IT Phobia?

IT Phobia?

It has been known for years that most SMEs in Chinese regions including mainland, Hong Kong etc. are far behind about IT applications.

Even the Chinese authority has recently announced this problem again and tried to promote the IT applications. In fact, regional governments were instructed to establish platforms to facilitate this development. Of course, besides building a website, we cannot see any substantial movement.

After joining the WTO, all Chinese SMEs have to face competition even in domestic market. In Hong Kong, the SAR government has worked hard for this development. Although the financial supporting plan for SMEs has been arranged for a few years, yet the outcome has not yet satisfactory.

Of course, we do not have the information about foreign SMEs. Their international corporations have been the major support for the IT development since the computerization age and may contribute to the assumption that IT applications are much better in the western world.

We shall talk about IT in China and Hong Kong only and therefore no comparison is taken into account now.

Is it the problem of cost?

If the cost is a reason, then it might suppose that Chinese SMEs were lack of financial strength.

As mentioned, SME Loan Guarantee Scheme handled by the Commerce and Industry Branch of the CITB (Commerce, Industry and Technology Bureau) has the Guarantee for Business Installations and Equipment Loans up to 1 millions HKD (50% of total investment) and the use also covers computer software and hardware. According to the report for Oct. 31, 2002, the total number of application was 2931 with 2695 approved. Out of the total amount of 960 million, only 4.8% (46 million) was for computer hardware & software. In other words, SMEs were not taken IT as priority for improving their competitiveness. (Check http://www.smefund.tid.gov.hk/eng/content.html for information about this Scheme)

We can assume that cost is not the major factor.

Our view

Factors leading to rejection of IT applications are:

Leadership

The owners of most SMEs are leaders. Their abilities in leading their own business must be great, else there would not be existed at all. But many may still like a general in the old days that took the heading role in competition, not war now. Total control of everything is expected. If that is true, then they may not be willing to hand over the control to any body not to say an IT system. There is a good example. Mr. Yeung of Yahoo did aware of the lack of skill to manage a large corporation and when Yahoo started to develop, a top executive was hired to manage the corporation. This decision may be the major factor for his success.

Management

There is nothing about IT and management has been existed long before any computer appeared. Perhaps this term has been used too often that many may forget the originality. This is the basic form of system giving any organization a kind of automatic control without the face to face environment. It is certainly not by verbal orders or reports. It is the data that has been used so that any levels of superior up to the top commander can base on to know the operations.

Data takes the form in documentation. A good documentation system is vital to the success of management. For this, we must remember that the English style of documentation years ago had been the fundamental elements for corporation development. This had guaranteed the continuing performance of a task almost instantly when a new one was assigned to take over the job of a departed manager or engineer.

Designing documentation is not easy and usually required specific knowledge and loyalty to the task. Why loyalty? One must keep the benefit of the organization as top priority so that there would not be any or serious drawback if things went wrong. However, this requires everyone including the owner, Chairman, CEO etc. to follow the system without exception.

Leaders must let go their concept of superiority and keep in mind that the documentation system is part of their policy. This was not easy for them, especially Chinese.

Without documentation in force, there is not possible to build any system. IT system is just a computerized way of the documentation only.

IT contribution

Most concern for any leaders is the contribution of IT applications. Does it offer any substantial benefit to the company? Does the investment give the same value back in foreseeable future?

There are reports proving the ROI (return on investment) of IT applications. Something like the saving of employing extra staff for development or the efficiency that lower the management or operational cost of various tasks. However, these are not easily understood.

Some talked about competitiveness. But the idea of 'so far so good' will override any forecasting until the real loss of business, when all IT application cannot immediately rescue. In other words, IT application is for going from good to better or better to best. Certainly it is not the urgent case for most.

We cannot rule out that misfit IT system would cost the SMEs certain loss without any contribution. There were many cases of failure even for large corporations.

Summary

In most industries, the pioneers were technical experts for their trade. The success so far would be the abilities to produce new, better quality or lower price products. It is never the management, documentation or IT that help established these SMEs. It is the concept to maintain or further develop the business that would have the IT applications in mind.

May be we can take this as the parameter to prove why some startups can develop into big corporations and why some just had a short period of success and eventually disappeared.

By saying how good IT applications would be can never persuade these leaders. That is too far away for them.

Of course, governments have to do something and hope for the best. Yet, to get a better outcome requires much more than empty promise or propaganda that most had read similar content from years of advertisement articles.

F. H. Tong, Nov. 7, 2005