A survey by CDW recently found three key lessons about the use of technology in high growth rate SMBs.

1) High growth rate firms integrate technology in the company’s strategic plan
2) Owners/leaders of high growth rate firms understand technology
3) High growth rate firms leverage their technology to the fullest

To me, the first concept is a no-brainer. Any company starting out today that doesn’t view technology as a strategic differentiator (or at the very least as a requirement to remain competitive) is going to struggle with growth. Give your employees the bare minimum resources they need to keep up with their jobs, and they’ll get the bare minimum done. Simple as that.

It’s also easily understandable that technophile business owners will use technology more and therefore grow faster than their technophobe competitors. I do see examples of technologically challenged SMB owners still doing well. But the owner who “gets it” is always on the lookout for new ways to apply technology to drive their growth. It’s just part of their DNA.

But, in my experience, the last point is key. I see so many businesses that purchase technology and then fail to take full advantage of its capabilities. Software modules go unused because they don’t handle a process exactly as the company wants to do it. Old manual efforts continue to exist even though the same process is now managed in the software. Spreadsheets continue to get manually compiled instead of automated with data from the new system.

If you’re going spend the money on the technology, you might as well maximize your return. Don’t just rely on your vendors to help you. Their primary purpose is to sell. If they sell Point of Sale systems, they’re not going to look for ways to streamline your back-office operations.

Use the staffing model I described over the past couple days. Find yourself a Project Manager who can help you over the long term. Identify inefficiencies. Drive them out of your organization. Repeat.

Over the past few days (Part 1 and Part 2), I’ve had a couple posts related to hiring IT employees for your SMB. I’m convinced that SMBs shouldn’t do it. Instead, they should opt to use a Managed Service Provider to handle their network and desktop support, and tap into contract developers for applications needs.

If you’re a business owner, you may wonder how the heck you’re going to manage all these technology folks running around your business?

The key to solving this problem is to recognize that there aren’t just 2 sides to IT – Infrastructure and Applications. There is a third component – Management. Besides executive level roles, IT employees in this category have titles such as Business Analyst and Project Manager. These people have the ability to speak both technology and business. They can identify opportunities to use technology to improve the business, and then they can mobilize and coordinate the appropriate resources to make that change happen. Your Project Manager becomes the liaison to the MSP and as many development resources as you need.

So let’s look at one way you can put it all together. To make it simple, let’s say you have 50 employees/PCs and you were going to hire 1 full time IT employee at $20/hour. Let’s also assume that you’re not philosophically against outsourcing some work to low-cost rural or offshore locations as long as the quality is good.

Alright, so $82k is not less than $67k. But consider the cost of turnover. Figure 100% of compensation every 4 years or so. What do service disruptions cost when systems go down during your single IT employee’s vacation? How productive can your employee really be when faced with frequent interruptions to fix printer jams? How quickly will your employee’s skills fall behind under the crush of keeping up with day to day tasks?

Under the alternative approach, you get a team comprised of highly skilled specialists in all areas of IT.

Your PCs and network are constantly monitored, maintained, and backed up. Help desk services are always available. Most MSPs even provide some on-site time every week to handle things that can’t be done remotely.

Your development resources can be scaled up or down as needed. If you don’t have projects going on now, you don’t pay for them. If you need more help, you can add hours without adding another full time employee.

And your Project Manager keeps track of all outstanding issues, helps prioritize projects, coordinates development and delivery of new applications, and helps identify areas where you can use technology to improve operations.

As your company grows, you will eventually hire internal IT staff. Start with bringing your Project Manager on board full time. Then bring on developers as you require enough of a specific skill to justify a full time specialist.

With this approach, you’ll be off to a great start using information technology strategically.

Apple makes great computers. I have an iMac at home, and I’d probably get another one if I needed to.

Apple in the SMB market though? I can’t find much in John Welch’s article to disagree with, but it still doesn’t feel right to me. Maybe it’s my years of experience doing MS Office automation. I’m all for abolishing Access, but Excel is awesome! Maybe I’m frustrated that I still can’t figure out all the shortcut keys after years of using a Mac. Maybe I’m just brainwashed?

Specifically, I’m not sure I buy the vendor lock-in argument. Sure, there’s a downside to all the choice in the PC market. But once you have an installed base of 100 Macs, aren’t you actually more locked in than if you had 100 PCs? And if Apple’s not meant for an enterprise environment, what happens when your company outgrows Apple? If upgrading from XP to Vista is tough, can you imagine the nightmare of migrating 1000 users from OS X to Windows?

