Predicting Trends in a 'Crunching World'?

Feature from: DOMInion post, CHRISTCHURCH PRESS, WAIKATO TIMES July 2008 

With the world experiencing a ‘credit crunch’, It has been interesting  to read extensive coverage on what’s happening in technology in the SME sector overseas.

So how might all this impact the SME market in New Zealand?

Typically, there is the obvious ‘cost cutting’ measures, freeing staff that seem surplus to requirements, and removing ‘unnecessary’ overheads.

It has been interesting watching some clients undergoing this process recently and pondering what is and isn’t surplus within their technology budget.

Many are trying to ascertain what value there is in future planning as, given the speed at which technology matures, halting development can actually increase rather than lessen costs.

Internet, email and antivirus are obviously all accepted as non-expendable business requirements.

There has also been a definite shift toward seeking fixed price and OpEx models for hardware, software and support contracts compared to CapEx.

Any business owner who has not investigated these options, should do so as they could potentially make huge savings.

American studies have shown that 90% of businesses that have critical data loss are no longer in business within 12 months, which suggests that backup is critical.

There are even murmurs that banks will soon require compulsory automated backup of data from those seeking business loans. Certainly there is already a strong movement through the Australian Parliament on this issue.

The more you can remove human interaction in the backup process the better. Those backing up to USB drives and hoping for the best should consider reasonably priced online automated backup solutions instead as data loss can be catastrophic.

Looking forward, technology, as in any industry, has the typical S shaped curve for uptake in services and products. The amount of time required for product innovation, which takes market uptake from 1-10%, is the same time needed for its growth stage where market saturation goes from 10-90%.

Typically, the switch that flicks innovation to growth is cost driven. In consumer goods, it can be seen very clearly. Five years ago LCD televisions were only owned by the extremely wealthy. Now they are widespread and the death of tube televisions is nigh.

As production or uptake doubles, cost decreases by 25%. Although a simple formula, it can prove highly accurate when trying to ascertain which trends will affect SME businesses

Typically, the early adopters of technologies are those with specialised needs or intimate understanding of the particular technology being implemented.

Commonly, it is also those businesses with strong cashflows that can afford these technologies when they are priced highly before market uptake and competition drives price down.

It is often easy for SME businesses to then look at what is becoming, or is already, widespread in the enterprise sector (200+ staff) and evaluate from this what coming technologies they should be planning for so implementation, when available and affordable, is possible without incurring large capital cost.

Voice over the internet is one such service and will, without doubt, hit a critical mass within the SME sector over the next three years.

I also believe outsourcing of areas of business, such as copywriting or coding developments, will become commonplace as cheap labour forces and good connectivity drive co-creation on a worldwide scale. This is widely used overseas and stronger connectivity development here will accelerate this.

Telecom and Telstra have also announced their leap into the SME technology market offering ‘Software as a Service’ and support contracts to business owners through the first two quarters of next year.

They certainly face challenges educating the market regarding this and potentially underestimate the urgency and expertise required by 15-50 user SME sites. I suspect they will miss their market.

Technology certainly does not retract and there is value in understanding what cost benefits could be garnered by better technology management.

Patrick Kershaw is a Business Partner for Horizon Pacific, a nationwide technology support provider specialising in assisting SME’s with all their technology requirements. For further information, go to www.horizonpacific.com