IT for small companies - Institute of Industrial Engineers

BigIT
Although small and medium enterprises (SMEs)
are a key factor in the economies of all countries and regions,
they sometimes face big gaps in production and performance
when compared to large companies. One important gap is the
fact that most SMEs do not use and implement information
technologies to their full potential. This entails a significant
loss of resources and consequently disappoints managers
about how such technology can benefit the company. For example, several studies show that acquiring hardware and software
licenses can be one of the most important investments a small
or medium business can make. But evidence abounds that
these companies have problems in fully exploiting the funcBy Alejandro J. Cataldo, tionality of their new purchases.
Robert J. McQueen and
Three factors explain why it is difficult for smaller compaMarcos Sepulveda nies to use IT effectively. First, while almost all SMEs have a
vision that acts as a guideline for IT, they often lack a definite
roadmap to implement a strategy to prioritize investment projects for the medium and long term. Second, smaller enterprises
have a strong operational focus. Their lack of resources requires
them to focus on the most important function of the business
— operations — which reduces the effort that can be spent on
nonoperating and support activities, such as effectively managing IT. Third, smaller businesses often lack IT knowledge and
skills. They have few specialized staff, and scarce resources
for small
companies
Quick-scan method makes up for lack of resources
negatively affect the recruitment of IT professionals who can
support and enhance strategic IT utilization.
This well-documented problem has few effective solutions.
Researchers have placed a greater emphasis on larger enterprises, so it is clear that more tools are needed to help small
and medium organizations optimize their use of IT.
We developed a quick-scan method that helps a consultant
or IT expert analyze the role of IT in a smaller enterprise and
develop recommendations for improving its use. It is called
information technology-quick-scan method (IT-QSM). The
method requires two investigators and is applied in a session
that lasts a day. It merges qualitative and quantitative data
gathering and analysis techniques to explore the manager’s
views about aligning IT with organizational goals. At the end of
the day, researchers present their conclusions and recommendations to the manager and the IT leader of the organization.
(We use the term “IT leader” because people in charge of IT
could have various position titles.) The method was tested in
seven organizations in New Zealand and Colombia. After the
first three cases, feedback from participants showed that the
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test had a high level of acceptance and usefulness.
The test application described below shows how each step of
IT-QSM is executed.
Presenting IT-QSM
Initiate the process, which is summarized in Figure 1, with a
meeting between the main investigator and the manager. The
manager’s initial enthusiasm is a key factor for the success of
the work, so it is important to know the manager’s expectations about IT-QSM. This meeting presents the requirements
of the method. The investigators’ needs are simple: time and
access to key informants, access to company facilities and
documentation, a private room where researchers can discuss
their conclusions and an Internet connection.
After this initial meeting, the researchers send two sets of
questionnaires to be completed by the manager and the IT
leader. The questionnaires help reduce the time spent interviewing these key informants. Not all respondents answered
the questionnaires in advance, so in those cases, add about
30 to 40 minutes of time for each interview. Additionally, the
investigators ask for relevant information about the company
and its products. This information could include strategic or
business plans and presentations about the company.
The questionnaires were based on three important research
projects in the field of IT alignment in business. A set of
questions was developed to gather data about the company’s
strategic orientation based on the work of N. Venkat Venkatraman. In his 1989 paper, “Strategic Orientation of Business
Enterprises: The Construct, Dimensionality, and Measurement,” Venkatraman proposed that the strategic orientation
of a business enterprise (STROBE) could be measured using
eight dimensions, or variables: aggressiveness, analysis,
internal defensiveness, external defensiveness, futurity, proactiveness, risk aversion and innovativeness. The company
manager fills out Venkatraman’s questionnaire.
Using Venkatraman’s framework, authors Yolande Chan,
Sid Huff, Donald Barclay and Duncan Copeland developed
another questionnaire to measure the strategic orientation of
the systems in an enterprise (STROIS) through their paper,
“Business Strategic Orientation, Information Systems Strategic
Orientation, and Strategic Alignment.” The STROIS is applied
to the company’s IT leader. STROIS and STROBE are used
together to measure the IT alignment by comparison.
