Roger Trapp: Start-ups should not be reluctant to invest in ICT

To judge from all the attention given to technology and innovation, it would appear that just about all small and medium-sized businesses (SMEs) are based in technology. As Richard Parkes Cordock points out in his book, Business Upgrade (reviewed on page 8) - such businesses tend to be by their very nature more innovative than larger ones, there are many small companies that are responsible for great technological advances.

In another new book, Designing Interactions by Bill Moggridge, many of the innovations featured stemmed from scientists working alone or in small teams. Some were in large organisations but others were in garage start-ups, continuing the heritage of that granddaddy of such organisations, Hewlett-Packard. Google started life in a room at Stanford University, while RIM came from nowhere to develop the Blackberry.

Even Apple is a smallish company by computer industry standards. But it has transformed itself from a company with machines loved by the cognoscenti, but dwarfed by the opposition, to a cutting edge and leading player in online music distribution.

Such stories are thrilling to hear, but they belie the experience of many SMEs when it comes to technology. According to a recent report by the independent forecasting think-tank the Centre for Future Studies, many of the UK's small businesses are falling behind as technology progresses. By failing to recognise the need for the effective management and use of their information and communications technology (ICT) many small businesses are unable to meet customer demands and expectations. In a world of e-business and converged networks this problem could have grave consequences.

Among the other findings are, firstly, SMEs are missing out on the opportunities that technology presents - being small is not a disadvantage if the business's ICT capabilities are right.

Secondly, the technology skills, services and products that a business employs are critical to its growth and success as well helping to ensure swift and competent customer service levels.

Thirdly, owner-managers are unable to implement solutions on their own, because they do not have the ICT management skills to fully recognise the problem or the cure.

Fourthly, there is no single source of trusted information or advice for them to go to about ICT management and services.

Finally, there are an estimated 4.3 million SMEs in the UK, accounting for half of the UK's turnover and employment, and smaller businesses are now generating twice as many jobs as large employers and are providing real growth in the graduate job market. So the challenges facing them are not insignificant in terms of the economy at large.

The report, sponsored by BT Business, shows that SMEs do understand the importance that technology plays, with 86 per cent acknowledging that it is pivotal to their long-term success. But while they are doing their best to embrace technology, they are having difficulty managing it and identifying where their business is falling down.

The problem stems from owner-managers being specialists in their industry, but not in ICT management, leaving them unable to adequately assess the competency of their employees to optimise their hardware and applications.

This is further compounded by a lack of resources, adds the report. They are unable to employ a dedicated ICT professional and instead are over-reliant on friends to provide advice. What is clear is that essential skills in managing, purchasing and operating ICT are missing. SMEs lack a single and trusted source to advise them or provide an extension to their in-house team to manage through change and crisis.

Some of the larger technology providers are starting to realise that there is a ready market for their goods outside the world's biggest companies. But they still have a lot to do to convince would-be customers among the smaller businesses. It is only when they really understand how smaller businesses work that they will be able to address such problems.

If the times are tough for smaller businesses, they are also challenging for those seeking to serve them. It looks like an opportunity for another one of those start-up visionaries.