Competitive Advantage

If a small business is going to survive it must be competitive. Internally, efficient operations will contribute to lower costs. A positive environment will allow employees to gain and apply the necessary skills. Management knowledge of information systems will provide leadership. Externally, the establishment of knowledge acquisition networks will facilitate the novel use of information systems. This chapter discusses how a strategy which integrates all of the small business resources, especially those related to information systems, will improve performance. An overall customer orientation applying internal resources and accessing external knowledge will contribute to competitive advantage.

Information Systems

An information system translates data into information to support business decision making. Data, raw unorganized facts, are gathered relative to a business event. The resulting information, which has meaning in the hands of a user, must be complete and accurate in order to support timely decision making. The acquisition of an information system by a small business will be a relatively costly endeavour. The small business manager will tend to rely upon an internal individual or external organization for advice when acquiring an information system. Further, the information system will be employed to improve the efficiency of daily operations of a small business. This chapter describes information systems. In general, an information system turns data into information to support decision making. The information must be timely, complete, and accurate relative to the decisions which must be made.

Small Business

Small businesses are quite unique in many ways. They make a major contribution to employment specifically and the economy in general. Decision making at all levels is affected by resource limitations. Many of the aspects of failure or success of the small business relate to management issues. When a small business is formed it may grow quickly. If they do not fail the growth may lessen. While this growth may be regarded as a success, longevity and the consequent multi-generation existence may also be a consideration for an interpretation of success. This chapter covers the gamut of small business perspectives.

Adoption

The adoption of information systems by small business requires an innovative approach to the acquisition of technology. There are external pressures from the environment, such as customer and supplier expectations regarding interacting with the small business. However, it is incumbent upon management and employees form within to be open to considerations for change that will result in the small business. Further, a successful adoption will be facilitated through participation of everyone who will be affected by the adoption. The overall goal is improvement in processes which will positively impact the competitive advantage of the small business. This chapter addresses the issues involved in small business adoption of information systems. The adoption of technology in general will result in significant changes to the small business. It is not necessary that the technology is leading edge, just new to the small business. Pressure to adopt a new technology may come from external or internal sources. Externally, customers or suppliers may expect to interact with the small business via some form of technology. Internally, senior management of the small business may perceive that the adoption of a technology will provide a benefit to the business.

Entrepreneurs

An entrepreneur requires many skills. But, an entrepreneurial perspective is more about a state of mind. That is, an entrepreneur will be more willing to take a risk than a small business manager. Further, an entrepreneur will tend to be more innovative in continually seeking out new opportunities. Eventually, however, the entrepreneur will move on to a new initiative; or to adopt the perspective of a small business manager. This chapter presents the evolving role of the entrepreneur's involvement in small business.

E-Business

The management of a small business requires many processes which promote a smooth and efficient operation. Internally, these processes relate to inventory, accounts payable, accounts receivable, and payroll. Externally, there are processes which support the small business interaction with customers and suppliers. As a small business matures so should the management processes. Sophisticated technology, such as the Internet, will add further benefits to applying e-business to the management processes. This chapter discusses the benefits of this application.

Management Processes

On a daily basis small businesses carry out the basic operations of the venture. These management processes must support the general direction set by the small business in its long-term mission statement and goals and objective plans. But the small business must also address the short term functional requirements. As the small business grows and matures the management processes must expand and change to support the larger business. More formal and structured processes will be facilitated through the adoption and use of information systems. These processes are presented in this chapter.

Use

A positive environment will contribute to the beneficial use of information systems by small business. It is incumbent upon senior management to take a proactive approach to the strategic use of information systems. Employees must be trained with the appropriate skills. New processes should be explored regularly both with current information systems and new systems that could potentially provide an improvement in performance. Information systems should be sued in a way that contributes to both efficiency and effectiveness to support operational decision making and eventually the competitive advantage of small business. This chapter presents an overview of the issues involved in the use of information systems by small business. Management of small business tends to make decisions based upon an informal approach to gathering information. Once adopted, an information system formalizes this approach and promotes a more structured process for decision making. From an external perspective the use of information systems by small business presents a positive image to customers, suppliers and other small businesses. Internally the responsibility resides with senior management to set a positive environment regarding the use of information systems.

Balanced Maturity Framework

Entrepreneurs form businesses to be successful. To begin, a small business must make a profit. But then success may be measured in growth or longevity. In either case the small business will mature over time. The management processes will become more structured as decision making is formalized and the necessity for information expands beyond the boundary of the small business. To support this structured approach technology must be more sophisticated. More extensive E-commerce will facilitate improved interaction with customers via Customer Relationship management systems. Advanced E-business will promote more efficient and effective Supply Chain management and relations with suppliers. A balanced approach to maturity, as proposed in this chapter, will improve performance of the small business and contribute to competitive advantage.

E-Commerce

There are many ways for a small business to interact with current or potential customers. E-commerce represents the most current communications channel which is supported by leading edge technology in the form of the Internet. The communication between a business and customer is referred to as Business to Customer (B2C). This communication may occur at various levels of interaction. At a very basic level a business web site may simply present a description of its products and services in the form of an electronic catalogue. More sophisticated E-commerce applications will conduct sales and provide follow-up services for customers. The advantages of implementing E-commerce outweigh the disadvantages. However, small business adoption may be restricted due to limitations of resources such as time, skills, and finances. The focus of this chapter is Business to Consumer (B2C). As a small business matures it will tend to incorporate more sophisticated aspects of E-commerce and pass through four stages – Presence, Portals, Transactions Integration, and Enterprises Integration.