Information Technology has fundamentally changed the landscape of business. From the first digital calculator to the much higher performing portable machines of today, technology has impacted the way business operate. For the majority of this technical advancement, small businesses could rely on industry leaders to bear the brunt of the costs necessary to figure out how technology could be used to increase performance and profit. Everyone else could play the wait and see game until the technology was proven. Once technologies were ready for main stream business, companies had years to adapt to the “new way”. Fast forward to today, and it seems like the leaders are still pushing forward, trying new things, and those a little more hesitant to dive in are playing the wait and see game. The difference today, however, is that the timeline for companies to play catch up is now much shorter. Advanced technology is leveling the playing field for startups through enterprise companies, which means more competition that has the ability to move more quickly. This leaves the small and medium sized business in a very challenging position. The decision to put technology in the background and play catch-up later is no longer an option. To remain competitive and profitable today, business need to make technology a core competency, otherwise the outcome will be disastrous. So how do you measure up? Take a look at 5 of the top areas that left alone, could put you out of business sooner than you think.

1.) Inability to scale

One of the many benefits of technology is its ability to eliminate process and resource bottlenecks. Companies not leveraging technology in this way will have difficulty scaling up when demand increases. Focusing on tools that create and manage scale will not only allow you to grow faster, but also allow you to run very lean in downturns. Taking advantage of this flexibility is exactly how successful startups today are growing so rapidly when sales increase. Small businesses looking to reproduce this are investing in technologies like:

  • Process development and management systems
  • Process adherence and governance systems
  • Process simplification
  • Process automation
  • Productivity and efficiency enhancements
  • 3rd Party vendor and supplier integration
  • Productivity tools


2.) Failure to protect profit margin

Not many companies are lucky enough to avoid shrinking profit margins. As competition increases and products become commoditized, profit margins shrink. Businesses that are more efficient at producing product will protect profit margin over a longer period of time. As well, companies that build technology around efficiency are in a better position to control their markets during price wars, and typically have extra cash flow to invest in evolving their products. Technical solutions that create efficiencies can include:

  • Automation, automation, automation! Specifically, for processes and procedures throughout the entire company
  • Manufacturing and logistical systems automation
  • Process simplification
  • Productivity tools


3.) Failure to innovate/change with market demands

The proliferation of consumer technology has increased expectations across the board. Businesses serving consumers as well as businesses serving other businesses, are now faced new and rapidly changing demands. Industries are being turned upside down, and new products are released almost every day to try and keep up with the new demands. This transition is not slowing down, it is increasing. Companies that are not planning for the fast paced world we now live in, are in danger of becoming irrelevant in the eyes of customers. Investments in technology to help keep the pace of this change typically include:

  • Change management systems
  • Next generation customer feedback tools
  • Innovation management tools
  • R&D tools
  • Industry monitoring and research tools
  • Internal technology training programs

4.) Poor customer service

Today we live in an experience based world. Customers expect more and seem to have less patience. As a small business, managing these expectations can be very difficult. Adding to the complexity, customers can now share any negative feedback almost instantly to a growing number of contacts, friends and followers. Ignoring this can damage a company’s brand and reputation beyond repair. Small businesses looking to technology to help are focused on:

  • Building and managing the entire customer journey
  • Building a better understanding of the overall customer experience
  • Deploying systems to manage engagement at every point in the customer journey
  • Monitoring where customers are actually having conversations about your brand
  • Tools to engage customers in the places they want to talk, social, mobile, etc.

5.) Incorrectly investing in technology

Technology is the heartbeat of information and process within business, yet too many companies treat their IT budget as a necessary evil. That typically means too much of the budget to managing and maintaining IT, and not enough on strategic initiatives. And as such, companies tend to devalue IT spend and shrink budgets appropriately. This, unfortunately, is the opposite of what is necessary to turn IT spend into profit. Companies that spend dramatically less than similar companies within their industries are usually well behind the curve in automation, process efficiency, customer experience management, and even product innovations. When evaluating your IT budget, follow these guidelines:

  • Determine IT budgets loosely on the average technology spend per employee in your industry. This will give you an idea of how competitive you have the potential to be in your industry.
  • Reliable access to your business applications is par for the course. If you have stability issues, make a change. You need to have a reliable infrastructure, all of the time. Nothing else is acceptable.
  • Management and Maintenance spend should shrink over time
  • IT Spend for Strategic Initiatives should grow over time
  • Use the IT maturity ratio as a metric to guide your efforts
    1. IT Maturity Ratio = (% of IT spend for Strategic Initiatives / % of IT Spend for Management and Maintenance)
    2. Average spend ratio: 25/75
    3. Top performer spend ratio: 50/50
  • A good way to gauge the overall performance of technology is Revenue Per Employee. The higher the amount, the more effective your technology solutions. The lower the amount, the more you need to invest in efficiency and automation efforts.

We are only starting to see the real effect technology is having on small business. Products and services are being radically changed and business models are being completely flipped upside down. The companies that are willing to invest in technology and make it a core competency will be poised to adapt and evolve to compete not only today, but tomorrow as well.