IT Management 101 for Small Business

by Gerry Blackwell

IT management isn't just for the Fortune 500 crowd. SMBs need to manage their technology just as much, if not more. But how can small companies tame the IT beast?

Big companies almost always have IT departments that help them select technology, install, integrate and maintain it, train employees, provide desktop support and fix systems that break.

If you're a small business owner, you probably don't have an IT department. So how do you manage the technology in your company? In too many cases, the answer is: not well, or by the seat of our pants. But there small businesses can adopt more effective approaches to IT management, and there are very compelling reasons why they should.

Hiring a full-time dedicated IT staff is one solution, and it may be a more reasonable and affordable strategy than many small business owners think. But there are other solutions as well, including using managed service providers (MSPs) that deliver some or all services remotely, helping to reduce IT management costs.

The Financial Risk of Poor IT Management

Maintenance and support of essential systems is just one part of IT management, but it's where the impact of poor performance is easiest to see.

"When a server or network goes down, and it's not if, it's when, you'll be losing time and money and productivity," said analyst and consultant Laurie McCabe, a partner with the SMB Group. "People can't do their jobs; they can't enter or take orders, for example. The cost of not performing well in this area is going to show up on the bottom line."

For some businesses, such as small law firms where attorneys charge high hourly rates, costs can mount quickly if employees are unable to access information or systems they need to do their jobs. But it's not just loss of access. Neglecting software patches or anti-virus updates -- important parts of system maintenance -- can result in costly malware infections. If you lose private customer data to hackers, for example, you'll likely lose customers.

"These kinds of situations can be absolutely catastrophic for a small business," said Darin Stahl, a research lead at analyst firm Info-Tech Research Group Inc.

Strategic IT Management

While the bare essentials of keeping computer systems healthy and humming are most crucial for small businesses, it's not the whole picture. Who decides which technology you use? The second biggest concern around IT expressed by small business owners in a survey conducted by McCabe's firm was that they might miss new solutions that could help their business.

Ensuring you're using the latest and best technology you can afford requires knowledge, expertise and a commitment of time and resources. Who decides when you should upgrade essential infrastructure such as network equipment, servers and PCs?

Hanging on to old computers may seem like a good cost-containment measure, and an easy way to avoid the issue, but if you hang on too long, Stahl pointed out, old gear can cost you more in lost productivity and increased IT management than you would pay for new.

Small businesses need someone to analyze these issues and make recommendations or decisions.

IT Implementation and Integration

When you do upgrade infrastructure, who oversees the installation, and how is it done?

Most small businesses buy PCs in ones and twos when they absolutely must or when there's a good deal at the local big box store. They end up with a mish-mash of makes, operating systems and application software versions.

Larger companies, Stahl said, acquire new PCs on planned cycles, and when they install them, use a standardized 'image' with all the operating system settings and application software needed for each employee. This approach speeds installation and integration, reduces IT management costs and helps ensure solid security. There is no reason small businesses couldn't do the same.

When you acquire new software systems, who ensures that they're working as intended? The third biggest IT concern in the SMB Group survey is implementing new solutions, McCabe said.

It goes beyond simply implementing, she added. "How do I integrate those new systems with what I already have? How do I make sure everything works well together? How do I configure and customize it for my business?"

Getting the most out of the technology they've already invested in is the number one concern expressed in the survey by SMB Group, McCabe said.

Bridging the IT Knowledge Gap

There is often a "knowledge gap" in small businesses about such issues and their importance, said Stahl. Many think they know their business and the technology they need, and that it's a simple question of acquiring and installing it.

"They're being sold this notion that all you've got to do is buy this server from Dell or HP, put it in, hook it on your network and press this button -- and everything happens," Stahl said. "And yeah, sometimes it is that easy to replicate your data, but is it secure, is it encrypted?"

What are the options for improving IT management in your company?

IT Management Solutions

Some IT management strategies that small businesses turn to may not be ideal. One is to assign an untrained tech-enthusiast employee to look after IT on a part-time basis -- the "shadow IT department," as Stahl called it.

It can be successful, he said. But it may not be the best use of that employee's time. And because the person is untrained and working part-time, he may overlook crucial tasks -- resulting in compromised security or system instability.

The other most common strategy is to hire a small local value added reseller (VAR) or computer service person, sometimes on retainer, to come on site to handle routine maintenance and respond to trouble calls.

Stahl puts the cost for the lowest level of service providers at $25 to $30 per device per month for handling routine tasks and responding to trouble calls. Unscheduled "moves, adds and changes" are charged on a time-and-materials basis.

There are a few problems with this approach. The least expensive providers may not be "fully professional," Stahl said. Their knowledge is limited so they don't recognize or know how to solve all problems. "If all you have is a hammer, everything looks like a nail," he said.

The other problem is that most are small operators themselves and may not be able to respond quickly. Problem reports can pile up for a week or more until the person comes in to deal with them. "That breeds a lot of frustration," Stahl said.

Retaining bigger, more professional service providers with better capability to deliver timely onsite service can cost from $35 to $50 for desktop computers per month and as much as $70 for servers.

Managed Service Providers

Many essential IT management tasks can be performed remotely, over the Internet. Managed service providers (MSPs) offer various outsourced IT services, including routine maintenance and help desks.

With remote service packages, costs drop to more like $19 to $22 per desktop per month, Stahl said. McCabe said it can range anywhere from "a few dollars" to $30 to $40 per device, depending on services delivered.

Stahl and McCabe are both enthusiastic about MSPs as a solution for small business. "More and more small businesses are thinking of going to managed services for remotely managing things like software patches and backups -- all the basic care-and-feeding stuff," McCabe said. "I think it's a really good option."

Small businesses can use the Managed Service Showplace, a vendor-neutral online database of MSPs, to find a service provider, she said. Many are local or regional in focus. Intel also has an MSP locater at its small business website.

"I think it's a real win for small businesses," Stahl said. "It lowers the cost structure. It means they've got a more consistent level of service and the mean time to repair is shorter so people are back earning revenue faster. It's a big win."

MSPs may not be ideal, though, for small businesses with a "reactive" management style that values quick onsite response, he noted. MSPs can dispatch onsite technicians, but it's not their forte, and it typically costs extra.

A Nerd of Your Own

Once small businesses hit a certain size -- Stahl suggested 75, McCabe said 50 -- it becomes, as McCabe put it, "very hard to not have at least one IT person on staff."

The point at which it makes sense to hire dedicated IT staff may come sooner or later, though, depending on the complexity of your technology and other factors. Small businesses should analyze their costs for outsourced IT management and then calculate whether hiring in-house expertise would cost more or less.

Stahl estimates the "fully loaded" cost -- salary and benefits -- of an entry-level IT professional at about $55,000. Finding the right person may be difficult, he warned.

You also need to decide at a strategic level what you're hiring the person do. One possibility is hiring someone to do routine maintenance, trouble response and repairs. But that still leaves the other crucial IT management functions such as acquisition, implementation, integration and customization.

McCabe recommends that small businesses with 50 employees and up consider using an MSP for routine "care and feeding" of technology and hire a more senior staff IT person to manage the MSP and all the other IT management tasks.

Where's the pay-off in that?

"When a company can think more strategically about IT -- figuring out how IT can really help your business as opposed to just figuring out how to keep systems up and running -- those are the companies that usually get an edge in the market," McCabe said.

Gerry Blackwell is a freelance technology writer based in London, Canada. Read his blog, AfterByte

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This article was originally published on Wednesday Aug 25th 2010
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