Broadband: Picking up speed

Figures from the latest Computer Weekly/BT ICTAudit survey show that broadband is booming among the UK's small and medium-sized...

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Figures from the latest Computer Weekly/BT ICTAudit survey show that broadband is booming among the UK's small and medium-sized enterprises. But in the rush to deploy high-speed, always-on internet access, SMEs are failing to grasp all the business opportunities that the technology offers. Helen Beckett reports

 

 

Small and medium-sized enterprises in the UK are more confident in their use of IT than ever and a big factor behind their new-found confidence is broadband. As high-speed communications have become part of day-to-day life, so more, and smaller, businesses have got themselves wired up and are discovering the benefits of high-speed, always-on access.

According to the latest Computer Weekly/BT ICT Audit survey, 54% of respondents now connect to the internet using Digital Subscriber Line technology, an 11% increase over the previous year, and the sum of all high-speed connections - including ISDN, leased lines and DSL - has increased by 3%.

Computer Weekly reported last October that SMEs had taken a firmer grip of technology investment and their familiarity with broadband means that the plumbing is going in fast.

Although this may paint the picture of UK plc finally getting its act together, it is what business does with all the extra speed and availability that really matters.

The survey findings are less promising in this area, with faster internet connection reported by 62% of respondents as the main incentive for broadband adoption, way ahead of the 28% interested in its capacity to facilitate remote working, for example. And once online, e-mail remains the killer app - 97% of the sample cited it.

Despite the unimaginative use of broadband portrayed by the survey, the Institute of Directors remains upbeat about the potential for broadband to make a difference to business efficiency. But it believes that many of its members stumble across the benefits by accident.

"Most SMEs who install broadband do so because it is a no-brainer in terms of reducing communication costs," says Jim Norton, senior policy adviser at the Institute of Directors. "Once it is in place they realise there is a lot more they can do with it."

In a survey of its member businesses conducted last June, the IoD discovered a range of quantifiable benefits with broadband, including improved research capacity, greater customer satisfaction and an increase in productivity. "It is the standard stepladder effect," says Norton. "Once broadband is in place you can play with it to gain incremental improvements and then fundamentally change processes to gain full advantage."

BT has also seen the incremental learning curve take effect once broadband is installed. "The driver is faster access to the internet, but once it is in they adapt," says BT director of broadband Jerry Thompson.

Thompson says the big impact for a company is not the "fast", but the "always-on" aspect of broadband. Companies can sit and watch information as it trickles in, and speed up and upgrade processes, such as daily, instead of weekly reporting. "For a small retailer it is like being able to operate like Marks & Spencer," he says.

The Communications Management Association confirms the picture of rapidly growing use of DSL in the UK. But the association laments the lack of exploitation, specifically the lack of converged voice and data applications, which connection to broadband could facilitate.

"The availability of broadband is necessary for business improvement, but on its own it is not sufficient," says Alan Hindley, business development director at the CMA. "We need applications that are good for business and that means exploiting IP."

Phil Jones, research director at analyst firm Infoconomy, agrees. "People tend to think that broadband and IP equals networking faster, not more reliably, more flexibly or more securely," he says.

IPprovides the ability to mix and match voice and data over the same channel and brings the economic advantage of one shared channel. Broadband also brings the option of setting up a virtual private network, or secure tunnel, into commercially confidential company data. Large corporations have been providing remote staff with this facility for some time, not just because of the security aspect, but because it is possible to provide them with a virtual desktop from any location globally where there is broadband.

"This aspect has not worked its way into the consciousness of SMEs yet because suppliers have targeted larger companies," says Norton.

Hindley agrees. "'What IP application would you like?' is the wrong question," he says. Instead, he believes suppliers should be asking solicitors, for example, whether they would like their legal clerks to be able to access, on demand, legal documents stored in another office.

Cost would be the obvious incentive for the SME sector to adopt a more coherent approach to its networking needs. Voice over IP, for example, provides the business with tariff-free conversations as well as access to the corporate database, simply through the addition of software to the local computer.

The problem is that it is difficult for many companies to envisage the new ways of doing business that always-on, integrated voice and data networks offer. "When we first marketed broadband as 'fast and always on', it didn't resonate with between 20% and 40% of the community," says Thompson.

Instead, BT started to talk to this group about the applications that broadband could enable, such as data back-up services.

