Businesses 'stuck in IT time warp'

Britain's small to mid-sized clients are losing £18 billion annually and putting the future of their business in jeopardy thanks to old fashioned IT practices, vendor research claims.

Out of date beliefs about in-house server computing emerged as the key culprit that saddles SME businesses with higher technology bills than if they opted for hosted services.

The study, which polled mid-sized firms in the last quarter of 2005, found mid –sized firms believe running a server in-house offers maximum security and access.

Yet setting up such a system has ongoing impact on a company's "bottom line," aside from the upfront and minimum requirements, Fasthosts, the service provider said.

The company cited financing a power failure system, SDSL internet connection; a remote control card; a firewall for security and other considerations such as air conditioning; physical security and remote back up, as a constant tax for owner-managers.

But without investing in a technology driven system for minimum server start-up, the company says the longevity of small to mid-sized runs a risk from 'major IT failure.'

Even when smaller employers can stretch to import server technology with the right environmental factors, careful consideration and preparation of the system is neglected, the firm's study showed.

Andrew Michael, its director, said: "In our experience many businesses are still stuck in 1980s computing mentality. They need to move and embrace new computing practices.

"It is impossible to put value on data so it needs to be kept under maximum security - data is the lifeblood of any business. Only a hosted environment offers the required security solutions in a cost effective bundle, however the SME market remains largely ignorant of this."

The alert to mid-sized firms coincides with new research showing inbound e-mail is delayed and causes a backlog most often when companies, sometimes unknowingly, alter their internal settings.

In order of frequency; the next most common causes are the crashing of an email server, having the wrong firewall settings, incorrectly changing MX records and an email server running out of space, according to SoftScan, the e-mail filtering firm.

"With constant patching, the introduction of new software or even just human error, it's very easy for system settings to be altered in such a way that the email flow grinds to a halt," said Phil Watts, managing director.

Beyond the research, Watts claims anecdotal evidence points to the advantages smaller firms can enjoy by foregoing the "burden of internal resources."

"This issue was recently highlighted by an enquiry from a firm of solicitors whose email had been stopped by no fault of their own," he said.

"The IT director was completely frustrated that they couldn't access just two emails that were of critical importance to the business and had to wait until they were downloaded, along with the other two thousand messages queued, once the service issue was resolved."

Last week, Capgemini said companies that innovate through IT instead of seeing their provision or department as a cost centre achieve higher margins, Computing reported.

The IT provider's poll of 161 European chief information officers said they spend 87 per cent of IT budgets on low-value, back-office tasks such as support.

Eight per cent goes on conceptualisation/design, but just five per cent of an average European company's IT budget is spent on strategy and planning.

These areas have a proportionally higher value, the consultant said, and are proven to deliver revenue uplift and greater margins.

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