Written by: 10/2/2008 2:54 PM
An overwhelming percentage of business owners felt that the Internet had already had an impact on their business and information technologies could improve sales or productivity. The web benefits factor quantified this sentiment as both realized and potential benefit. The following chart shows eReadiness versus perceived benefits. The size of each circle shows the relative size of each group.
· In general, all businesses rated medium or lower on both the degree of eReadiness and for IT benefits
· The e-mailers, the smallest group, were an outlier with a higher rate of eReadiness but the lowest perceived benefit. One interpretation: they didn’t value web technology and felt they collaborated as much as needed through the use of e-mail.
· The largest group, the collaborative business, perceived the most benefit from information technology.
Why don’t businesses appear at the higher end of the eReadiness and benefits scales? Information technologies appear to be most important to those companies that require more collaboration; however, the high priority objective of most businesses was growing their business and increasing revenue. Only a small percentage were interested in putting core business processes online or increasing productivity. In addition, the webless and e‑commerce groups were less collaborative due to their business—a single proprietor dealing with a limited number of customers, business partners, vendors, and discrete business facilities. For those business owners, the opportunities to leverage more efficiency from current operations through information technology were more limited.
I have not been able to locate another study for comparison. Lacking more current information, I need to rely on anecdotal experience from clients and prospects to hypothesize how the chart in this section might change after four years. The webless and emailers would still exist. With the popularity of gmail, the emailers group may have even increased in size. I would also expect the e-commerce group to be much larger. More businesses start up as an online businesses. Conversely, I would expect the webless group to be smaller. Finally, the most movement movement would probably occur with the Collaboration group, both on eReadiness and benefits dimensions.
Even if a business wanted to accelerate eReadiness and realize more benefits, it faces two barriers: 1) budgetary and personnel constraints and 2) limited economies of scale. Also, other business owners may be unaware of the information technology solutions that can be used to help them meet their goals. (One fifth of survey respondents did not know how information technology could help them, including those who felt it could somehow improve sales and productivity.)
Cash flow and personnel constraints. Smaller organizations are unable to realize the benefits of e-business technologies, because internally developed solutions become too cost and resource prohibitive. In addition, they may not have the technological expertise to implement a solution.
To address cash flow constraints, off-the-shelf software (an e-commerce shopping cart, for example) offers low upfront costs and contracted services provide a pay-as-you-go fee structure. With low-cost software or hardware, a hidden cost exists—the time and effort of internal personnel learning the software and then developing and maintaining the solution when they could be focused on other business activities. A contracted service, whether it is an IT consultant or service technician or a web-based Software-as-a-Service (SaaS) application, may have a higher overall cost than a low-priced software package, but the cost can be distributed across monthly payments through a retainer or subscription. Under this pricing model benefits are paid for as they are realized.
Limited Economies of Scale. This is logical, since many surveyed businesses were newly formed or had been in business for a short time. As a new or small business, it is already working within a restrained budget, and the scale of the business may still be too small to yield great cost or productivity improvements. In addition, processes may not be established enough to make these improvements measurable.
Once an office begins growing in size (more than 5 employees), the up front investments in information technology investments can begin to pay off.
Advances in Internet technologies allowed larger companies to differentiate themselves and improve their operations through innovative use of information technologies. To remain competitive, small businesses can identify inefficient transactions, such as handling a customer order, use affordable Internet technology to automate the transaction and capture data that can improve business decision-making. This imperative will become increasingly important as larger web‑enabled companies, delivering products and services at a lower cost with the speed and flexibility of an agile organization, enter the small to mid-sized markets as part of their growth strategy.
Since 2004, consumers and businesses have become increasingly more sophisticated users of information technology. Advances provide more opportunity for smaller businesses to bump up the eReadiness of their technical infrastructure. Whether it is a single laptop and a single Internet connection or an internal network interfacing with the Internet cloud, the technical infrastructure supporting your business’s operations must be maintained. How does Michigan and its business climate stack up in its ability to maintain the technical infrastructure that support eReadiness?
Each year, the National Science Board publishes Science and Engineering Indicators. (You can locate it online by googling Science and Engineering Indicators 2008.) One indicator that they monitor is computer specialists. This indicator shows the extent a state’s workforce makes use of specialists with advanced computer training. On this metric Michigan lands in the middle of the pack, increasing from 2004. Continuing to build Michigan’s technical infrastructure will be critical to our success in an information economy.
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