Case study illustrations of a scorecard to measure IT strategy improvements in UK SMEs

Date30 January 2009
DOIhttps://doi.org/10.1108/13287260910932395
Pages24-42
Published date30 January 2009
AuthorJohn Williams,Hefin Rowlands
Subject MatterInformation & knowledge management
Case study illustrations of a
scorecard to measure IT strategy
improvements in UK SMEs
John Williams
Department of Accounting and Business Information Systems,
University of Melbourne, Melbourne, Australia, and
Hefin Rowlands
Newport Business School, University of Wales, Newport, UK
Abstract
Purpose – The purpose of this paper is to demonstra te a means of measuring information technology
(IT) strategy improvements in small to medium-sized enterprises (SMEs).
Design/methodology/approach – A longitudinal study of eight SMEs was carried out over a
two-year period, applying an IT development scorecard which uses a Likert scale to measure changes
during the study period.
Findings – The paper finds that seven of the eight companies assessed during the period of the study
showed improvements in their IT development, with only one company showing negligible
improvement. The company that made negligible improvement went into receivership 12 months after
completion of the study.
Research limitations/implications – The key limitations were that only eight companies were
prepared to participate fully in the study, and the diversity of type of company was large. Future
research should include a larger sample size and use of companies from within the same
industry/sector.
Practical implications – The scorecard has practical implications in that instead of having to
choose complicated IT planning systems or pay high consultancy charges, SME owner managers can
use the scorecard themselves at no cost and make informed decisions on IT investments.
Originality/value – This particular design of scorecard has not been used before, it is original, and
will be of use for SME owner managers and IT practitioners, as it provides an easy-to-use tool to help
plan and measure IT development within SMEs.
Keywords Smallto medium-sized enterprises,Communicationstechnologies,Continuous improvement,
Corporate strategy,United Kingdom
Paper type Research paper
Introduction
Small to medium-sized enterprises (SMEs) are a major component of economic growth
in many countries; indeed in some cases they form the very heart of the national
economy. In the UK 55 per cent of employment and 51 per cent of gross domestic
product (GDP) is made up from the SME sector (SBS, 2005). Beyond the UK, the figures
for the European Union overall show that there are 18 million SMEs providing 67 per
cent of jobs and 59 per cent of GDP (SBS, 2005). In the USA, 97 per cent of all
businesses are small, employing over 51 per cent of everyone employed (Barrera, 2005).
Even when a variety of industries are considered, the SME sector is still very well
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JSIT
11,1
24
Journal of Systems and Information
Technology
Vol. 11 No. 1, 2009
pp. 24-42
qEmerald Group Publishing Limited
1328-7265
DOI 10.1108/13287260910932395
represented, in fact it has been stated that they predominate in many different
industries (Ward et al., 2006).
The main aim of this paper is to demonstrate the use of a scorecard to measure
improvements in information technology (IT) development, as the result of
implementing an IT strategy. The research question is therefore “Can an IT
scorecard be used to measure improvements in SMEs?” The paper is structured to
show why SMEs need IT, the lack of research in this area, the development of an IT
opportunities list, a scorecard to measure IT development, and its application to SME
case studies.
The need for IT in SMEs
In order for SMEs to compete in this new digital economy they need to exploit IT to the
full. Customers are demanding quicker delivery, in fact the pressure for this is constant
and SMEs are finding themselves more and more dependent on technology as an
enabler to improve productivity and delivery times. This in turn requires better supply
chain planning, and the ability to predict and forecast customer needs reliably
(Aggarwall, 2006). Since IT is now more affordable, the use of IT in SMEs is on the
increase, enabling them to increase volumes of product and supply these over large
geographic areas (Chacko and Harris, 2006). IT is being used in a number of areas to
benefit SMEs, including use for the development of new products and services and
assisting in managerial decision making. In addition, research has shown that
companies that use IT are more likely to engage in innovation. (Montazemi, 2006). In
addition to the increased likelihood of innovation, studies in Japan suggest that the
firms that invested in IT were more profitable (Morikawa, 2004). Research in Australia
supports the findings that lack of IT investment can have a negative effect on
profitability (Love et al., 2005). The development of global competition mentioned
earlier is forcing companies to improve their competitiveness and productivity, and
research has shown a general focus of IT on “business efficiencies”. The term IT can
have different meanings to different people, and yet the terms strategic info rmation
systems, and strategic information systems planning (SISP) are sometimes used
interchangeably (Hagman and McCahon, 1993). Therefore there is little doubt of the
growing importance of IT in SMEs.
The need for researching IT in SMEs
Despite the importance of IT in SMEs shown above, it is a subject that has not been
well researched (King et al., 2000; Premkumar, 2003; Levy and Powell, 2005). In
addition to the lack of IT research in SMEs, information systems (IS) also for SMEs
have had little research as noted by a number of authors including Levy et al. (1999)
who point out that most research in SISP has been carried out in North America, where
the focus is on large corporations and on the development of methods. European
contributions have tended to concentrate on developing frameworks that assist in
identifying the position of SISP within the organisational environment and that:
To date, research interest in the role of Information Systems Strategy in SMEs in particular, is
surprisingly sparse and underdeveloped (Levy et al., 1999).
IT strategy
improvements
in UK SMEs
25

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