Size Doesn't Matter

Size Doesn't Matter

They might have modest budgets and a lack of resources, but when it comes to scoring big hits with the business SMEs can show their brethren at the big end of town a few pointers

As IT manager for Kendall Airlines, Peter Adams used to routinely attend meetings at parent company Ansett Airlines where he had as many as 10 Ansett specialists lined up against him as the sole Kendall representative in the room. In those meetings, he says - meetings where his was often a lone dissenting voice - the merits of the argument rarely held nearly as much weight as the fact that the bigger Ansett team had the sheer muscle to win any disagreement. That both companies were accountable to exactly the same set of shareholders seemed to be entirely lost on those opposing his point of view . Adams does not argue that Ansett, in keeping with many large IT shops, had lost sight of the value equation in its IT delivery - not exactly, at any rate. But he does insist that the relatively tiny Kendall IT group did have a much clearer view of the cost benefit relationship. Smaller shops often do, he says. "If something was going to cost Kendall three times as much to implement because it was an Ansett policy, it was the same shareholders paying for it in the end, because the subsidiary is a wholly-owned company. That sort of logic seemed to escape them - that was the stupid part about it," he says.

Clearly, IT managers at small- and mid-size companies have their work cut out for them in IT delivery as they battle minuscule budgets, a total lack of clout with vendors, sometimes huge difficulties attracting and retaining staff and sheer lack of resources. But they do seem to know how to keep their IT costs down. Research firm Gartner finds the IT budget per employee grows as an enterprise gets larger, with the most significant spending growth spurts occurring as the company moves into the $US1 billion to $US3 billion range, and again as it crosses into the $US3 billion to $US7 billion range. Gartner finds enterprises hit a significant IS spending growth at around the $US1 billion size, when infrastructure and staff costs peak.

Adams, now a lecturer in IT at Charles Sturt University, has no doubt it is the IT departments with small staff numbers who achieve most by way of cost benefit in IT delivery. "I ran the IT for Kendall Airlines (revenues $200 million) with three staff and lots of contractor relationships around the country - and world - for four years," says Adams. "I always contrasted this against our parent Ansett, which had 500 IT staff plus as many full-time contractors and what return each company got for its investment. Of course, it's none now.

"What always struck me was the corporate assumption or mentality in big companies and consultancy groups, that the 'little guys' - especially in regional areas - mustn't know what they are doing, that bigger is better." That assumption is ridiculously inaccurate, he says. Both the difficulties in managing IT and business, and the cost of delivery inevitably increase exponentially as companies grow. But the situation was worse in Ansett, where every project and section within IT quickly became its own entity with all the associated political and fiefdom implications. Adams says statistics show that the bigger the organisation, the higher are the costs per head of supplying IT. Technology simply costs more to deliver in larger organisations, he says, because of the complexity of integration and of creating external, often global links.

There is no doubt small business IT shops suffer any number of privations not faced by the big boys. For instance, big businesses have the luxury of appointing the best possible person to a particular task, and have the dollars to spend on outside consultants. Nor can smaller shops access the economies of scale available to larger organisations. Small shops cannot generally afford to live on the bleeding edge; they are much more likely to be limited in the technology choices they make. But IT managers at these companies say they have found various ways to keep up with their better endowed colleagues.

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