There is all this talk about making companies more agile. And with more than two million hits on Google the term may even be more popular in some circles than Web 2.0 this week. (Well, we can only wish.) Certainly, part of understanding agility is changing how you develop and bring your products to market — write better code, make more reliable hardware, work more adeptly with Internet services, respond better to customer complaints or suggestions. But another part of agility is understanding the “softer” side of your company, such as being able to better hire, train, and retain your people. Too often management tends to forget that it is the people that make an organization, not just the products.

I thought about this recently for a story that I wrote for the New York Times that is out today about contact management software. I first got the idea from a colleague that I met at the local National Speakers Association chapter here in St. Louis. He had some computer issues running ACT on an old Macintosh. He was keeping the aging Mac around because ACT was essential to running his speaking business and he didn’t want to have to a Windows PC just to run the latest versions of ACT. That got me going on the idea for the story, and the Times was interested enough to give me the assignment.

Too often a small business gets wrapped up in the wrong technology and their agility suffers as a result. Actually, it can be any sized business. Take a look at what happened to IBM back in the 1990s when its mainframe-centric world collapsed and they had to reinvent themselves as a software and services company. I was reminded of this when at a lecture last night by Harvard biz school professor Lynda Applegate, who has done some consulting for them over the years. IBM went from the most profitable company in the 1980s to losing billions in 1991.

But a better situation is when a company builds in agility from the get-go. They don’t stay small too long because they can grow. As an example, take the woman that I interviewed for the Times who runs her own business in Orlando. When she started her company, she thought she would use a traditional model of having everyone come into a single office. But as she got clients around the country, she realized that this wasn’t a workable model.

Part of what was holding back her operations were outmoded contact and sales management tools. The assumption was that a single PC would house this information, and that everyone would create their own documents on their own PCs. As a result, there wouldn’t be much need to share data among different staffers. Wrong, wrong, and wrong.

Once they implemented an Internet-based contact and document system, things changed. The firm found out that they could hire anyone and that they can work anywhere. “We didn’t intend to run our business in a virtual environment when we got started but realized that we can hire people based on their skills and our needs regardless of their location,” says Lara Triozzi, the president of MarketLauncher Inc. But now that they have a taste for the “virtual environment” – meaning that their critical IT components are outsourced and available via the Internet — they really like it and it is the core of how they will grow their business going forward.

They got some side benefits from this strategy, too. The outsourced contacts vendor that they picked (ACT Remote) also handles all of their security, backups, and tech support, and the vendor also hosts all of their Microsoft Office applications and data, too. Now they have freed themselves from having stand-alone and isolated applications, and can share information around the company without having to worry if someone left something on their PC and didn’t come into work that day.

That is what agility is all about.