IT Failing 1 in 4 Small Businesses, Says Effectiveness Index Survey

Initial results from a new online survey designed to measure IT effectiveness at small businesses shows almost one in four respondents score a “D” or “F” grade. According to the IT Effectiveness Index (ITEI) Mid-Year Report 2009, another 37 percent of small businesses are barely maintaining their IT operations, scoring only a “C” grade.

The report, based on surveying hundreds of small businesses, further reveals that these companies are falling further behind as economic pressures have forced nearly half of the respondents to reduce, delay or cancel critical IT investments. Spearheaded by companies with a core interest in the SMB market, including Microsoft, Host Search and research firm Yankee Group, the survey provides insight and counsel for improving business processes and IT effectiveness.

“The results to date indicate that many small businesses are falling behind when it comes to implementing accepted best practices for IT operations and management,” according to Steven Kahan of server hosting provider The Planet, one of the sponsors behind ITEI. The results so far are especially disturbing, said Kahan, since more than two-thirds of the small businesses responding to the survey indicated that IT and Web commerce are the foundations that enable their business success. “The IT Effectiveness Index is telling us that in nearly two-thirds of businesses with 100 employees or less, IT operations are failing to fully support or keep pace with small business needs,” he said.

In many cases, he said, the symptoms of mediocre or failing IT grades are displayed in a lack of security protection against cyber-threats, an inability to prepare for or respond to incidents, as well as growing concerns about IT availability and unacceptable levels in downtime of IT systems. Survey results also show that nearly half the businesses are facing obstacles in implementing new IT projects because of cuts in capital investments, and nearly one-third lack the staff to properly manage their IT investments.

Anita Cambell, principal of midmarket online resource Small Business Trends, said the take away from this survey is that small businesses are finding themselves at a competitive disadvantage. “During the recession, some have had to make do with less staff, cancel or put IT projects on hold, and slash capital expenditures in their IT budgets,” she said. “The benchmarking and self-audit tool helps small businesses understand where they have fallen behind so they can work on the building blocks for better technology effectiveness, leading to greater overall success in their businesses.”

The sponsors of the mid-year report also provided suggestions for small businesses to help them upgrade their IT performance and effectiveness without the capital expense typically associated with IT budgets. Among the suggestions are for small businesses to concentrate on core competencies while seeking to explore outsourcing options, take advantage of free software and other offerings, explore the benefits of cloud computing and consider IT infrastructure alternatives to capital expenditures through hosted hardware, software and services.

The IT Effectiveness Index is an industry coalition dedicated to measuring the IT effectiveness of small and midsize businesses (SMBs) around the world. The online survey offers business owners and IT executives a free online benchmarking tool that uses a methods-based framework. Participants take a 12-question, 10-minute survey to receive an immediate and confidential score, accompanied by a detailed report with consultative suggestions about how to improve their IT processes. In January 2010, the ITEI Partners will publish the SMB IT Effectiveness Index Annual Report, which will be provided free-of-charge to survey participants.