SMEs log on to concerns

3 May 2000
More news

04 May 2000

While Wales welcomes the government's new £5million e-commerce scheme, cost is not the only worry for small firms going online, writes David Arminas

The message from the government and business organisations could not be clearer. E-commerce is necessary for growth and to remain competitive in a global environment.

This message is aimed at every sector in the UK. Companies of all sizes are told they should take heed. But, while no firm should be left behind in the prime minister's push to make the UK the best place for e-commerce in Europe, there is a recognition that there is much work to be done among small and medium-sized enterprises (SMEs).

Wales has been particularly successful in attracting investment, with many international firms setting up bases and manufacturing plants there.

But e-commerce doesn't recognise geography and Welsh SMEs are now competing with others in Europe. They realise they must be capable of e-commerce to survive.

The latest initiative, the Welsh Development Agency's (WDA) £5 million Wales smE-Business Programme, is a concerted effort to ensure not only that the message is spread, but that it is actively supported. Few excuses can now be accepted from Welsh SMEs for not being aware of the costs and benefits of going online.

But it is crucial that such programmes must tackle the specific issues faced by small firms. People who have worked only for large companies might find it difficult to understand the fears of those in smaller firms further down the supply chain.

The people who must understand these fears in the WDA's programme are the 70 consultants advising firms on e-commerce strategies. This is the backbone of the scheme, said Rosemary O'Connor, the WDA's programme manager, business competitiveness.

O'Connor envisages that around 1,500 SMEs will have an average of 13 days of consultancy visits. Some may need 20 or so, while others may need just three days.

"Getting independent advice has been a big problem for SMEs," said O'Connor. "Our requirement is that the consultants do not represent a particular product or line of goods."

Consultancy for SMEs is welcome but there could be some resistance, said Owain Davies, director of Spencer Davies Engineering, a 25-year-old bespoke sheet-metal firm employing 40 people near Swansea. There will have to be some sensitivity about it, he added. "Welsh SMEs tend to be very self-protective. And they generally have a firm belief in 'if it ain't broke, don't fix it'. It's a tricky cultural issue."

Davies also believes that SME owners will have to be shown that e-commerce means you have more, and not less, control over your own business.

Software problems

One area in which SMEs can trip up is software and its licensing, although Davies has made sure he has an IT strategy that includes buying software, complete with backup and assurance of regular maintenance from reputable vendors.

If an SME is using application service provision - in which the customer downloads the software it needs from a host company's website - problems with the illegal use of software are limited, according to Chris Hodge, international vice-president of US firm Lawson Software. This is because the web-based software should have been licenced by the host - normally a large company or trading exchange.

However, the weakest link in an SME's e-commerce set-up could be its basic, in-house software, said Geoff Webster, chief executive of the Federation Against Software Theft (Fast), an anti-piracy group set up in 1984 whose members include two-thirds of the FTSE-100 companies.

"Every day we get reports from employees or former employees saying that a company is using unlicenced software," said Webster.

Last year Fast's annual software-licensing survey showed that 30 per cent of organisations in the UK have board-level responsibility for software licensing. But 16 per cent of the respondents said they had insufficient controls to monitor the downloading of unauthorised software onto company computers.

A growing SME, said Webster, may have to pay particular attention to the finer points of software licensing. If a firm expands from having 10 employees to 20, will its license allow for more computers to use the software?

A complete change of senior management over, say, a two-year period may also leave an SME without any knowledge of its software history.

Webster points out that SMEs are really "betting their houses" in a tight market when they enter into business-to-business e-commerce. Mistakes, intentional or otherwise, are likely to be extremely costly.

SMmay2000

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