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Richard Masters ( April 2012

The operating environment for Pre-start Micro, Small and Medium sized businesses (SME’s) is currently highly dynamic, driven by a number of fundamental underlying changes in the external technological and social environments. These are, famously, The S and T in factors in the classic Strategic Environmental Analysis model (PEST or more recently PESTLE) still used extensively in strategic business planning to assess the external contextual impacts on organisations going forward. Whether we are at the beginning of a change cycle or in the middle or the end, I have no idea. Indeed the whole idea of change occurring in cycles may be redundant and a never ending and ever accelerating pattern may be a more relevant model. What is certain is that these external environmental changes will have a major impact on SME’s and, almost certainly, the whole structure of the services market which supports them. Some of the social and technological trends which are currently manifesting themselves and causing this radical impact include: 1. The greater accessibility of web technology for SME’s. 2. The resurging pre-eminence of content in search and therefore getting found online. 3. The rise and further rise of social media and social networking platforms as marketing tools for small business. 4. The development of cloud and mobile as the IT technologies which are potentially competitive game changers for SME’s

5. The entry of generations X and Y both into the labour force, and as significant purchasers and consumers in the economy Below I explore in turn, the nature of the change each of the forces are applying, before trying to pull out some of the potential implications for SME’s themselves and the support environment which services them.

The web design industry has grown like topsy, with small cottage industries to large companies, providing services ranging from simple “cookie cutter” sites to large, functionally rich, ecommerce sites. There will always be demand for specialist and highly complex sites, especially where the on-line element is vital to competitive advantage. I deliberately exclude mission critical because, although an ecommerce capability can be vital, it may not provide a competitive differentiation. So, for example, a standard ecommerce module can be used quite adequately in most situations. It might well be that the need for highly bespoke sites is declining significantly. These might only comprise a relatively smaller proportion of business site requirements. The technology now exists for the vast majority of businesses to be able build and support their own sites and their surrounding social ecosystems. The emergence of simple website builders1 has been a particularly strong feature. These range from simple on one page “electronic business cards” (for more details see2) to fully fledged managed service based sophisticated solutions. I was asked recently to review some of these systems elsewhere3. The results were impressive. The ease to which, even quite sizeable and
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for a good introduction to website builders see: For example see

“Website Buiiders an Evaluation” R.Masters

complex, sites could be constructed in very short timescales was remarkable. Even in the 3 years I have been tracking developments in these applications, their capabilities and sophistication has developed enormously encompassing Blogging, Shops, Social Media integration, hosting and email functions. Perhaps most significant is that they allow the creation, addition and amendment of content in real time by the users themselves. In fact I would go as far as to postulate that the website functionality requirements of over 95% of small business websites could now be provided by these systems. Similarly there is an increasing realisation that what a website looks like to the “human eye” is not a particularly important aspect. As long as it performs its business functions, and which often includes appealing to the “Google eye”4, then it is ‘fit for purpose’. There is now a realisation that design for the human eye is an aesthetic but not a critical functional issue for the majority of websites5. The design is an important element of the functionality, in that the design must work and deliver the functionality, but beyond that it is very much in the beholders eye. Websites that are easy to use and navigate to access the information that users are seeking are well designed. Clearly, if you are selling design differentiated products, then the visuals are important, but other than that it is largely a peripheral issue. The lesson from this is that a business, even a micro one, can develop its own website around its own business requirements without the need to hire a web designer or developer. “Not having a budget”, “my web company charges too much for every update” or “they are too complex for my business” are, simply, no longer valid reasons but excuses. If it’s important to the businesses objectives then it is beholden on the business to do it themselves. Owners and managers, whatever generation they belong to, have to take responsibility and get involved as they would in any other key activity area of the business. You can bet your life competitors will be!

a readable populist overview see Johnson and McGee 5 For an exposition of this view see

