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The owner-manager needs to understand that he cannot be everything in the business and needs to employ or outsource the ICT function. Software is becoming a service: a good example is ABSA bank, which is providing a payroll solution to its SME clients. For the SME, this leads to a reduction in the costs of developing or acquiring payroll solutions, and means that maintenance and upgrading of the solutions is taken care of. SMEs need to spend money and time on getting the relevant advice from ICT experts and consultants in order to set up the ICT strategy, based on the SME business strategy.

By defining the strategic objective of the SME, the SME can decide which strategic investment to make. Levy et al. (2001) have found that investment in ICT is successful when it takes one of the following two forms: providing efficiency and savings, or enabling added value. The former form is taken by SMEs in the Low and Medium user of ICT groups where ICT is used for transaction processing and does not play a huge role, while the latter is adopted by the High user of ICT group; here ICT is used for technical and operational integration and inter-organisational integration (as discussed in Section 3.3.2).

The focus-dominance model in Figure 2 shows the different possible ICT solutions. As mentioned in Section 3.6.4, it is based on the following dimensions of the SME: strategic focus (cost reduction versus value adding) and customer dominance (few versus many customers) (Levy et al., 2001:135). Customer dominance refers to the power of the customers, as “SMEs are driven primarily by customer needs” (Levy et al., 2001:135). The model’s four domains: coordination, efficiency, collaboration, and innovation, create competitive scenarios.

MIT 840

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