As Published In February 2005

Gaining Momentum
By Marta Bright

An expert's view: holistic approach is key to success for midsize companies investing in technology

Small and midsize businesses, notorious for being a few beats behind the band technologically, are discovering new and better ways to make innovation pay. In fact, research shows that rather than standing by and watching their larger competitors deploy the latest in business software and data management, the midlevel players are indeed moving ahead and investing in technology.

Alan Pelz-Sharpe, vice president of software and services at Ovum, a consulting firm with offices worldwide, lauds midsize companies' willingness to adopt technologies but cautions them to proceed with a clear plan—one firmly rooted in the reality of their specific needs. "The first step for midsize companies really isn't the technology; it's understanding what information they have, why they have it, why they're producing it, and why it's coming into the firm," Pelz-Sharpe explains. "We suggest that businesses conduct an audit to get a clear idea of what's business-critical and what isn't." He's emphatic about this phase, because rare is the business, regardless of its size, that isn't harboring substantial amounts of duplicate, contradictory, or just plain wrong information. "It's ultimately about getting to grips with information as a whole and understanding where all the pieces fit," he says.

Midsize Business Seeks Committed Relationship

Prophesies: Technology on the Horizon Smart Sensors Radio frequency identification (RFID) will be augmented with "smart sensor" technology for use in the homeland security, aerospace and defense, automotive, manufacturing, and medical industries. For example, Frost & Sullivan reports that an American designer of supply chain sensors has integrated radiation detectors with RFID technology to detect radiation sources. A developer of battery-operated sensors recently launched a gamma-radiation sensor. Because it requires little power, it can operate for long periods without maintenance. www.frost.com/prod/servlet/press-release.pag?docid=24870043 Wireless Docs U.S. healthcare providers will invest US$7 billion in wireless technology by 2010, according to the Information Technology Solution Providers Alliance. Mobile technology will connect doctors and nurses with patient scheduling and management systems, electronic medical records, e-prescription writers, and drug references. www.itspa.net/pressroom/press_detail.asp?id=109 Not Just for Computers John Gantz, IDC's chief research officer, predicts that over the next 10 years, the number of devices communicating over networks will grow tenfold—and most of them won't be computers. Instead, they will primarily be Web-enabled cell phones, internet phones, entertainment devices, and even toys and appliances. In a little more than a decade, these devices will include trillions of tags and sensors. www.idc.com/getdoc.jsp?containerId=pr2004_09_29_112523

Whether a company opts to purchase software outright or adopt a hosted model, one of the primary drivers for long-term success is commitment. "You're not buying a couple of CD-ROMs, putting software on, and taking it off a few minutes later," says Pelz-Sharpe. "These are long-term commitments, and companies need to be sure that a vendor shares a vision that they can go along with. We've become so fixated on technology for technology's sake that we've forgotten, or maybe we haven't noticed, that most software and hardware is pretty good these days. You want a partner you can trust and work with, and you need to understand what that vendor plans to be delivering to you in five years."

What about outsourcing? Pelz-Sharpe sees the value in it, but he cautions that companies should understand the consequences. "In the long term, there is not a lot of benefit to most small and medium-size businesses' running their own software and hardware, but outsourcing shouldn't be used as a desperate measure to control costs," he says. A company also has to be very clear that it is not appropriate to outsource anything that is core to its business. Citing customer service as an example, he says, "I would question the value in outsourcing that component, because it represents your first line of communication with your customers. From the customer perspective, service plays a large role in how they perceive and understand your business as a whole. Should that really be in the hands of somebody who doesn't understand your business? I think that's very questionable."

Don't Shut Me Out

Under the best of circumstances, employees don't rush to embrace changes in work processes, particularly in relationship to technology. In fact, in Pelz-Sharpe's nearly 20 years of observing organizational behavior, the fastest way to send people farther down the path of resistance is to keep them in the dark. "The seeds of resentment and resistance are formed early on in a project when management has a special project that nobody is supposed to know about," Pelz-Sharpe explains. "If you involve your employees in times of change at an early point, asking them for their feedback along the way, it will ease the process. You can't guarantee that people will be happy, but if you are honest and straight with them, they're far less likely to behave in a destructive way."

Arming employees with information pays dividends in other areas, including data security. "The greatest challenge is getting regular staff to actually understand the implications of security, making it an educational issue," says Pelz-Sharpe. He notes that the most secure companies in the world are the ones that don't allow anybody access to the internet. "Security holes are unwittingly opened up, because people simply don't understand that certain pop-up ads, surfing the Web, or registering at various Web sites and leaving an e-mail address behind here and there is really quite unhealthy for the business as a whole. At the end of the day, security really is everybody's issue."

A Holistic Approach

Most of all, Pelz-Sharpe advocates for an eyes-wide-open, holistic approach to technology. "There is a tendency to see technology as a stand-alone activity when, in reality, it isn't," he says. "I think we need to be moving to a point where businesses clearly understand that technology is simply a tool, and the elements of the business environment—be that the morale of the employees or the usability of the tools you give them—are all very much interconnected. When midsize companies start thinking about things more holistically, they're well positioned to move forward."