In parallel with this trend towards increasing ease of website development, has been the progressive emergence of “Content is King” in search. This sounds dumb put as simply as this- of course content is the key! Unfortunately, this has not been the case in the recent past. The emergence of search, driven largely by Google, in the early stages has been the key technology for getting potential customers to locate a website and hence a business. In order for businesses to get found, it was necessary to either pay for the privilege via PPC or Display advertising or emerge at the top of relevant “organic” search (SERPS) listings. Google pioneered the concept of the PRI or Page Rank Index by which all sites are ranked and displayed accordingly (for an good explanation see6). This was fine in principle but led to the emergence of a whole industry- the SEO (Search Engine Optimisation) industry- aimed at exploiting the criteria to get their clients sites to the top of search listings7 . As quickly as Google would change the search algorithms the resourceful SEO’s would dream up a way around them. This was dispiriting for small businesses as it seemed that unless they invested large amounts in the “dark arts” of SEO their websites would not attract customers and therefore be of little use. Google finally tired of the continuous gaming of the system. I think it may be possible to link this decision back the infamous JC Penny fiasco8 in the run up to Christmas 2010 and they instituted a series of fundamental changes to the ranking algorithm now known collectively as the Panda Updates9 early in 2011 which are still rolling out as I write. The net impact of these changes has been to put content as the key ranking criteria. Matt Cutts, head of Search at Google recently spoke on the issue, this is summarised by Read and Write Web as below:
Johnson & McGee (see note 4 above) Chapter 2 “How Google works” Their critics would say “gaming” the system using a variety legitimate “White hat” and less legitimate “Black hat” techniques 8 See 9 For an over view of Panda see
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“Even if you do brain-dead stupid things and shoot yourself in the foot, but have good content, we (Google) still want to return it," says Cutts. In fact, Cutts says that Google tries to make it so that sites "don't have to do SEO." First and foremost is content, and there's no bonus for having good SEO. So if you're planning that 2012 site budget, you might want to think twice about hiring that SEO expert and find a content expert instead.10

More recently still, Cutts has indicated that Google will actually penalise sites which are overly SEO’d:
“We are trying to level the playing field a bit.... All those people doing, for lack of a better word, over-optimization or overly SEO – versus those making great content and great site. We are trying to make GoogleBot smarter, make our relevance better, and we are also looking for those who abuse it, like too many keywords on a page, or exchange way too many links or go well beyond what you normally expect”11

There is already evidence that some paid link sites are being penalised12 as part of this crack down on overt SEO activities So what constitutes good content? Put simply good content is content that people want to read and Google tends to measure this by the quality and originality of the content along with its recentness. Included ‘inter alia’ in content are other elements of the digital ecosystem, Blogs and Social Media interactions (often referred to elliptically as “Social Signals”), News Releases etc. (for more on content see13) Google now searches every page of every website in the search for relevant content. In bound links and their authority are also seen as important indicators of the popularity of content. Google has now also outlawed sites14 that offer paid links in an attempt to prevent the abuse of creating score of inbound links just to improve search listings. There are, however, still numerous articles in serious journals and newsletters extolling link building strategies for websites. One has to ask the question as to whether building links to a website solely for
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Google webmasters advice note 12 above for details



the purpose of increasing rankings is an exercise that should be rewarded. It seems likely that Google will progressively address the issue and reward natural and earned links as it has original and valuable content thereby negating these types of activities. As with website design and development, so the tide seems to be ebbing away from the highly specialist services offered by specialist SEO companies towards user generated content as the key driver of search and hence being found on the Web. Frankly, if the business doesn’t have the skills/time or interest to write and communicate about their business and its value to customers then why should anyone be interested in finding it anyway? The further good news that these skills- the development of compelling content for customers- are readily available, as they are basic to the skill set of most recently trained business studies, marketing and media studies students. This is an area in which the UK has been investing in via the higher education system over the recent past and these skills are readily available in the marketplace at reasonable cost. Good content is not technical rocket science and is in the easy reach of any business prepared to devote the necessary time and effort!

The rise of social media over the recent past is one of the most pronounced and all pervasive trends currently social trends. As noted above, Social Signals are, quite legitimately in my view, now one of the key content elements in search engine ranking. Over and above this, social media is hugely important in driving traffic directly (as opposed to via search) to businesses and their websites. At the outset of the Internet revolution, the internet it was envisaged as a sort of huge network of reference libraries with all of the world’s knowledge connected to it for people to look up and read15. However, it

For a brief history see:

soon became clear that people did not want to just access knowledge they wanted to generate knowledge, share ideas and interact with other like minded people and the social web emerged centred on people, ideas and sharing. Within the overall umbrella of the social media revolution, which has completely redefined and restructured the media industry, has emerged the phenomena of social networking Platforms such as Facebook, LinkedIn, Twitter and G+. The impact of these platforms on customer behavior is often likened to the modern version of ‘word of mouth’ recommendations. It, however, goes much further than that; with the explosion of the availability of information (see Infographics16) it is almost impossible to arrive at decisions based on complete information .Therefore, we seek out the opinions of others we know or experts we trust, we are therefore looking at others to effectively ‘curate’ the information for us. It is this act of curation that makes social networks so powerful at driving customer behaviour and hence traffic to websites ( in fact many people see Google searches themselves as a form of curation, based on Googles assessment of the value of the content- the PRIto the searcher). The net result is that websites can no longer be seen in isolation-as a free standing entities. Instead they are now viewed as the content hub of an ecosystem composed of a content rich hub at the middle with the various social media sites linked to in a symbiotic relationship. Which elements of the social net are linked and how will largely be dependent on the nature of the business, its marketing strategy and the personalities of the individuals concerned. Therefore, ultimately, each business will develop an ecosystem of relationships and which will be unique to it. As with the comments about content, ultimately the responsibility for engaging with social media and social networks and establishing an ecosystem are the responsibility of the individuals running the business or closely involved with it. If you are an SME and think your customers are participating in social media- then you have to get involved directly.
Nice Infographics to illustrate the point

