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Businesses Who Value IT Outperform Those Who Don't

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Microsoft Corp. recently released its global SMB IT and Hosted IT Index 2010, which investigates how small and midsize businesses (SMBs) across multiple segments fared during the recession and how they use technology. The research finds that businesses that value IT as an enabler for better business productivity and effectiveness and those that use hosted services performed better fiscally than those that do not.

The interesting findings include the fact that despite the global recession, more SMBs surveyed in 2010 reported an increase in revenue for 2009 than in 2008. Those who reported growth view IT as critical to their business success.  Let me repeat that...

Businesses who reported growth view IT as critical to their business success. 

While I think this is huge, I also have to clarify this.  Every business owner I've ever met THINKS they view IT as critical to their business success.  Yet, NOT every one of them actually acts this way.  From where I stand, it's actually a pretty small percentage that act this way.  There is a difference.  And it is a critical difference.

In a recent meeting with business owners and key decision makers, I threw out the question asking who thought they valued IT and if their IT was critical to their business' success.  Every one of them raised their hands.  Then I asked if they knew or planned on how much they spent on IT.  Only a handful knew what they spent or were of the mindset that they viewed their IT spending as an investment.  The remainder viewed IT as a cost center (whether they admitted it or not).  One of them (who raised his hand earlier) even commented, "I only spend when I have to AND as little as possible."  Clearly this is NOT the mindset of someone who values IT.

Clearly the study backs this up. In fact of the SMBs that view IT as critical, 60 percent saw revenues grow over the past 12 months. In contrast, among SMBs that stated IT is not important, less than 29 percent saw revenue increase. 

In addition, the 2010 index indicates SMBs are beginning to see the benefits of cloud computing; more than 40 percent of the respondents that use hosted or cloud technology reported revenue rises of 30 percent or more compared with 90 percent of respondents not using hosted technology that saw decreases in revenue. The advantages of hosted or cloud technology are viewed as reduced cost and IT management and maintenance, as well as increased business value, productivity and competitiveness.

“Our assessment of the report tells us that an increased focus on IT correlates with good performance in all of the size categories surveyed,” said Dale Vile, research director of Freeform Dynamics. “This whole picture corroborates the notion that technology and hosted services can provide tangible business advantage, even for smaller companies, and it’s not surprising to see that investment in IT and hosting goes hand in hand with good financial performance.”

One of our successes at FPA has been our ability to align ourselves with growing companies who value IT and see it as an integral part of the success of their business.  There are meaningful acts that back up this thinking - acts like IT budget planning, implementing proactive maintenance, business continuity planning, and looking for meaningful ways to leverage technology to improve business processes.  Also, the perception that ROI is measured against true costs, not just the IT dollars spent.  What I mean by this is considering the impact of hidden costs of IT when making spending decisions - ie: reduced or lost staff productivity, reduced or lost sales, delayed orders, delayed receivables (impacting cash flow), etc.  Some people get the value of this and some don't.  Luckily for them, the majority of our clients seem to get it and get IT!

About the Author
Craig Pollack
Craig Pollack Blog Profile Image Craig is the Founder & CEO of FPA Technology Services, Inc. Craig provides the strategy and direction for FPA, ensuring its clients, their business owners, and key decision makers leverage technology most effectively to achieve their business objectives. Craig focuses on ensuring that the technologies implemented by clients are "business centric" and key components of their businesses' success, and that this approach is shared by every staff member of FPA.
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