I guess the bottom line is that the things listed by Mr. Welch in his article are just too abstract for the average SMB. There may be benefits to a more standards based environment, but are they relevant and significant enough for a small business owner to spend 3x more than they would for a PC? Macs may have a chance in the SMB market, but you won’t see it until they compete on price.

What do you think?

In my last post, I stated that small to mid-size businesses do more harm than good by hiring IT employees. Yet, technology is a critical component of any modern company’s growth plans. So what’s a business owner to do?

First, understand the difference between Infrastructure and Applications.

Infrastructure = Servers, desktop PCs, file storage, email, backups, printers, network security, etc.

Applications = Packaged software, custom built applications, databases, reporting, your website, etc.

For the infrastructure component, find a Managed Services Provider (MSP) with a local presence. They do this work for many companies so they know what they’re doing and they make sure their staff keeps up with latest developments. Make the investments they recommend. They’ll keep your servers and desktops running and your network secure; they can’t do their work if you won’t follow best practices. Trust your MSP to help you get this foundation right and focus your energy on the stuff that truly has the ability to help your business grow.

In the applications area, identify consultants that do software development. You may actually need to find several resources, because software development, database work, web development, and MS Office programming can be very different animals. Depending on your personal preferences and business philosophies, you can find large organizations with a variety of development skills in-house, use a roster of local contractors, or find developers across the globe who can do the work at much lower rates than you’d find in the US. (Sourcing will definitely be a future topic in this forum!) Make sure the people you identify have the bandwidth to either give you a set number of hours per week or jump in quickly when you have needs.

In both areas, be certain to talk to client references. For MSPs, you’re looking for pro-active support, availability during your business hours, published service levels with penalties for failure to comply, and regular reporting on incidents and performance.

In the applications area, you’re looking for consultants who can deliver a usable solution in a timely manner that doesn’t require ongoing support. Understanding user requirements is key, so they have to be good at communicating with all levels of your organization. And be concerned if the consultant doesn’t insist on end-user participation in testing the application before it is delivered.

To be sure, if your company’s product is technology, then this approach may not be right for you. But most other companies shouldn’t seriously consider hiring internal IT resources until they are sufficiently large enough to maintain expert level IT staffs.

There’s still one more missing piece. Who gets to be in charge of managing all these different vendor relationships? That’s the subject of my next post. Tomorrow, I’ll put the final piece of the puzzle in place and show how this can be more cost effective than hiring an internal IT resource.

Read Part 3

Here’s the most important rule for a small business to follow when hiring their first IT employee:

Don’t do it!

As a company grows, one person is usually technically more adept than the others and becomes the de facto “computer person”. When the job of supporting the group becomes too much for that one person, the owners decide that they will hire someone specifically for that role. This sounds reasonable, but in fact hampers the company’s growth.

How?

When they start hiring for the position the owners don’t even really know what skills they need in house. So they look for someone who can do it all.

Owner: Do you have networking experience?

Applicant: Yes, I’m an expert in Windows 2003 and Linux.

Owner: Have you done a lot of desktop support?

Applicant: Yep. I’ve got 3 years experience supporting Windows Vista.

Owner: What about programming?

Applicant: I’ve taken classes in C# and Java.

Owner: Ever done any website development?

Applicant: Yes, I built a website for my uncle using PHP, XML, ASP.NET, and AJAX.

Owner: You’re hired!

In all my years of IT work, I’ve met many people who claim to do all of the above. But they certainly don’t do them very well. In fact, it’s safe to say that the more broadly skilled an IT employee claims to be, the less their actual skill set is.

Think about it this way…Would you hire a brain surgeon that also did heart and knee surgery?

What the company ends up getting is someone who is not an expert in any one thing, pieces together solutions based on the little they know in each area, and generally just keeps things running.

Of course, the IT person seems like a godsend because they make things work when they break. But the makeshift solutions don’t scale. The IT person ends up stressed out just trying to keep things going. Break, fix, break, fix, etc. The company decides to hire a second IT person. They obviously need someone who can do all the things the first employee can so they can support each other’s work. And the cycle repeats.

And the owners wonder why they have all these darn computers anyway.

There’s a better way to do this. A way to grow, put solid technology solutions in place, and not spend any more than it costs to hire the Jack-of-all-trades. And I’ll describe it in my next post!

Read Part 2 and Part 3