Analysts Warn Small Businesses: Cut-Price Connectivity a False Economy

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A new report sponsored by business Internet service provider, Easynet Connect has revealed how complexity and cost are the main barriers to efficient communication within UK small businesses.

The ‘Valuable Business Connections’ report, authored by Quocirca, advises businesses on how to create the best and most reliable communications investment plans.

The report highlights how small businesses, many of which have no full-time IT manager, are being held back from making the best use of communications technology due to the complexity and cost of new tools. Businesses also face the challenge of managing the influx of consumer, ‘shadow IT’ applications like Skype and instant messenger, providing the systems to support remote and home workers as well as deciphering the latest vendor-driven services and buzzwords such as ‘unified communications’ or ‘fixed mobile convergence’. This challenge is compounded by the continual need to manage bandwidth and capacity in order to support business critical applications as well as controlling costs and ensuring return on investment from communications tools.

As part of ten expert considerations, the report outlines how small businesses can get the best value for money from their IT and communications investments, advising against short-term deals, low-cost connectivity and to seek out flat-rate tariffs over pay-per use contracts.

Rob Bamforth of Quocirca said of the report: “Small businesses rely upon effective communications tools, but often many are too complex or costly to be worthwhile. There is pressure for small companies to drive reliability and value, without solely focussing on price. For instance, low cost connectivity can be a false economy when it is an integral and critical component which underlines core business tools and powers applications like e-commerce and conferencing which save other costs such as transport, energy and rent.”

Chris Stening, Managing Director of Easynet Connect added: “Small businesses need to develop a full understanding of their communication requirements in order to prioritise the tools they use. This report highlights the full extent of the challenges faced by small businesses when choosing their communications suppliers.

Small businesses are being bombarded from all angles with new technologies and trends, which, for companies often without dedicated IT managers, can become a potential minefield. But with 71% of small businesses unable to function for longer than a day without internet access, taking the wrong approach can be costly in terms of time, money and even reputation. The reliability of the service you receive should therefore be your absolute top priority when choosing your communications provider.”

Expert recommendations

1 – Assess current use – what is in place and on the roadmap? Rationalise and consolidate, but do not blindly cut back on items bringing in value or that are saving costs elsewhere. Make ongoing assessments; the asset mix shifts as employees come and go, or services and suppliers change. Avoid paying unnecessary bills or for those who have left.

2 – Prioritise shared or limited resources – internet and data connections will often run many services. Are the business-critical ones that rely on them being protected and provided sufficient capacity or resources? Can these be easily scaled in an incremental way? Low cost connectivity can be a false economy, especially when applications such as e-commerce and conferencing save other costs such as transport, energy and rent.

3 – Investigate supplier alternatives – could existing suppliers offer a better discount or a new one with more options offer a bundled service to reduce overall costs? Short term deals, while welcome, do little to address underlying problems. Take a broader view of total communications needs and potential solutions rather than item by item savings.

4 – Incremental outsourcing – staffing or skilling up to run the wide range of communication technologies required for even the smallest business is expensive. Can you outsource elements – e.g. device management, security or billing – to avoid needing in-house support and keep costs predictable?