FSB and Intellect say small firms need IT help

24th Apr 2013 | 19:02

FSB and Intellect say small firms need IT help

Report identifies the Digital Imperative

Most small businesses don't have IT specialists, so they don't get involved in talking about it on a public platform or make it clear as a group what they want from the industry and government. But they still need to exploit it or they'll lose out in their markets.

The Federation of Small Businesses (FSB) has begun to provide a voice, and taken a step to making it louder, working with IT industry association Intellect to produce a report on how smaller firms are spending their money and using technology.

Titled The Digital Imperative: Small Businesses, Technology and Growth, it makes use of a survey of 2,200 FSB members carried out in January, and shows that while they take IT seriously many still need more support in getting the benefits from it.

The key facts in the report show that the respondents' investment in IT averaged £3,500 per business for the past year, with figures of £2,844 for micro-businesses of less than 10 people, and more than £10,000 for those with between 21 and 50 staff.

Software leads spending

The main areas of spending are predictable, with between 40-50% having invested in software, laptops, the company website, printers or desktop computers. Others rating between 20-35% were smartphones, hardware, tablets and cloud services.

Most could see clear benefits from the investment, with more than 50% agreeing that new software and hardware had helped them in a range of areas: back office operations; targeting and communicating with potential customers; communicating with existing customers; and innovation within the business.

The figures for those seeing a direct return on investment in terms of profits and turnover were lower but still respectable: 36% for spending on hardware and 39% for software.

It is also encouraging that the great majority of businesses, 88%, spent money on IT last year. Of those that didn't 89% said it was because it wasn't needed or not a priority, but there were some who cited the cost, lack of skills to use the equipment or worries over security, and problems with their internet connections.

Causes for concern

The FSB and Intellect have raised the costs and skills factors as their main areas of concern.

At the launch event, the former prompted a question as to whether the IT industry is packaging and selling its products and services in a way that may not make it easy for smaller firms. Anthony Walker, Intellect's Deputy Director General, said there is anecdotal evidence to suggest that is the case.

"The very small micro businesses will work with consumer products quite effectively, but to upgrade they need something that gives it more of a service wrap," he said. "My sense is that there is something of a gap, and IT firms could do more to take small businesses on that journey to using something more appropriate for a business."

George Freeman MP, who takes an active interest in IT issues, said this is particularly relevant to the way the big telcos sell their services, and linked it to the slow roll out of high speed broadband networks into rural areas.

It reflects one of the findings in the report, that 25% of respondents said that if internet service providers offered better packages for small firms it would encourage them to invest in technology.

But more of the respondents called for support from tax write-downs and capital allowances, (42%), improved digital infrastructure in their areas (40%), and said they need to increase the IT skills among their staff (25%).

Skills picture

The report shows a mixed picture on IT skills in different sectors. Unsurprisingly, more than 80% of IT firms are confident that their staff have excellent skills, but the figure is below 50% for all other sectors, and goes as low 22% for transport and 20% for restaurants, bars and catering.

"The sheer complexity of the skills needed is often confusing," Anthony Walker said. "But there are also concerns about weak leadership and management in the area."

The fact that a lot of small firms see it as being complex emerged as a big issue. Most are interested in the benefits rather than technology for its own sake, but the IT industry often sells it as technology without making the potential benefits clear.

Mike Cherry, National Policy Chairman for the FSB, said that small businesses want something simple, presented to them without jargon so they can quickly understand what it can do.

It raises the question of who should be helping to demystify it all, and it seems that Intellect and the FSB are ready to be more active in this respect.

"We've all sat around pointing at each other for too long, and there is an ingrained habit of pointing at government," Walker said. "We're at the point where organisations like the FSB and Intellect should be doing something about it."

This is one of the recommendations in the report: that the two organisations volunteer to play a more active role. But it doesn't let the government off the hook completely, saying it should set up a small business and tech taskforce with the industry to develop some practical support initiatives, and says the Office of National Statistics should include micro businesses in its ICT Activity of UK Businesses survey.

It also calls on Local Enterprise Partnerships to prioritise technology in their plans for local growth.

The recommendations for small business are predictable: make technology a priority, invest wisely and prioritise IT skills. But it backs this up with some guidance such as asking employees what can help, asking customers what they want, developing and wish list of services, starting small and setting a budget for investment.

While the FSB and Intellect seem ready for a more active role, Walker made it clear that ultimately, small businesses have to take responsibility themselves.

"The simple application of technology can often be the most effective," he said. "Any company that sits tight and thinks it doesn't need to drive technology forward is deluding itself."

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