State of the SMB: Contemplating the cloud, keeping the lights on

Roughly half of small- and medium-sized businesses in Canada face flat IT budgets this year, according to a survey that ITBusiness conducted in January, while another 23 per cent will have even less money to spend on IT than in 2010. Maybe some of these firms can stretch those scarce dollars through cloud computing and virtualization – the two technologies that the largest numbers of respondents predicted would help them grow or improve their businesses this year.

ITBusiness surveyed 181 small and medium business people across Canada in January.

Asked about their biggest IT challenge, 54 respondents (29.83 per cent) said it was finding products that suit the needs of a small or medium enterprise, and 55 (30.39 per cent) said it was tailoring IT products to their business processes. Choosing applications that won’t be obsolete in a few months and managing risk both came in around 18 per cent.

Free Download: Read the full report from ITBusiness.ca

But members of ITBusiness’ editorial advisory board suggested that, in hindsight, the multiple-choice question might have included the problem of just keeping things running. For many small enterprises, says Brian Bourne, an advisory board member and president of CMS Consulting, Inc. in Toronto, just “keeping the lights on” is the day-to-day challenge. And in fact, a couple of answers written in under the “other” heading (chosen by 3.87 per cent of respondents) indicated that.

Reached in the midst of a gruelling system conversion, advisory board member Roberta Fox, president and senior partner of Fox Group in Mount Albert, Ont., says that’s often true for her consulting firm even though technical expertise is her business.

It’s also true for Nannies on Call, an online nanny-referral service. “When it goes down, we’re hooped,” says Michelle Kelsey, founder of the Vancouver-based company. “It really throws a wrench into things, because every piece of information is there.”

Nannies on Call is already exploiting cloud computing, using Google Docs and NetVoice, a hosted voice over Internet Protocol (VOIP) service. So is Voices.com, a London, Ont., online business that connects voice-over artists with customers such as broadcasters and advertising agencies. David Ciccarelli, co-founder of Voices.com, says the key advantage is access from anywhere to a central database of customer information, built on the popular Salesforce.com system. “It’s proven to be, to be honest, quite the competitive advantage.”

Most survey respondents say cloud computing is a technology that may help grow or improve their businesses in 2011.

With IT budgets flat or declining in most organizations, the cloud may be a way for those businesses to get more bang for their IT buck, says Stuart Crawford, an ITBusiness advisory board member and president and chief marketing officer at Calgary-based Ulistic Inc., a consulting firm that serves managed service providers and VARs.

Next on the list of important technologies was virtualization (respondents were asked to check all technologies that applied).

The big benefit of virtualization is “being able to not have a warehouse for servers,” says Bill Wallace, IT specialist at Liburdi Engineering in Dundas, Ont. And Wallace says he can add new virtual servers quickly because they go on existing physical machines.

VOIP and business intelligence came next on the list, each named by around a third of respondents.

The significant interest in business intelligence is interesting, Crawford says. People in the small and medium business space are “really starting to run their businesses by the numbers” and turning to technology to help them do it, he commented.

The survey also found that many respondents see disaster recovery and business continuity as their biggest security concern.

Few could identify with that more than Wallace. Liburdi Engineering survived a $30 million fire in October. Wallace says his servers were smoke-damaged yet salvageable, and were up and running again in four days. No data was ultimately lost, but it took two weeks to get 95 per cent of Liburdi’s IT operations back up. The company had already been paying attention to business continuity, but is now trying to do even more, he says.

Respondents’ next-biggest security concern was “viruses and hackers,” chosen by 40.56 per cent. If viruses were separated from hackers, Bourne predicted, it would be apparent that most small business people are more worried about the former. That could be a mistake, he says.

“Small businesses very much operate under the, let’s say illusion, that no hacker will ever attack them,” says Bourne. Not true. “Hackers have lots of reasons to target small businesses …. It would be great if you could walk into a bank network, but because that’s much more difficult, why not walk into a much smaller one?”

Perhaps more worrisome, only 9.44 per cent cited employee blunders as the top security concern. “It’s actually my number-one concern,” Bourne says – and studies of security incidents back that up. Small businesses tend to think their employees are more loyal than those in bigger organizations, Fox added, but attacks from within also happen. “SMBs don’t do as good a job of protecting themselves as they should.”

Krista Napier, a member of ITBusiness’s editorial advisory board and senior analyst for Canadian digital media at IDC Canada in Toronto, says the survey’s finding that many respondents don’t use social media in their businesses is in line with IDC’s own research.  But those businesses should take a closer look, she says. Consumer social media tools like Twitter and Facebook may not be useful to every business, but there are other tools, such as Yammer, a social networking tool for in-house use.

Customer relations and communications was the most common purpose for those using social media, while the second-most commonly named purpose was community building and after that, product and event announcement.

Those using the tools often aren’t doing enough to measure their effectiveness, Napier noted, and should take advantage of a variety of analytics tools available to do that.

The survey also dealt with other topics such as training and who sets IT strategy. The full report, complete with all statistics is available for download here.

Free Download: Read the full report from ITBusiness.ca

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