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Friday, August 26, 2005

Small As Efficient As Big Via Technology

(Via IHT)While the likes of Amazon, eBay, Google & Yahoo come to anyone’s mind when we think about the economic impact of information technology, the biggest impact on the economy may well show up in small and medium-size enterprises. As computers get cheaper, more powerful and more connected, technologies that were only available to the WalMarts of the world become available to the small fry. By the late 1980s cash registers had become just another computer application. They could add up receipts, compare sales with inventory, create order lists - in short, they could do just about everything that the big chains could do. In the 1990s, cash registers became networked, allowing the small stores to download records in a form suitable for spreadsheet analysis and accounting software. Big chains like Wal-Mart could use satellite networks and mainframe computers to track purchases, manage inventory and record customer behavior. These intelligent cash registers allowed small companies to adopt business models that had previously been available only to large enterprises. Equipped with a scanner, a cash register could be used to verify the sale of each item, allowing companies to share data on revenue with the supplier. Some ice cream manufacturers effectively contract for space for a freezer in a store and share the revenue from purchases each time a sale is made.

Even the success of the big Internet companies rests, in large part, on the fact that they provide advertising and sales platforms for small enterprises. EBay, Amazon, Google and Yahoo all make it possible for small businesses to reach national, and even global, markets that were previously inaccessible. The Internet has not just affected the selling side of small businesses; it is also having a big impact on the production side. While western workers complain about offshoring, the economic benefits from international trade outweigh the costs, which is great as long as you are not one of the costs. The internationalization of small and medium-size enterprises has got to be a big plus for the US economy. It allows the small players to have access to labor markets similar to that of big boys. Constant supervision, constant communication and constant coordination are necessary to make small business grow. But it is just these things - the ability to supervise, communicate, and coordinate at a distance - that have become so much cheaper in the last 20 years. Big enterprises were the first to reap the benefits of this technological progress. But the impact of information technology on small and medium-size enterprises may yet turn out to have the most impact on the economy.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"