The third frame of reference used in the questionnaires was
developed by Paul Cragg, Marco Tagliavini and Annette Mills
in their paper, “Evaluating the Alignment of IT with Business
Processes in SMEs.” The authors proposed a set of questionnaires to measure IT alignment in SMEs based on a set of
standard processes transparent to the industry. These standard processes were proposed by the American Productivity
ss
e
c
o
r
p
e
h
T
Figure 1. It takes two
investigators a day to
complete the information
technology-quick-scan
method (IT-QSM).
May 2011
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big IT for small companies
The classification
Abbreviation
P1
P2
P3
P4
P5
P6
P7
P8
P9
Process
Develop vision and strategy
Develop and manage products and
services
Market and sell products and
services
Deliver products and services
Manage customer service
Develop and manage human
capital
Manage information technology
Manage financial resources
Acquire, construct and manage
property
Manage environmental health
and safety
Manage external relationships
Manage knowledge, improvement
and change
manager. This interview is to determine the company’s vision
and the concerns of the manager. Another objective is to determine the perceived role of IT and how the manager thinks IT
can contribute to the company’s success. It also is important
to get a view of the company’s relationship with its customers,
suppliers, competitors and other stakeholders. For example,
some important questions in this interview are:
• What are the key indicators of success?
• How does the manager use these indicators?
• How do the systems help to get that information?
• What is the biggest pain of the company?
During this interview, ask the manager to draw the processes
of the company. Understanding the manager’s diagram helped
the investigators better understand the company. It also helped
P10
reveal the information flows in the processes and how systems
could contribute to those processes. In other words, through
P11
P12
the process diagram, the investigators discovered the major
and minor contributions of the systems to the processes of the
company. The interview with the manager lasts about one to
Figure 2. The American Productivity and Quality Center classified
one and a half hours. If the manager has not yet completed the
a set of 12 processes that are transparent to industry.
questionnaires, add an extra 30 minutes.
The next step is to interview the IT leader to verify the information
delivered by the manager, determine the frequency and
and Quality Center, which classified them in the 12 categories
shown in Figure 2. Cragg and his colleagues developed two level of contact between the leader and IT manager, and get a
questionnaires to measure the alignment according to those list of the IT systems used. In this interview, the diagram drawn
12 processes. One questionnaire was applied to the manager by the manager becomes an important tool. The diagram helps
clarify doubts that investigators have developed from the first
and the other to the IT leader.
IT-QSM uses two questionnaires. One is for the manager, interview. Experience from these initial tests shows that exterwho answers the STROBE questions and the managerial part nal consultants, when acting as the key IT leader, sometimes are
of Cragg’s questionnaire. The second one is for the IT leader, not the best candidates for this role. Given that external consulwho answers the STROIS questions and the technological tants mainly have operational responsibilities, they show very
little knowledge of how systems are used by the organization.
part of Cragg’s questionnaire.
After the initial meeting and handing out the question- For example, at one company the question was asked, “What
naires, investigators meet to discuss the company and their systems do you miss in the company?” The consultant said, “I
initial impressions. A two-person team reduces the bias that a think we’d need a gigabit Ethernet network.” In those cases, it
single investigator might introduce because they can discuss is preferable to find another key informant.
Another key step is to visit the operational facilities and
and triangulate information to make more accurate recommendations. The team examines the information collected observe how employees and interviewees use the systems.
so far, including documents submitted by the manager, These observations help uncover bottlenecks and clarify
completed questionnaires (if any) and the company’s website. misconceptions. For example, one manager said he had a
The meeting has three objectives: Discuss potential problems system to manage the company’s innovation. When the
that may be present; list the systems that should exist; and investigators viewed the system, they realized it was just a
PowerPoint slideshow. The manager mistakenly understood
prepare a set of key questions to respondents.
