Small, Yes -- But with a Big Back Office

Small companies can rarely compete head to head with behemoths. But the latest generation of information technology is making the playing field far more level than it has ever been before

Subaru of New England Inc., an independent supplier of Subaru parts, used to track orders from dealers with pen, paper, and guesswork. It often sent its customers parts that they didn't need; in fact, returns averaged 80%. No longer. The Norwood (Mass.) company, with 45 employees, uses Web-based software to track what dealers need and when. Now returns are less than 1%.

Such Web-based software is transforming small-business functions from cash-flow management to marketing. The jobs are done electronically, often on the Web and typically for a monthly fee. "Small companies are getting, in essence, a virtual planning department," says Eric Hinkle, CEO of Atlanta's Servigistics Inc., whose software Subaru of New England uses.

Champions of Web-based software envisioned it as a way for big companies to decentralize, letting remote units use software at the home office. But the big companies were reluctant to let back-office functions operate outside their firewalls. And they wanted lots of customization. "Small companies are happy to forgo the bells and whistles," says Julie Giera, a research fellow at consultant Forrester Research Inc. "They're getting the back-office functions of an IBM -- without paying $250 million a year."

Small businesses often find that paying suppliers is a headache. So New York-based TradeCard Inc. provides Web-based software that, among other things, compares what's received against what was ordered, and releases payment if the two match. It enables Hi-Tec Sport USA, a hiking boot company in Modesto, Calif., with 70 employees, to pay suppliers on time and track boots for shipment from its factories in China.

Web-based software isn't the only new technology being embraced by small business. When Patricia C. Sibley started MediaSolutions, a media-buying company in Atlanta, 10 years ago, she needed two staffers per account. Now one staffer can handle four accounts. One key is a media-buying program called SmartPlus. Says Sibley: "What technology has done for us is unbelievable."

By Charles Haddad in Atlanta

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