Social media is not an easily outsourced activity like, say, producing your annual accounts. Agencies are offering services in these areas but the degree of intimacy with the business required for success and the costs makes outsourcing problematic. As with a collaborative approach to website content either in house staff or closely integrated freelancers may offer a more effective solution for SME’s.

Not only are the applications and systems that comprise the Internet revolution evolving in some of the ways suggested above, but also; the whole basis of the provision of the underlying infrastructure is changing in such a way to present a whole range of new opportunities for business as a whole and individual SME’s. Some significant features17 of this change in It infrastructure provisions include:     Computing capacity as a utility not as dedicated equipment The Freemium business model for the supply of applications The emergence of mobile The consumerisation of access devices

The impact of each of these features will be considered in turn briefly below:

Computing as a utility. Under the cloud model18, computing capacity is considered to be more like a Utility and available on demand from an external source just like electricity or similar utilities. This concept has already facilitated the explosive growth in social computing outlined above. Systems like Facebook and LinkedIn could not be ubiquitously available and scale without the infrastructure of cloud computing.

For a more detailed overview see:

A good introductory guide for SME’s can be found here:

Similarly the tools we all use around these systems could not exist without cloud based data and open API’s (Application Programming Interfaces). In fact it has been cogently argued19 that current start ups are radically different from those of the Dotcom boom era because the massive up-front investment in IT systems and hardware is no longer required. Hence new sorts of business models have emerged based on longer term plans in achieving business value for investors and owners. Under the Cloud computing model all that is required is a device that is capable of running a browser (e.g. IE, Firefox & Chrome) and an internet connection. The rooms of servers and high priced expensive desktops, which are seldom utilised to a fraction of their capacity and then only for a few minutes a day, are no longer required. Perhaps more important, is the likelihood that the large numbers of in house IT support staff or expensive external technical support suppliers are not required. It has been estimated20 that the move to cloud based infrastructure can save up to 70% of IT costs by moving to on demand infrastructure. Furthermore, not only is it cheaper overall, but because payment is now managed as a revenue rather than a capital item ,It is now possible to equate the costs and benefits of computing rather than to think of it as a huge upfront investment and an act of faith. Freemium applications. This hardware capacity trend has been further reinforced by the emergence of Software as a Service (SaaS), for the supply of software and applications and more recently the “Freemium” model21 . Under this model users pay for the functionality as they use it and, often not at all in the first instance until the usefulness to the business is established. This is in stark contrast to the traditional model of hefty up front one of software charges. In other words, as with hardware and technical support, businesses can match the benefits of using software, to

See for example


For a fuller explanation see:

the benefits accrued by its successful operation. The applications can then scale in line with businesses growth in a seamless manner as use increases. Furthermore, the combination of capacity as a utility and software as a service means that SME’s can now have access to state of the art IT solutions which were previously only the preserve of large organisations with deep investment pockets. The competitive playing field for SME’s (and indeed for businesses in developing economies) has therefore been dramatically leveled.

Mobile. Another huge consequence of the growth of the cloud model is the enablement of the mobile revolution- everything everywhere computing! The emergence of new devices such as Netbooks, Tablets and Smartphones with the ability to execute applications themselves (Apps) and to connect to the internet, and therefore access cloud based applications, is having a massive impact on both business and consumer behavior. In terms of business the link between workplace and work function has been irrevocably broken. Charles Handy’s22 vision back in 1995 of the “Doughnut Organisation” now has the technology to enable it. This does not only give businesses geographic flexibility, it also provides organisational flexibility. The existence of cloud based applications that facilitate the collaboration of individuals, wherever they are geographically or organisationally, allows people not directly employed or remotely employed by an organisation, to participate as a virtual member of a team or a project. Clearly, Gmail, Office365, Dropbox and Social platforms are all examples of applications that work in this manner. Returning to the specific example of building websites, managed service and CMS (Content Management Systems) approaches now allow the collaborative development and updating of sites; and this, therefore, allows external and internal resources to be applied to a website project in a collaborative manner on a real time basis. This may well form a sensible basis for SME’s to get the external

