G mobile phones, fiber optics in homes and businesses

•New avenues for management, marketing, and distribution

•Web 2.0 will continue development as infrastructure development increases.

•Applications are becoming increasingly key, but hardware costs will decrease.

Apple in business

Source: ITIC Corp Survey, January 2009

Apple advantages•Security better than Windows, OS updates more frequent

•Growing network of retail stores to provide consulting, support, repair

•Low total-cost-of-ownership (TCO); best-in-class resale value

•Easier and faster software configuration

•Strong UNIX open-source development community

Layers of IT in the SMEMac OS

- Advanced search - Backup (Time Machine)- Intel/Windows compatible

Applications- Mail/Entourage/iCal/Address Bk -iLife/iWork

- Excel/Word/PowerPoint Web

- Google Collaboration - MobileMe - PM tools

- Google Messaging - Google Video - Accounting

Security within the SME•Security concerns vary by business (e.g. financial institutions

(SarbOx) and health organizations (HIPAA) require very different approaches to data security)

•Security requires a proactive, rather than reactive approach

- Administrative: spending resources to ensure security

- Technical: regular OS updates, password changes, network protection

- Physical: ensuring documents and equipment are always secure

Mac desktop applications in the SME

Microsoft Office (Excel, Word, PowerPoint)

Apple Mail (integration with iCal and Address Book)

iCal (calendar serving on Mac OS X)

Address Book (web services in development)

Web browsers – pages are changing from static in nature to more dynamic and more application-based. E.g. Google’s Chrome browser (uses WebKit) and Apple’s iPhone with Safari

iChat (AIM/Jabber)

Graphics/web editors (PhotoShop/Dreamweaver)

Mac OS X Server in the SMEFile sharing

Wiki services - user collaboration/project management

Central software update

Backup services

Fast index-based searching for documents on a server

Address Book

Mail (desktop & web)

Calendaring

Smartphones in the SME•Trend in mobile telephony:

desktop on your phone á la BlackBerry and Apple iPhone

•Management-specific apps for phones, e.g. Salesforce for iPhone/BB and LightSpeed POS software for iPhone

3 Words: Backup, Backup, Backup...

•$2000+ for a full data recovery

•All hard drives fail. It is a question of WHEN, not IF.

•Backing up has never been easier for a small business user. Large and expensive backup server: NOT REQUIRED!!!

Web 2.0 in the SME

Advantages DisadvantagesScalability key to success in 2.0 Less control over rollout

Platform independent Frequent upgrades = steeper learning curves, more time spent retraining

Low IT cost

Google’s place in the SMEThough Google Messaging is increasingly useful to SMEs, the real

benefit to growing enterprises is in Google’s Collaboration applications...

Messaging Docs (sharing) Video

✔✔

• Updates/storage by 3rd party• Ability to customize domains

• Increasing integration with mobile phones

• Inexpensive• Active online sharing/work

anywhere• Recoverability of old drafts

• Presentation through the web• Compatible with many file formats

(.xls, .doc, .ppt, etc)• Updates/storage by 3rd party

• Off-site storage• Simple GUI• Worldwide

sharing

✘✘ •Lack of offline capability

• Challenging sans web access• Lacks desktop integration

• No editing capabilities• Bandwidth

issues

Investigation: Salesforce.com

Web Web adsadsSEOSEO

Marketing the SME on the web

Web SiteWeb Site

Q&ASean Patterson

s.patterson@mac.com