Small firms’ IT less complex, less risky than larger firms: study

Canadian small businesses are more satisfied with their IT departments, but less likely to adopt new technologies than their larger counterparts, according to a global study on IT governance conducted by PricewaterhouseCoopers.

Companies that have 500 employees or less often benefit from a less complicated IT infrastructure, yet often aren’t willing to take risks with new technologies, the Global Status Report on the Governance of Enterprise IT survey results show. PricewaterhouseCoopers prepared a special sub-section of data for ITBusiness.ca that looks specifically at the difference in how Canadian small-to-medium-sized (SMB) businesses approach IT compared to larger firms.

Out of the 834 organizations surveyed around the world, 41 were Canadian and 19 of those were in the SMB category. The results show that smaller firms in Canada lack “IT maturity,” says Gert du Preez, director of technology consulting at PricewaterhouseCoopers.

“There’s a lot of room for SMBs to put in place more formal IT governance,” he says. “You need the right people in the right places, making decisions.”

Smaller firms are more satisfied with their IT departments than larger enterprises. Nearly half of small firms strongly agreed that “IT service levels meet the business needs” while only 18 per cent of large companies said the same thing. But that level of satisfaction may merely come from lowered expectations, not exceptional performance.

“Doing a good job might be easier in a smaller and less complex environment,” du Preez says. Larger businesses may be required to manage thousands of seats across various locations scattered across the globe, while smaller firms may just manage a handful of desktops in the same room.

It’s true that smaller companies have less complicated IT environments, agrees Stuart Crawford, president of Calgary-based IT consultant firm Ulistic Inc. But that less complicated overhead can sometimes be an advantage that offers flexibility.

“My computer crashed at my house today, but I have a backup laptop and an iPhone,” he says. “If I was in a bigger company, I might not have that flexibility to change devices and still have access to all my files.” Crawford is also a member of ITBusiness.ca’s Editorial Advisory Board.

Smaller companies are less likely than larger ones to be interested in adopting new technologies including cloud computing and social networking, the survey results show. No small businesses said they were using cloud computing currently for mission-critical IT services, compared to 13 per cent of large companies. For non-mission critical IT services, only 18 per cent of small companies are planning to use cloud services, compared to 46 per cent of large companies.

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But small companies may be using cloud services without even realizing it, experts say.

Vendors often have different definitions for what cloud services mean, says Tony Balasubramanian, partner, Western technology advisory services at PricewaterhouseCoopers. That’s confusing the definition in the market space.

“They may be using services that are cloud-type services, but they don’t recognize that as being different from what they did in the past,” he says.

Crawford agrees. He sees many small businesses using hosted services that could be considered cloud-based. “They see the commercial from Microsoft of someone editing photos and they think that is the cloud,” he says.

Small businesses consider social networking too risky, according to the survey. Only one in twenty small businesses agreed that the benefits of employees using social networking outweigh the risks, while almost six out of 10 said the risks outweighed the benefits. Large businesses were more likely to embrace social networking.

SMBs just tend to be late adopters, du Preez says. It will take some time before small firms jump on the social media bandwagon.

“They will wait until all of their issues and concerns are ironed out,” he says.

Many entrepreneurs just don’t have time to update social media profiles, Crawford says. Very small businesses with few employees might be unlikely to get social, but those closer to 500 employees are engaged. One of Crawford’s clients, Calgary-based home developer, is using a Facebook Page, Facebook Place, and is looking into QR code technology to share information about show homes.

“They’re looking at it from a perspective of how can they use it to share information and get feedback from their customers,” he says. “Not necessarily a hardcore marketing type of activity, but really a community building.”

One thing that small and large firms had in common was shared concerns about IT. Both listed privacy concerns (cited by 50 per cent each) and security concerns (named by about one-third of both large and small firms) as the top two worries.

Brian Jackson is a Senior Writer at ITBusiness.ca. Follow him on Twitter, read his blog, and check out the IT Business Facebook Page.

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