Information Technology (IT) has revolutionized business conduct throughout the world. And while IT’s impact may have been more pronounced among global firms than more localized small businesses, the latter also clearly feel its effects. Those effects have presented small-business owners opportunities as well as problems. One class of problem is the sales and marketing adjustments due to the current IT-shaped competitive milieu. Another is the actual purchase and operation of the technology itself. Given the new competitive climate, the latter should precede the former. As a result, this issue of the National Small Poll centers on IT Issues.
Eighty-eight (88) percent of small employers report that they have a stand-alone computer(s) or a computer(s) connected to a network system in their business (Q#1A). However, 39 percent of those who do not have a computer in the business have one at home that they use for business purposes (Q#1A3). Thus, about 91 percent of the entire small, employing business population has a computer that it utilizes. That figure is marginally low compared to other surveys in this series, though it is likely the result of survey sampling error rather than elimination of such technology.
Forty-one (41) of small, employing businesses computers located in their firms claim to have both stand-alone and networked computers (Q#1A1). Another 30 percent have just stand-alones while 26 percent have only a networked system(s) (Q#1A2). The majority (52%) of small, employing businesses with a computer use a combination of laptops and desktops (Q#1A3). Meanwhile, 45 percent have desktops exclusively and 3 percent laptops exclusively.
Not every small, employing business with at least one computer (including those using a computer at home for business purposes) is connected to the Internet. While 90 percent of them have one or more e-mail addresses, 10 percent do not (Q#1B). Similarly, 87 percent of that group are connected to the Internet by high-speed (Q#1C). Seventy-two (72) percent of small, employing businesses that are not connected by high-speed use a dial-up connection (Q#1C1). As a result, about 95 percent of small, employing businesses using computers are connected to the Internet.
Other Internet related technologies are exploited less frequently. For example, 20 percent of small, employing businesses with a business computer use an Internet telephone facility (Q#1D). Thirty-two (32) percent use mobile brand-band (Q#1E).
Web sites are increasingly common among small businesses. Fifty-seven (57) percent of small, employing businesses with a business computer have one (Q#1F). That translates into just over half (52%) of the small employer population. Sixteen (16) percent of those sites are capable of conducting e-commerce, that is, accept orders over the Internet and let customers pay with a credit card through a secure connection (Q#1F1). Most (58%) of those sites were developed outside the firm (Q#1F3). Still, one in three (33%) developed it internally and another 6 percent helped an outside vendor with the task. About 20 percent or one in five small employers, therefore, had the technological sophistication in-house (and the time) to either build a Web site or help do so. Two-thirds (67%) use a Web hosting company for their site while 29 percent host their own site (Q#1F2).
IT requires installation and maintenance of both software and hardware. Possession of this technology implies that small employers must have people available with the requisite technical skills to do such things as install new hardware and/or software, repair the old, fix network problems, manage a Web site, etc. Small employers find most of those skills outside the firm.
Seventeen (17) percent of small, employing businesses with business-based computers have at least one employee who works at least half-time on IT or IT-related matters (Q#2). Larger, small businesses, that is, those employing 20 or more people, are twice as likely (31%) to have at least one than smaller, small businesses, that is, those employing nine or fewer (15%). Of the small, employing businesses employing someone for this purpose, 63 percent have a single person and another 13 percent have just two (Q#2a). However, 13 percent more, or less than 2 percent of all small, employing businesses, have four or more such personnel. Likely, most of those businesses are in an IT-related industry.
The most expertise on a firm’s computers typically rests with the owner or manager. Forty-four (44) percent think that they have the most expertise (Q#3). That phenomenon is particularly prevalent in the smallest firms (49%), that is, those employing nine of fewer people, compared to the largest (21%), that is, those employing 20 or more. An employee within the firm is the expert in 32 percent of small, employing firms. An employee as the expert is more frequent in larger (46%) than smaller (30%), small businesses. An outside services provider is the firm’s expert in 17 percent of cases.
Just 21 percent of small employers personally feel “very comfortable” with IT issues, problems, opportunities, etc. (Q#4). Another 45 percent personally feel “comfortable” with them. That leaves 34 percent who are uncomfortable with them, 8 percent of which are very uncomfortable. Of those who identify themselves as the firm’s expert in their computers, 76 percent are also very comfortable or comfortable with the technology.
A strong and direct relationship appears between comfort with IT and an owner’s age. The younger the owner, the more likely he or she will be comfortable with IT and vice versa. For example, 57 percent of those 55 and over are comfortable with IT while 43 percent are uncomfortable. Meanwhile, 72 percent of small employers between 35 and 54 are comfortable with 28 percent uncomfortable. There are relatively few cases on owners under 35 (n=51). Yet, 84 percent of them are comfortable with IT and 16 are not. The age relationship implies that over time the small-employer population will become increasingly familiar with IT problems and opportunities.