The fieldwork begins with a brief presentation of the that such a presentation was an innovation system.
Investigators may decide to interview a third informant.
method to the key participants (the manager and IT leader).
Then the work continues with a private interview of the This is evaluated on a case-by-case basis, depending on
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radar love
Figure 3: As this radar chart details, questionnaires revealed that
the company lacked IT support to manage financial resources.
whether more information is needed. For example, in the case
of the aforementioned consultant, the researchers decided to
interview the company’s contact with the consultant.
Analyzing the company’s website is an important part of
IT-QSM because the site delivers a lot of information about
the implicit role of IT in the company’s systems. Comments
about the company website were highly valued by managers
in the feedback sessions, especially for small, low-cost ways
to improve the company’s positioning in search engines like
Google. The website analysis should examine things such as
when the last update was done, content and active links, positioning of the page in Google searches for combinations of
keywords, and comparison of the site with two competitors’
sites — one a large business and the other a small one. The larger
competitor was used as reference for future improvements. The
smaller business helped reduce resistance to improvements by
managers who looked at their larger competitors, agreed that
they had wonderful websites, but doubted whether a company
their size could pull it off. In three Colombian operations, the
company had no website. In this situation, we showed the sites
of competitors and delivered a list of recommendations to
design a website.
The last two steps in the daylong quick scan are developing
conclusions and recommendations and presenting them to
the manager. All respondents should attend this presentation
because we found that the discussion between the quick-scan
investigators and the management team generated a wealth
driving growth
Governments and entrepreneurs worldwide see the
deployment of information technology systems
as
a key to driving the growth of small and mediumsized businesses.
For example, Singapore’s enterprise development agency invested $20.05 million in 69 startu
p
enterprises last year, with a large share of that
in IT and communication companies. Many
of
Europe’s most creative information and communications technology companies are small businesses
that have developed niche technological solutions.
Vietnam’s government is pushing to upgrade
its information infrastructure after noting that
more than 50 percent of enterprises do not use
software for labor force and wage management.
At a Marc h confe rence in Ghan a, speci alists
encouraged the government to improve comm
unications infrastructure, access and affordability
of ICT equipment.
And India’s secretary of the Ministry of Micro,
Smal l and Medi um Ente rpris e, Uday Kum
ar
Varma, told the SME Times that no matter the
size, all businesses need to incorporate more IT.
“There is no way SMEs can avoid IT,” he said.
“It will only add to your peril if you don’t adopt IT.”
of ideas and suggestions. At the end of the presentation and
discussion, we asked for feedback on the effectiveness and
usefulness of the process.
The presentation summarized the qualitative and quantitative results. For the latter, we developed a way to synthesize
the information collected from the questionnaires using two
radar charts similar to the illustration in Figure 3. These charts
show the alignment gaps between strategic priorities and IT
support. The graphs use the 12 standard process classifications developed by the American Productivity and Quality
Center. They are constructed according to the strategic importance of each of the variables by putting the most important
on the top part of the chart. The others are arranged clockwise in descending order of importance. Matching techniques
determined the alignment of each variable. The gray line
represents the alignment of each variable measured between
zero and one, and the gap between one and the gray line indicates alignment problems.
May 2011
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big IT for small companies
mind’s eye solutions
Figure 4. In this mind map, the solid line boxes represent the problems identified and the segmented line boxes the proposed solutions.
The arrows represent linkages to related solutions.
Applying the method
One field case study was of a small agency that primarily rents
property. Two partners who wanted to raise capital for retirement founded the company 16 months earlier. The company
had three employees who managed approximately 100
properties. The manager’s vision was to grow at a rate of five
properties per month and get to a staff of five or six people.
The highest priorities for the manager were banking and
solving everyday problems. The biggest pain was to align the
requirements of some tenants with their landlords. For the
manager, the long-term goal was to consolidate the company
to sell before her retirement.