Other hosted applications also become possible once a business has broadband. Employees of small companies can share calendar details and work folders just like their corporate peers if their employer buys hosted Exchange.

Smaller companies are certainly disadvantaged by their lack of in-house expertise when it comes to understanding new technology and advocating a business justification for it. Larger businesses have technically competent executives in their functional groups, such as marketing and finance, who can champion new ways of doing things.

By contrast, says Hindley, "The large mass of SMEs are risk-averse and have been disappointed in the past by their IT investments. They do not have IT managers in a position to use their influence."

This story of a technology looking for an application has a familiar ring to it, although the new twist is that businesses are wary of "wonder applications". One application that broadband would have turbo-charged a couple of years ago - the use of websites as a front-end for customer contact and as a means for transacting with them - is a diminishing priority for the SMEs that Computer Weekly contacted.

Gerard Burke, programme leader for Cranfield School of Management's business growth programme confirms that SMEs are no longer prepared to invest in the latest technology just for the hell of it. "Research shows that nine out of 10 successful growth companies achieve this by sticking to their knitting," he says, adding that these businesses are more likely to view a website as a means to add value rather than a way of reinventing how they do things.

Similarly, the greater ease of receivinge-mail, which a broadband connection facilitates, has led to a negative perception among certain groups. "Employers are saying that e-mail is slowing them down," says Peter Scargill, IT chairman at the Federation of Small Businesses. "Those companies without technical experts are overwhelmed, and almost everyone I know has to handle a boatload of e-mail everyday."

This sort of comment confirms the worst fears of the CMA, which exhorts suppliers to adopt a different approach to selling broadband to the SME sector. "We have got to get the supplier industry to talk and breathe the language of applications," says Hindley.

Computer Weekly's study reveals that broadband is a key building block for SMEs becoming adept at IT. But the danger is that those businesses which have rushed to install may not yet understand the advantages of being connected - and that is an opportunity not to be missed.

How wired are SMEs?


DSL takes off

A total of 54% of SMEs use ADSL to connect to the internet, an 11% increase on the 43% recorded in the previous year's survey. However, the increase in DSL use has come at the expense of some leased-line and ISDN broadband connections, which fell by 10% and 4% respectively to 32% and 12%.

Killer app is e-mail

Businesses' perception of what broadband brings to the table has changed little over the past year, with the drivers shifting only slightly. Broadband still means faster internet connection according to 61% of the adopters sampled. Another 28% were keen to use fast connections for teleworking. Only 7% see broadband as a gateway to managed services, and just 4% are interested in achieving faster websites.

Customer-facing activity dwindles

Businesses' interest in maintaining websites has stagnated, with numbers hosting brochureware sites decreasing a couple of points to 72%, and the number of respondents hosting transactional sites falling to 17%. After-sales support to clients over the internet has also decreased, from 40% in 2003 to 35%, perhaps confirming the problems of e-mail overload that companies suffer when they expose their operations to cyberspace.

Early days for voice and data convergence

The biggest driver for broadband adoption is cheaper voice calls (33%) followed by the 21% who believe that voice and data convergence provides a more manageable network. Just 11% have deployed VoIP.

Case study: Broadband is part of the furniture at Jali   

An early adopter of broadband is furniture designer and manufacturer Jali.  

The business proposition from the outset was to enable the customer to participate in the design process by giving them software tools and linking them to the automated machine-cutting plant based in Jali's factory. 

"The objective was always to have an automated factory while I just watched the data flowing past," says Nicholas Showan, Jali's managing director and founder.  

The rural Kent location of the factory meant that access to broadband was not easy when the company was set up in the early 1990s.

Showan himself had to dig a trench from the factory to meet the BT ISDN pipe in order to get sufficient bandwidth for his machinery to operate. 

Early interaction with customers entailed them downloading a graphics package to their home computer so they could manipulate designs for their chosen furniture. 

In two months' time, the company is moving to the next phase of design and production, facilitated by the mass take-up of ADSL by the UK population.  

"The customer needs broadband to access our website. This hosts a 3D tool that customers remotely use to design and view furniture," says Showan. 

Broadband has profoundly changed the economics of Jali's business.   "In 1999 we had £1.6m turnover with 35 staff, and today it is £1.6m using 12 staff," says Showan. "Today we have the capacity to do five times more than our current workload."

This was last published in March 2005

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