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Advanced
How To Guide
Formulating an IT/eBusiness strategy for SMEs
1 . Introduction
SMEs
are making increasing use of computers, eBusiness and telecommunications, collectively
referred to as ICT (Information and Communications Technology) to achieve one
or more of the following three broad objectives: -
- Increased
competitiveness. For example, to save on staff and
other costs, to permit better informed management
decisions based on accurate and timely data, to
improve customer service through reduced stock-outs
or by providing better and quicker information,
faster turnaround time on orders etc.,
- To
provide particular capabilities specified by key customers.
- To
achieve new sales, primarily over the Internet . This is outside the scope of this
briefing note, which will focus on the previous two factors. Another document
in this series covers eBusiness Strategy.
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Capabilities
needed for online
trading with key customers
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The facilities needed to handle electronic ordering
by customers can vary dramatically as shown in
the following examples. One
large Irish customer posts orders for its smaller
suppliers to a website. (It interacts in a more
sophisticated way with larger
suppliers). The small suppliers log on using their
own individual password and access code and can
read their order. The only
ICT facilities needed to meet the specified demands
of this customer are a basic PC with Internet
access.
Dublin based Lake Communications, on the other
hand, faced far more stringent requirements from
British Telecom (BT), one of its major customers.
What BT wanted, and has now got, was a system
that works as follows. When BT receives an order
from one of its numerous small business or home
office customers for a Lake product, the BT sales
person enters it onto a computer. The order then
passes electronically to Lake and from there,
goes automatically to Lake's subcontract manufacturer
and delivery company. This electronic message
causes
production schedules and delivery plans to be
updated automatically in all of these
companies. The product is built to order and delivered
direct to the end user, without ever passing through
a BT warehouse or shop. All of the parties involved
can track the progress of any of the multitudinous
individual orders placed each day. Solutions such
as these not only require sophisticated
Internet related technology to link the companies
together, they also require powerful and expensive
internal IT capabilities to manage all aspects
of the
business.
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Customer
demands are likely to keep escalating and at least some
competitors are going to keep on investing in ICT (Information
and Communications Technology). Hence, to remain competitive
and retain customers, many SMEs are going to face a
requirement to continuously improve their IT/eBusiness
capability. This is particularly true of those subject
to international competition or dealing with large customers.
It will be increasingly important for SMEs to make the
right decisions about their ICT strategy because: -
- Not
all computerisation projects repay their cost and some do not work at all.
- While
technology is dropping in price, significant IT projects are still very expensive
in terms of cash, time and the disruption they can cause.
- Once
a company starts making substantial use of ICT, they become increasingly dependent
on it. Should the computer systems fail for any reason, the consequences can be
severe, far more severe than in the days, when they less dependent on these technologies.
Many
SMEs manage their IT in an ad-hoc fashion with different departments involved
in buying equipment as and when they need it. Each function may go through the
same learning process and devote an excessive amount of management/staff buying,
trouble shooting and installing equipment. The equipment installed may be incompatible
with that used by other departments. It is far better to have an overall medium
term strategy for the organisation as a whole.
However,
the appropriate strategy is not always obvious. The
available technologies and IT service providers are
changing rapidly. The ways in which competitors, suppliers
and customers use IT can all impact on a company's IT
choices and these factors are also undergoing rapid
change. The correct approach differs for each company
depending on their own individual business needs, current
methods of operating, IT skills and the resources available
for ICT (eBusiness, IT systems etc.).
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