The company used some basic technology, such as Microsoft Word for documentation and forms, Microsoft Excel to
support the accounting system (which was primarily manual),
and Microsoft Outlook to communicate with and send notices
to tenants and landlords. The most important software was a
commercial system, Aspect, that helped manage the properties.
As the manager drew the process diagram for the company,
an important problem was revealed: the steady decline in
visits to the website. The website was an important tool to
attract new tenants. However, after a promotional assessment made by an Internet company, the manager discovered
that site visits had fallen in the last few months. The website
content was updated manually every week by the secretary.
Figure 3 shows the IT alignment according to the process
level. The most important problem identified was the lack
of support to manage financial resources (P8) because it is
management’s second most important process and, at 30
percent, is the least aligned. The visit to the office facilities
showed another problem: time management and scheduling.
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Industrial Engineer
Each time agents returned to the office, they had to review three
notebooks with new announcements and task assignments to
see if any new ones had been assigned. This ritual worked as
long as the agent visited the office. Another discovery was that
Aspect had extra features that the company did not use. For
example, it could automatically upload photos of the houses
to the website. In addition, the software had an accounting
module tailored to property management.
As a tool for discussion and to summarize the problems
identified and suggestions made, the researchers prepared a
mind map, which is shown in Figure 4.
Finally, the most relevant recommendations made were:
• Increase staff skills on Aspect.
• Implement a system of time management and workgroups,
such as using shared electronic calendars.
• Improve website design.
Conclusions
IT-QSM is a quick and effective method for evaluating IT use
in SMEs. After an initial period of adjustment, from the fourth
case on, all the managers evaluated the results of the method
as 100 percent useful. IT-QSM also presented an additional,
unexpected benefit for managers. Most of them thought that
the interviews had helped them assess their managerial work.
Still, the results yielded two insights that could improve
IT-QSM. First, further development of the questionnaire and
interview guidelines should seek ways to simplify the technical
language when talking to businessmen. For example, during
the New Zealand trials, the investigator’s first language was
Spanish, and the language difference appeared to cause some
communication difficulties with the participants. However,
during the Colombian trials, even though Colombian managers spoke Spanish as their first language, in some cases there
were linguistic problems related to IT jargon. Using videos
or images can help explain how software works or what the
benefits of IT might be.
Second, IT-QSM was effective in recommending technology solutions for management and strategic problems, but it
was less effective in suggesting technological improvements for
operational problems, particularly in manufacturing companies.
Applying the method to a specific group of companies in the
same industry could improve its results at the operational level.
Still, the field research has shown that IT-QSM can be a
useful tool to help managers and consultants in SMEs analyze
and guide their organizations’ effective use of IT. d
Alejandro Cataldo has been an assistant professor at the University of
Atacama, Chile since 2000, where he was chief of the computer science
department. He is a Ph.D. candidate in the computer science department at the Catholic University of Chile, Santiago, where he received
PE Exam Review
for Industrial Engineers
August 29 - September 2
his master’s in engineering. Cataldo has an industrial engineering
degree and more than eight years of experience in private companies as
department chief and consultant.
Robert J. McQueen is professor of electronic commerce technologies
at the Waikato Management School at the University of Waikato. He
holds a B.S. in electrical engineering from the University of Waterloo,
an MBA from Harvard Business School and a Ph.D. from Waikato.
His research interests are in electronic commerce, computer mediated
group communication and technology support for tacit knowledge
building in individuals.
Marcos Sepulveda has been a professor in the computer science
department at Pontificia Universidad Católica de Chile since 2001.
He earned his bachelor’s, master’s and doctoral degrees in computer
science from the university and serves as director of its Information Technology Research Center (CETIUC). He did postdoctoral
research at ETH Zürich, Switzerland. His research interests include
IT management, IT outsourcing, business process modeling and
business intelligence.
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