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Lymer, Nayak, Johnson, and Spaul, 1999

Executive summary

The operation of modern business is being increasingly influenced by the presence of information and communications technologies of various types. The potential to improve commercial information management and distribution offers possibilities for commercial advantage to businesses that can effectively harness the power offered by these technologies. One of the primary architectures of this technological environment over the last few years has been the Internet.

The Internet

The Internet, as a part of a ‘super highway’ of digital communications, is already in place. It has been growing in use in the UK at a tremendous rate, particularly over the last four years.

This study investigates the value of the Internet as part of this ‘data highway’, focusing on its value to small and medium sized enterprises (SMEs). It adopts the viewpoint of the business advisor. It illustrates the limited use made by SMEs of business advice in this area at present and contrasts this with what information should to be given to business clients in developing their ideas about the Internet’s appropriateness for their communication requirements. It provides a balanced view detailing where this technology is useful in its current form, and where its limitations can be found. It also provides practical pointers to guide realistic expectations of business change while emphasising the need to encourage SMEs to develop suitable plans and policies for the effective use of this technology.

The Report

The report commences by setting out the context of the IT environment in which the Internet currently operate. It describes what constitutes the Internet as a technology and what its role is as part of a digital ‘superhighway’.

The report then presents a series of cases used to illustrate and critically examine a theoretical study. These cases were developed over the period of the research (January 1996 - Summer 1997) and were completed in early 1998. While business cases have been reported elsewhere in various forms, those used in this report illustrate the current state of Internet use among early SMEs adopters. The cases are used to examine common problems faced by ordinary SME owners and advisers, rather than those who have particularly novel stories to tell. The report concludes with some comments on the immediate future for this technology in the context of small businesses.

Main Findings : The Impacts

• This report concludes that evidence exists of positive impacts for SMEs directly related to the use of the Internet. These impacts are available to most, though not all, SMEs.

• There is also evidence of some negative impacts occurring. Care, appropriate advice and planning are needed to ensure these impacts are avoided, or at least are minimised.

• The report demonstrates a growing focus on information management in businesses of all sizes. It indicates that, where such a focus is an important factor in effective business operations in an SME, the Internet offers the potential for positive impacts as a distribution mechanism for this information.

• It strongly suggests the need for business owners to consult with their advisers and with business contacts to plan their use of this technology and therefore indicates a potential new market for accountants as existing trusted advisers to many SMEs.

• The cases developed in the study demonstrate clear evidence that the major impacts on SMEs are in the areas of business contact communications and management of business contact relationships.

• The cases suggest that few tasks currently undertaken by SMEs will change significantly in the immediate future as a result of the adoption of this technology. Instead, evidence suggests these tasks will evolve to include the Internet where it can have a positive impact on their operation.

• While a small number of organisations have undergone dramatic top level changes with the introduction of the Internet, most have seen more subtle changes related to perceptions and attitudes rather than to more fundamental changes in business activities.

• Direct product selling online is only successful where the product lends itself to information-based purchase decisions: that is, a purchase decision that can be made using information about the product or service in isolation from the item actually being purchased.

• Companies wishing to sell physical products using the Internet will need to develop appropriate delivery and return facilities in order to benefit from Internet-based selling. They may also need to make use of advanced technology to overcome the limitations of a two dimensional presentation of their physical product.

• The issue of the security of transaction data continues to be a concern to those SMEs and their customers want to do more trade via the Internet.

• The technology provides opportunities for improved support while mobile for business staff for whom mobility is a vital element of their activities. The combination of smaller and lighter computers and improved data communications networks now make mobile offices a realistic way to organise some business activities.

• All the users of the Internet examined in this report were already comfortable with computer technology before they began to explore the business value of this technology. They were also keen to explore the possible value of this technology to their businesses. These are features commonly found amongst early adopters of technology. As an understanding of the use of a computer to deliver information in the way presented by the Internet is an important feature of its successful use, need for such understanding must be addressed in other businesses where it is lacking if effective use of the technology is to be made. This can be achieved through advice and training.

Recommendations

• The introduction of the Internet into even the smallest business requires planning to maximise the benefits it can bring. Accountants and other business advisers should be proactive in offering advice on how to plan for these changes as this stage of the adoption process is too often underestimated by adopters of the technology. More use of tools such as the Impacts model developed as part of this research should be made to support this process.

• Business advisers should seek out experience in this technology to equip themselves to aid their SME clients. Without this knowledge they will be unable to provide appropriate assistance to their clients in this increasingly significant area for SMEs. They should make use of local training opportunities from private sector organisations and take up professional association training where on offer. They should also recognise the vital need to maintain this knowledge by regularly adding to their training via online experience and more formal additional training.

• Professional Associations should offer member training opportunities, at varying levels of experience, as part of a Continuing Professional Development and Experience programme (as specifically suggested by the IFAC Guidelines on Information Technology in Accounting Curricula, 1998).

• More self-help support and opportunities to experiment with this technology should be provided to SMEs. Clubs, such as CUBIT in the West Midlands area and SNUF in Sheffield (see Resource Guide), are excellent examples of how this support could be organised. The district societies of accounting bodies could be more active in supporting these organisations or in establishing them where not already in existence. They should, in particular, be encouraging their members to recommend them as independent, useful sources of advice. National funding should be made available to these organisations.

• Professional associations should support developments such as WebTrust (see Resources Guide) and create codes of good commercial practice to help create a solid commercial foundation on which small businesses can rely.

• Research involving detailed case histories should be made available to SME decision makers as existing business cases provide good evidence of where the positive and negative impacts of this technology will be found. They provide ideal vehicles to illustrate both the detail and the context of successes and failures in this area. More material of this nature should be created by Government bodies such as the DTI and made available via organisations such as Enterprise Link and Business Link in England and comparable bodies elsewhere in the UK.

• Proactive encouragement of group connections to the Internet should be given as these minimise the per company cost of connection, lower the risk exposure of each individual member and offer the opportunity for higher levels of advice and support for participating SMEs. This encouragement should come in the form of central access points for companies physically located together such as those sharing common premises or with shared professions (such as accounting firms) or associations (such as Chambers of Commerce).

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