South-Western - Management  
High Tech Isn't Just for the Big Guys
Topic Technology, Innovation and Change, Entrepreneurship
Key Words Small business, technology, returns on investment
InfoTrac Reference A127332761
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News Story

Joelle Hilfers and her husband Tom put off investing in technology for their Top Dog Daycare business for years. But, as customers increasingly requested email notification of appointments, Joelle and Tom realized that they would have to take the plunge. A customer created a custom software package for them for $5,000, an amount they put on a payment plan to pay off. Three years and $30,000 in technology investments later, Ms. Hilfers says she doesn't know how they ever did business without their K-9 Connect software, which allows customers to book online, view accounts, post photos of their pets, and even look in on their pets during the day with a webcam. Without the technology, she doubts their company could have tripled their business to date.

As technology becomes more affordable and easier to use, many small to medium-sized businesses are investing heavily in it, or plan to shortly. They are discovering that adopting technology saves them money in the long run, and gives them a competitive edge over rivals. Some must also make the investment to comply with new corporate governance laws.

The growth in small business technology spending promises to give the economy in 2005 a boost. Technology providers like Hewlett-Packard, Dell, and I.B.M. are pushing their business aggressively. They are even creating special products specifically for these smaller customers (typically under 1,000 employees), and aiming marketing efforts at them. Small and medium businesses in the U.S. spent about $150 billion last year on information technology. Small company budgets are expected to rise 6.7% and medium companies are expected to see a 7.9% rise overall. Big companies are showing only a 4.7% increase. These numbers make small business technology needs the fastest growing segment in the world.

As technology becomes more accessible to small business, people are becoming more willing to embrace it. Some reasons for this include the proliferation of wireless devices for personal use, and the transfer of power from Baby Boomers to their sons and daughters, who are naturally more comfortable with technology. Also, technology has become a necessary tool to help small companies keep up with their competition. Customers demand the conveniences technology can provide.

Frank Muehleman, general business manager for small and medium business at Dell said "(small businesses) are the most discriminating and discerning group when it comes to where and how to spend their money." Small businesses want immediate payback for their investments and large technology providers like I.B.M. want to be prepared to give it to them.

Questions
1.

The article mentions that small businesses are looking to technology solutions to give them a competitive advantage. What are some questions a small business can ask to determine if their technology solutions are giving them a competitive advantage?

2.

What are the advantages of investing in technology for small businesses for the large IT providers like IBM and HP?

Source "High Tech Isn't Just for the Big Guys," The New York Times, Jan.20, 2005, pC9.
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