expertise they might require but still retain responsibility for generation and control of content. Turning to the impact of mobile on the consumer, there is no doubt that the availability of information anywhere is having a significant impact on consumer behavior. The growth of Smartphones, which looks like being a feature of the next few years, is radically altering consumer behavior. In the US, the emergence of “Smartphone Moms” who organise their daily lives and purchases via their Smartphones, in the US is a well documented23 example. The ready availability of data both via both applications (social and other) and mobile websites will increasingly be regarded as an essential facet of everyday life for increasing numbers of people. Consumerisation of access devices. Parallel to the emergence of cloud and mobile, has been the increased consumerisation of computing access devices. The emergence of Netbooks, Tablet Computers such as the iPad and Smartphones (driven by operating systems such as Android, iOS and Windows) has brought the connection and access to computing resources to the individual consumer via the high street retailers. The hegemony of the “technical expert” has largely been broken for good. This is not to say it isn’t still very technical, but this has been hidden behind a new layer which makes it much more intuitively accessible for non technical individuals. Even corporate IT departments, who have stood resolutely, Canute like, against the tide, have now had to capitulate and acknowledge the incorporation of these devices into their corporate networks! Given the huge commercial success of organisations such as Apple, this is a trend which is likely to accelerate rather than go away. The broader the appeal of these devices, then the greater the potential commercial return will be, and hence business impact. The potential impact of cloud computing in SME’s is potentially game changing, because, not only is it completely changing the ways in which IT costs can be viewed, sophisticated applications can be accessed and how organisations can be structured; but also the very way other businesses and consumers can interact with them.
For example see


It has been argued that in the UK, whilst as individuals are all happy to shop at Amazon, use Gmail and our chosen social networks from our smartphone’s , netbooks and tablets, businesses, and in particular small businesses, have been very slow at adopting these new approaches to computing24. For most SME’s, especially those looking forward to the future, the case to do this is now compelling


The current management of SME’s (and indeed business as a whole) is largely dominated by the post war “Baby Boomer” generation i.e. those born between 1946 and 1964. To varying degrees these managers have adapted to, and taken on board, IT to various degrees. Where they have been trained, it is predominantly in procedural and structured approaches to systems and applications. The younger generations- generations X (1965-79) and Y (1980-2010 sometimes also referred to as the Millennials)-have grown up with technology and have not consciously learnt it, to them it is intuitive and self evident. They are also often referred to collectively as, “Digital Natives”, the “Plug and Play”, generations. They have a radically different experience of and expectations of technology. It should be as available and easy to use as facebook on their Smartphone! They see opportunities rather than constraints. The MD of a medium sized IT technical support company specialising in supporting local businesses recently told me, in a quite matter of fact manner, that nearly all of his clients were over 40! The under 40’s simply have the familiarity and knowledge to do it themselves. He was already planning for a radical change to his business model to reflect this. Not only are generation X and Y emerging into the economy as employees, they are also emerging as entrepreneurs and business managers and

For example see

creating organisations with business models and value propositions aimed explicitly at exploiting these technological changes. The recent spate of Dotcom 2.0 IPO’s in the US, featuring companies such as LinkedIn, Groupon, Zynga, facebook etc are testimony to this. Finally they are also emerging as consumers with radically different expectations of the way goods and services are procured. There is evidence, for example, that social recommendations and brand values are increasingly important sources of information which influence their behavior. Whatever their influences are, they are likely to be different expectations from the recent past and SME’s will have to adapt to their changing consumer requirements or else they will vote with their feet. Whether it as employees, entrepreneurs, business leader or consumers the emergence of generations X&Y,, with radically different technological aspirations, at the expense of the baby boomers is and will progressively have, a major impact on the environment SME’s operate within.

The above has provided a view of some of the changing Technology and Social issues in the classic PEST analytical framework which may impact the business environment for SME’s. This final section outlines some implications of these changes may have for SME’s and IT services which support them. Four particular general areas are selected for consideration below:  Increased ownership of technology issues in SME’s  A rise of DIY approaches to websites and social platforms.  The re-emergence of marketing and storytelling skills to support the generation of content

 A decrease in the need for technical support skills and the emergence on new types of IT support organisations


Lack of understanding and issues of cost will no longer be acceptable reasons for not getting involved25. Decreasing costs and increasing ease of use are bringing these issues more fully within the ambit of all SME’s. I am not suggesting that all businesses must have a web presence – for example a local hairdresser specialising in an elderly clientele probably will not benefit greatly- but this should be a proactive choice and not a result if inaction as is often the case. Participation for the majority of businesses will become a matter of competitive advantage and not a nice to have optional add on. These issues are strategic and should be on the agenda for all managers and management teams. Expect more central involvement in technology choices by managers-even the baby boomers- as they strive to compete on an ongoing basis in an increasingly competitive and dynamic environment.

