Channel Convergence Opportunity Set To Take Off In 2006

Nearly two thirds (63 per cent) of small and medium sized businesses in the UK are missing out on huge cost savings and productivity gains because they are not fully exploiting the benefits of convergence, according to research released by BT.

Encouragingly for resellers, however, the study revealed that momentum is building behind the adoption of convergence. Fifty nine per cent of respondents that have migrated to a fully converged voice and data network did so in the past 12 months. Almost one quarter (24 per cent) of UK companies that have not already converged intend to do so in the next two years.

The BT Convergence Report was undertaken to assess the understanding and adoption of IP (Internet Protocol) convergence by UK small to medium enterprises (SMEs). It found that those businesses that have already migrated to a fully converged voice and data network are achieving real benefits. Fifty six per cent of businesses that have converged their voice and data networks say they have already significantly reduced their infrastructure costs, while 52 per cent have increased productivity and 39 per cent have improved organisational agility.

When asked the reasons behind their decision to migrate to a converged IP network, 57 per cent of respondents cited reduced communications costs as the main motivation, while increased flexibility (40 per cent), and the ability to allow voice and data to be sent on the same network (40 per cent) were also important drivers.

Nick Jervis, General Manager, Converged Solutions, BT Business, said: “In the digital networked economy, convergence provides companies of all sizes with a foundation for successful business communication. Our research shows that cost reduction remains a major focus for UK SMEs. What is interesting, however, is that organisations that have already migrated to an IP network have achieved much more. There is clearly a fantastic opportunity for the channel to educate the SME community about convergence. By adding value to converged networked solutions, resellers can help businesses get the most out of their investment and create a lucrative new revenue stream for themselves.”

Surprisingly, despite the evidence of the cost efficiencies that converged communications can deliver, the two main barriers to adoption were uncertainty about cost benefits (28 per cent) and lack of budget (18 per cent). This was particularly the case in companies with 101 – 250 employees, where almost half of respondents (47 per cent) claimed that uncertainty about cost benefits was the biggest factor preventing them from embracing a converged voice and data network.

The research also highlighted that lack of knowledge could be a major reason why many SMEs have not yet migrated to a converged network. Over one third (32 per cent) of all SMEs surveyed admitted to having limited or no understanding of what a converged network actually is. This was even more evident with smaller companies, with 48 per cent of businesses with between 20 – 100 employees admitting the same.

Nick Jervis said: “Lack of understanding is clearly holding the growth of convergence back. If resellers can develop the skills to tackle this they will be able to grow this market significantly. BT is committed to working with its channel partners to help them better understand the benefits of convergence. That way they will be able to identify more sales opportunities and deliver more complex, high-value solutions. We recently recruited a team of convergence specialists whose core focus will be helping the channel to develop this opportunity.”

Jim Norton, senior policy advisor for the Institute of Directors and a key contributor to the BT Convergence Report, said: “The major benefit of IP convergence is that businesses can consolidate practically all of their information technology and communications systems onto the one common platform, bringing about significant cost and resource efficiencies, increases in productivity and greater collaborative capabilities.”