There are more than four million small and medium-sized enterprises (SMEs) in the UK, accounting for over half the country’s employment and turnover. But while they may be the lifeblood of the economy, in terms of IT skills it seems they are suffering from blocked arteries.

Frank Shaw, foresight director at independent think-tank the Centre for Future Studies, says the vast majority of SMEs do not have adequate technology expertise. “As a consequence, they don’t know what they don’t know, which makes them vulnerable to suppliers and consultants who prey on their ignorance,” he says.

BT Business recently commissioned the centre to look at the IT skills issues facing SMEs. Shaw says the emerging research found many organisations had not seen any benefit from their investments in IT, largely because those investments were inappropriate.

“For instance, they might have just put some brochureware on a web site and assumed they were now doing e-commerce,” he says.

As well as lacking knowledge about IT, Shaw says small businesses are also time-poor when it comes to gaining that knowledge. “In smaller businesses, technology tends to be put to one side,” he says. “A number of firms we looked at relied on friends and family for IT advice. Generally, these are firms with fewer than 10 staff, but that takes in 80 per cent of all SMEs.”

For these small firms, the best option is often to outsource ­ – see below. But when you are unfamiliar with the technologies and the market, finding the right advice on which companies to use can be tricky.

SMEs also include medium-sized businesses employing 50 to 250 people ­ and Shaw says skills and sourcing challenges here are different, but still tricky.

“Larger SMEs generally have at least one in-house IT person. For them, the issue is not so much about understanding the technology, but about how to deploy it for the best advantage,” he says.

“Their main deficiency tends to be in IT management skills ­ generally, they have not related their technological capability to their strategic objectives and planning.”

Paresh Shah, IT director at electronics retailer Shasonic, which employs 220 people and runs 16 Sony Centre outlets across the UK, agrees that IT management skills are the hardest to come by.

“Experienced IT people are difficult for us to obtain and keep, purely because large firms pay a lot more,” he says. “Most people, especially those with management ambitions, want to work for big firms ­ that is one of the realities we face.”

Shah says as a result he tends to hire recent graduates.

“We look at people who don’t have any experience, then give them on-the-job training. Lack of experience doesn’t mean people are not any good. We have had some excellent people in terms of knowledge and skills,” he says.

Retaining staff is trickier, says Shah. “A few have stayed on purely because they have enjoyed the environment and did not want the pressures of a big company,” he says. “But if someone stays with us for two to three years we feel we have had a good run with that person. After that, we have to accept they will be looking to move on.”

SMEs do not suit everyone, so finding the right personality fit is important. IT staff must be prepared to muck in, even if it means doing things outside their job remit.

Norman Carroll, managing director of financial software and services business Exaxe, which employs 47 staff mostly in IT roles, says double-jobbing beyond one’s core skills is the norm in smaller firms. “This can be frustrating for specialist IT personnel who want to get on with building their niche skills,” he says.

But some SMEs can offer staff some compelling incentives over their larger counterparts.

Sam Baxendale, managing consultant at Computer People, says if companies are genuinely giving their employees exposure to desirable technologies, they will be able to secure staff.

“In smaller companies, staff also have more opportunity to shine and rise to the top,” he says. “There are many examples of people joining a startup company as a junior techie and finding themselves working in a senior capacity within a short space of time.”

And while they may not be able to offer big salaries, Baxendale says small firms can give staff at least one blue-chip perk without breaking the bank.

“Stock options or shares don’t cost them anything on day one, but can lead to large windfalls for the employee if there is a buyout or they go public,” he says.

SME skills – filling the gaps

Using third-party organisations to provide IT services is one of the key ways for SMEs to overcome their skills challenges. But how can they avoid being lassoed by cowboys?

Frank Shaw, at the Centre for Future Studies, says their first port of call should be the Department for Business, Enterprise and Regulatory Reform and the regional development agencies, which offer guidance to small firms onissues including supplier selection.

“Also look at reputable organisations providing a range of flexible outsourced services. The important thing is to have trust and confidence in the supplier,” he says.

But vendors need not be big players, says Paresh Shah at Shasonic. “Partnering with other small businesses with specialist expertise on an ad hoc basis has worked well for us in the past.”

Norman Carroll, managing director at Exaxe, adds: “One trend we are likely to see in the future is companies putting coding out to tender across the web, with individuals and teams responding
remotely from anywhere in the world. IT guys will be at home in their pyjamas writing code.”