A rise in DIY approaches to websites and social platforms. As more mangers decide to opt into the use of the technologies outlined above as part of their overall business strategies, then expect a rise in the use of DIY approaches as a response to both the high external costs and the ease of use of DIY systems. It is now perfectly possible to anyone with basic word processing skills to produce a perfectly functional website. Web designers and developers are simply no longer required for the vast majority of SME’s with standard business requirements.


For a challenging view see

Those that do wish to outsource will be looking for organisations which build systems which let the user generate and manage the content themselves. CMS’s will be the minimum requirement. The need to get to an external supplier for even the smallest tweak to a system will no longer be the norm. It is a similar story with SEO services, when search was a highly technical and complex subject, then external specialist skills were a necessity, but with the increased emphasis on the quality of content in search, it will only we a small minority of SME’s who will require access to these high level specialist skills. The story is pretty much the same with social media. Social platforms are designed to be capable used by individual users with no formal training. Indeed the fact they have millions of users is testimony to this approach. Furthermore a plethora of tools26 now exist around these platforms which make more complex business related tasks straight forward to achieve. In summary, if a business has a clear idea of what it wants to achieve, using website and social media technology then achieving these objectives is now possible within even modest levels of resources.

The re-emergence of storytelling skills. The re establishment of high quality content: original, timeous and compelling, as the centrepiece of search will move the core skills required away from the technical area towards the skill areas of marketers, and media specialists. These groups basic skill sets are in the development of compelling customer focussed content. This is doubly good news because the education system has been turning out these skills in large numbers in the recent past and this should provide the UK with a good skill base to exploit. This will be particularly true for the Generation X & Y’ers who are intuitively comfortable with technology in the first place.

Example of social media tools see: 568?pgno=1&isPrev=

There is a strong argument that these skills will be most effectively held inhouse rather than outsourced. This is because to be effective, they will have to be able to experts in the particular business, its specific target markets and its unique value propositions. Generating compelling content will almost certainly require this degree of business intimacy. However, there will be role for external agencies in the SME marketplace but they will be looking for broader based skill sets encompassing basic web skills, writing, video, social media, published and broadcast media etc. This trend towards more broadly marketing and media agencies can already be seen in the marketplace with consolidations and mergers a feature already. It is also possible to foresee an increasing demand for freelancers in these functions. Where an SME does not require, or cannot afford, a whole person on a fulltime basis then the collaborative working is now much more easily facilitated by cloud based sharing technologies. It is now possible to work collaboratively with other people in a remote location or as part of a ‘virtual’ team or project in ‘real time’. This would achieve a combination of intimacy and immediacy without the need for full time employed individuals

Changing IT Support Requirements. Other business support functions in SME’s, such as IT technical support, will also be affected. If rooms full of servers, high powered desktops, and internal networks and gateways are no longer required then neither will the teams of technical support staffeither internal or external. No longer will be the oft quoted fact, that every 10th person appointed by a growing business needs to be an IT person, be applicable. Under this Cloud and Mobile paradigm, therefore, the whole role of IT support for small business will be subject to change. Gartner have recently27 characterised this as the consumerisation of support in a similar manner as access devices have been. They see the rise of Cloud Service Brokers (“CSB’s) as intermediaries between suppliers and users. In large organisations this role with largely supersede that of the traditional gate


internal IT department in a facilitating rather than controlling role. To service SME’s new sorts of IT companies fulfilling the CSB role will need to exist to help companies with the transition to the cloud and more importantly to assist with the integration of the various individual applications into an functioning business support environment. The opportunities for integration and data exploitation as well as simple access, in the cloud are potentially enormous compared with closed local systems. To summarise then, these changes to Social and Technological environment are likely presage a period of intense change both internally within SME’s as they adjust to the environment by changing their internal management agendas and resource allocation but also in the external service companies that support SME’s. These changes might not emerge in the ways suggested above, but come they certainly will. Already, I confidently predict, business plans are being drawn up by businesses aimed at exploiting these ongoing changes in continuity in the marketplace.