Thirty-two (32) percent of employing, small businesses using a computer(s) have a contract with an outside service provider or consulting firm to provide it on-going IT services (Q#8). However, firms employing 20 or more people do so in 59 percent of cases. Most of those contracts are long-standing. Fifty-eight (58) percent report that they have been in effect (including contract extensions) three years or more (Q#8b) compared to 11 percent who had them for a year or less.
The most frequent manner that these owners used to initially find their provider was a referral. Thirty-six (36) percent used a referral (Q#8a). Another important source was an IT purchase. The services contract effectively came as part of the purchase in 29 percent of cases. Six percent found their provider through the Yellow pages or some type of Internet directory. However, 20 percent located theirs from another source while 8 percent who could not remember.
Forty-five (45) percent of the 67 percent who do not have a services contract (30 percent of all small, employing firms with a computer) have a non-contractual relationship with a services provider (Q#9). Half (50%) found their provider through a referral (Q#9a). Another 9 percent located theirs through the Yellow Pages or a similar Web-based directory. Twenty-eight (28) percent located theirs in other ways.
Small business IT problems are associated with software and with hardware. Forty-nine (49) percent of small employers report their computer problems exist among both in equal measure (Q#7). However, the remainder more often lean toward software as the culprit. Thirty-one (31) percent cite software as their principle problem, including 12 percent who think it creates a lot more problems than hardware. In contrast, just 12 percent identify hardware as the primary offender, including 5 percent who think it creates a lot more problems.
Small employers are also likely to consider new purchases and maintenance of existing product as equal problems. Forty-six (46) percent claim that they create equal problems (Q#7). Meanwhile, 27 percent give maintenance and operation the nod as the bigger problem with 17 percent giving it to new purchases. For reference purposes, 8 percent of small employers with a business computer consider installation and testing of new hardware and software a very serious problem and another 18 percent consider it a somewhat serious problem (Q#5H). Thus, in the scheme of things, hardware or software installation is not one of the more pressing IT issues.
The specific problem that small employers most frequently cite as “very serious” is associated with hardware crashes and lost data. Twenty-four (24) percent of small employers using computers in their business cite computer hardware crashes as a very serious problem and another 16 percent cite it as somewhat serious (Q#5L). At the same time, 22 percent report backup and data loss as a very serious problem (Q#5F). Fifteen (15) percent more term it as a somewhat serious problem. The two difficulties are related, at least in the minds of the owners who find at least one of them troublesome. About two of three who cite one of these two problems as being very serious cite the other as very serious as well. Similarly, about 45 percent who cite one the two as somewhat serious cite the other identically.
Two other problems that appear in tandem are getting timely or prompt service and updating security. It is not clear that the inability to get timely service is principally for security matters or that the two are simply common problems encountered by the same people. Regardless, 20 percent think that getting timely or prompt service is a very serious problem (Q#5I.). Twenty-nine (29) percent of larger, small employers, that is, those employing 20 or more people, who frequently use outside service providers as will be noted later, report very serious problems getting timely and/or prompt service. Another 16 percent of small employers with computers think the problem is somewhat serious.
Getting timely or prompt service is not the equivalent of lacking a place to ask basic IT-related questions. They are different problems. While 17 percent did think that no place to ask basic IT questions is a somewhat serious problem, just 9 percent think it is very serious (Q#5C).
Updating security is a very serious problem for 17 percent and somewhat serious for another 18 percent (Q#5E). Again, owners of larger, small firms are more likely to assess the problem as very serious (24%) compared to owners of smaller, small firms (16%). There are a number of potential reasons for the gap along the size dimension, including the importance attributed to information contained on computers and awareness of security issues.
Eighteen (18) percent of small employers using computers for business purposes report that filtering spam is a very serious problem for them and another 26 percent report filtering spam is a somewhat serious problem (Q#5D). In fact, spam becomes small businesses most serious IT problem when adding the “very serious” and “serious” responses. It is also a reason that some firms do not have e-mail addresses.
E-mail downtime (Q#5A) and a slow Internet connection (Q#5B) fall in the mid-range of IT problem evaluations. Twelve (12) of small employers evaluate each of the two as very serious. However, 20 percent evaluate the former and 14 percent evaluate the latter as somewhat serious. The more interesting problem is a slow Internet connection. Small employers without high-speed Internet are twice as likely as those with it to consider a slow Internet connection a very serious or a somewhat serious problem. Yet, 11 percent who claim to have high-speed indicate slow Internet speed is very serious and 17 percent think it is somewhat serious. So, the speed issue is not just dial-up is too slow and high-speed does the job. It is much more subtle involving purpose and use patterns.
Small employers are typically very busy people, making their time scarce and valuable. That condition can make keeping up on technological developments relevant to the firm problematic. Yet, just 10 percent think keeping up with technological change is a very serious problem (Q#5K). At the other extreme, 32 percent think it is not at all a problem, the second fewest of the potential IT problems evaluated. These data suggests that keeping up is one of those background issues that infrequently is pressing, but rarely absent, either.
