July 21, 2009

by Scott Campbell

Nearly half of small businesses -- 44 percent -- have delayed or canceled IT projects because of economic uncertainty, according to a new study. But at the same time, 23 percent of small businesses received a D or F grade when it comes to their own IT effectiveness.

The study, sponsored by Web-hosting company, The Planet, and research firm, The Yankee Group, finds that small businesses are having a tough time trying to build, manage and maintain their own IT infrastructures, especially since 35 percent of respondents admitted to be short-staffed in IT, said Carl Meadows, senior manager for product management at The Planet.

For the IT Effectiveness Index Mid-Year Report 2009, several hundred small businesses answered questions related to different segments of their IT strategy and they, in turn, received a grade for their preparedness. In addition to the failing grades, another 37 percent received a C grade.

"We were expecting more Bs and Cs than Ds and Fs going into this," Meadows said. "I know small business is always going to struggle to do all the things they should be doing to make sure their IT is effective as well as providing proper protection for their business. But what we saw across every IT category, including incident management, security and disaster recovery was a solid 25 to 30 percent that had no plan, nothing in place. That's a major concern. If you have no disaster recovery plan or no defined security program, you're building on the fly after something happens. It's our hope that this highlights the issue for small businesses and gives them the [impetus] to build the framework."

Other findings from the study include: Only 30 percent of SMBs have a fully implemented security program Only 26 percent have a fully implemented disaster recovery/continuity plan Only 42 percent said they're fully compliant with governmental regulations and policies, such as HIPAA or PCI.

The results are especially disturbing, according to Meadows, since more than two-thirds of the small businesses responding to the survey indicated that IT and Web commerce are the foundations that enable their business success.

"The Internet is a foundational element of business and many of them have no security program. That puts their business in serious jeopardy," Meadows said.

Nearly half of the small businesses face obstacles in implementing new IT projects because of cuts in capital investments, and nearly one-third lack the staff to properly manage their IT investments, according to the study.

Solution providers can play a key role in helping these small businesses overcome these challenges, Meadows said.

"These are persistent problems that small businesses face. It's impractical to have all the expertise they need on hand, such as Cisco-certified infrastructure guys. That's why outsourcing makes sense for a lot of these guys," he said.

Among the study's suggestions for small businesses are to concentrate on core competencies while seeking to explore outsourcing options, take advantage of free software and other offerings, explore the benefits of cloud computing whereby applications are utilized and maintained on a subscription basis, and consider IT infrastructure alternatives to capital expenditures through hosted hardware, software and services, according to The Planet.

"One of our goals of the survey is to help provide some ammunition to seek further funding. If I am a small business focused on delivering a SaaS application and I get a D, I can go to management and say one, we got a D, but also that's in the bottom quartile of other companies in our space and we need to invest more," Meadows said.