Training employees is an essential part of installing (or upgrading) software. Ten (10) percent think training is a very serious problem, though 17 percent think it is somewhat serious (Q#5G). So, who trains employees to use the firm’s software?
Training can involve acquainting current employees in new software as the question above references or it can involve training new employees. The owner is the one most likely to conduct software training for current employees. They assume that responsibility in 40 percent of cases (Q#11), though far more frequently in the smallest firms (44%) than in the largest (18%). An employee trains in 24 percent of firms. An IT services provider performs the function in 9 percent of cases and the vender of the new software in 8 percent of them. Very few use on-line instruction methods (2%). Thirteen (13) percent use other means.
The individuals training new employees in the firm’s software generally mirrors those training current employees in new software or software upgrades. The owner or an employee trains new hires in 67 percent of cases (Q#10). An IT services provider assumes the responsibility in 9 percent of cases. Eleven (11) percent of small employers draw on other methods. But, six percent either expect new hires to know the software or to learn it on their own. This seems low given the frequency of demands for knowledge of basic MicroSoft products that appears in many want ads (also see, Training Employees in this series).
Extensive use of audio and/or video streaming can slow computer response significantly. However, just 4 percent report it as a very serious problem and 9 percent as somewhat serious (Q#5J).
The amount and type of IT that maximizes productivity is a calculation every small employers must make for his or her firm. The calculation obviously differs from business to business, both on an objective and subjective basis. At this time, 46 percent of small employers using computers do not believe that they would benefit long-term from increased use of IT (Q#12). In contrast, 7 percent think that increased use IT would result in a much greater benefit to their business; 18 percent think it would yield a greater benefit modestly greater; and, 27 percent think it would produce a modestly greater than if no action were taken.
If small employers perceive no long-term benefit from increasing the use of IT, they are not likely to make new investments in it. However, a majority (53%) think greater IT use would benefit them. But if that is their view, what constrains them from employing IT to a greater extent than is now the case?
Sixty-nine (69) percent of small employers who think that they would benefit from greater use of IT or 37 percent of all small employers use less IT than they think optimal due to financial constraints (Q#13A). However, severe budget or financial constraints affect just 10 percent of them. That translates into about 5 percent of all small employers. More common are modest constraints (25%). Another 22 percent report reasonable (the middle tier) budget or financial constraints.
A second prominent constraint is the time required to explore new IT products and their use. Sixty-seven (67) percent of small employers who think that they would benefit from greater use of IT or 36 percent of all small employers use less IT than they would like due to the lack of time to investigate the potential of various IT-related technologies or products (Q#13D). The time problem severely constrained 11 percent.
Small employers who think that they would benefit from greater use of IT evaluate other possible constraints as much less frequent and important. For example, 55 percent indicate the lack of a trusted, knowledgeable IT advisor is not constraint at all (Q#13E). A likely reason is that they appear to make those decisions themselves in most cases. In contrast, just 3 percent think the lack of such an advisor is a severe constraint.
Discomfort with IT is another possible constraint that appears relatively unimportant compared to others. Either employers or employees could exhibit enough discomfort with IT to reduce its optimal use. Forty-eight (48) of small employers think that employee discomfort is not a problem at all (Q#13C) while 50 percent think employer discomfort is not a problem at all (Q#13B). They also think that discomfort with IT is a severe constraint among employees in 4 percent of firms and among employers in 4 percent of firms. For the most part (67%) respondents evaluate employers and employees as having an identical level of discomfort. In other words, if they evaluate employees as not at all comfortable, they will evaluate employers in the same way. Most of the remainder assessed the discomfort of employers and employees as only one classification removed from one another. Effectively, about one-quarter of all small employers using computers report that discomfort with IT places some constraint on its greater employment. But only about 2 percent think that impact is severe.
The owner or the manager is the IT expert in most small businesses. This phenomenon is particularly pronounced in the smallest businesses which lack the critical mass necessary to transfer the responsibility to a specialized employee(s) or the financial resources to employ outside expertise to handle IT issues for them. Yet, small-business owners are not likely to be concerned over the lack either of competent IT advisors or the resources necessary to procure the optimal amount of IT capacity.
The IT problems small-business owners most often face are common and therefore not likely to require firm-specific solutions. Still, small business supports a thriving IT support services industry. While attempting to economize to the extent possible through a do-it-yourself approach, small employers are periodically forced to reach out to a services provider or consulting firm for help either formally through a contract or informally through a non-contractual relationship.
Nearly half of small employers think that their businesses have as much IT capability as they need. Very few think that they would greatly benefit from additional IT capabilities, although many admit they could modestly. The survey could not discern the accuracy of those evaluations. Regardless, the behavior of small employers will be governed by what they perceive to be the state of conditions rather than an objective measure of some kind. Thus, small employers are not likely to rush out and upgrade their IT. They are more likely to add capabilities over time as a new generation of owners takes over from an older one. This transition is critical for younger owners are increasingly comfortable with IT technology and are likely to avoid its problems and exploit its opportunities.