A variety of telecoms products exist aimed exclusively for SMEs. As Anthony Adshead reports, SMEs are now beginning to formulate strategies for growth based on the technology that is appropriate and best suited to them.
Equipping an SME with a comms infrastructure for the modern world is a tough task. Where do you start? Technologies move so quickly that last year’s ‘next big thing’ has long since been forgotten. And SMEs are not easily lumped together – there are businesses of all sizes in all sectors.
Fortunately, there is one thing working in the favour of the small company. The market jargon calls it convergence – the tendency for data and voice networks to be able to travel along one single network. Until a couple of years ago it was only the early adopting enterprise-level businesses that were able to take on these new technologies, but as they gain a maturity and the suppliers look to expand sales outside of the Fortune 500 companies things are trickling down to the mid-market.
A number of technologies – voice-over-IP (VoIP), WiFi and compression technologies – are beginning to become affordable to the SME and in many ways their flexibility and scalability make them extremely suitable for the medium-sized business.
Marco Crueger, International Sales Director for IP telephony specialist Swyx Solutions, believes SMEs are beginning to spend on comms but acknowledges they are careful with their budgets.
He says, “After a period of refusing to invest in IT infrastructure SMEs will take a more careful look into the equipment they really need. They will be selective and research costs and features, and will not just take the next best new technology. They will only take equipment that will deliver a good ROI and one that has a positive and direct effect on their business.“
But how do you formulate a comms strategy to be a forward-thinking SME? As with any area of procurement, it’s all about working out the fundamentals first.
Nick Watson, of Cisco Systems, says, “The first thing companies should do is to clarify their business strategy, identifying where they want to be not only today but also tomorrow. They should then seek out a partner who can provide trusted advice on how best their ITC strategy can enable the business strategy; enabling them to remain focused upon winning business.”
Watson also advocates reconsidering how information and comms technology is viewed. Rather than automatically classifying equipment as a fixed asset to be written off, leasing equipment is an option that should be considered, he says. This approach enables a more tolerant cash-flow profile and provides the flexibility to upgrade equipment without significant write-offs.
Avoid the exotic
Cost emerges as a fundamental concern to the SME. After all, they are, by definition, smaller businesses, and need to ensure that if they reach into their pockets they don’t want to pull too much out and become exposed.
David Grove, SME specialist at network equipment and solutions supplier Avaya, says this means avoiding exotic solutions. “For SMEs, price is important. It is, therefore, important to them that it is a shrink-wrapped solution that can be up and running immediately, with no small premium at the start,” he says. “The cost for installing such technologies can be justified with the payback on the initial return of investment, which is normally a six-month lead time and will need to be shown.”
Assuming the ROI calculations give the green light for implementation, many of the present generation of networking technologies can pay back very quickly. Take VoIP, for example. Once such a network is established between branch offices, the company will be saving in a variety of ways: no call charges between sites and calls can be redirected when an employee isn’t in the office, so there will be no lost calls from potential customers.
VoIP is a technology that is trickling down to SMEs – likewise with sheer bandwidth and bandwidth compression technologies. Even SMEs bandwidth needs are increasing to levels unthinkable only a few years ago, so the dilemma arises – go for more bandwidth or try to squeeze more from what you have.
Network equipment supplier 3Com is one vendor attempting to give large amounts of bandwidth to the masses with its gigabit Ethernet technology. Bob Honour, Solutions Marketing Manager at 3Com, says, “The cost of upgrading to Gigabit Ethernet has dropped significantly over the past year or so, making the technology more affordable than ever to SMEs. If a company is already using Fast Ethernet, it is likely that they are also using bandwidth-hungry applications so moving onto Gigabit Ethernet would be the logical progression.
“With prices now so reasonable (less than £25 per Gigabit port), it makes business sense for a SME to now future-proof its network and invest in Gigabit Ethernet switches rather than Fast Ethernet, as the bandwidth per dollar ratio for Gigabit Ethernet is higher than that of 10/100 switching,” he adds.
Network compression equipment maker Peribit says a different approach can work: instead of paying out for extra bandwidth, why not get more from the cabling you have? Its MSR (Molecular Sequence Reduction) identifies repeated patterns across data flows – even where they exist in separate applications – and sends only one instead of multiple copies of the same data.
Rob Mustarde of Peribit says, “Peribit’s technology was originally focused on Fortune 500 type accounts, but we have seen a large take-up of sales into SME companies who may have either lower speed circuits or a smaller number of offices or indeed both. The point is this: Peribit’s technology is actually company size and vertical market agnostic, so if you have a Wide Area Network, then Peribit is almost certainly a relevant technology for you to take a look at, even if you only have one 64K circuit.”
He adds, “Peribit’s original core function – Molecular Sequence Reduction (MSR) – is a brilliantly simple cost-saving alternative to upgrading WAN circuits. For a one-off capital cost a client can get up to a 10-times increase in WAN capacity without having to order circuit upgrades which then require annual recurring charges.”
But what of the future? Where is comms technology for the SME sector headed in the next few years?
Most agree that the onward march of the converged IP voice and data network is unstoppable. But it’s not a trivial consideration for the network manager – the PBX is an expensive piece of kit, but it is tried and tested and not dead yet. What is to be gained by going down the converged route?
Well, 3Com’s Bob Honour says that the converged model has a lot going for it. “The business case for networked telephony is a strong one. When compared with legacy PBXs, it has very low management and maintenance costs. As the SME grows and expands, adding new users to the system is a simple and straightforward process. The only additional cost of adding a new user is that of a new handset, and the easy-to-use browser administration tools mean that anyone who is able to navigate their way around the Internet can easily manager the telephony system.”
And according to Avaya’s David Grove, the movement towards convergence will see its ‘tipping point’ in the next couple of years.
He says, “Although the sales of converged systems to SMEs are still lower than those of traditional PBX systems, this is going to change in the next two years. In 2005 we expect that 54% of systems sold to SME businesses will be either converged systems or IP-enabled PBXs, with growth in these platforms at the expense of traditional PBX systems and key-systems and hybrid products.”
However, Grove makes the point that no matter what the technology, what counts for users is what they can do with their system. As he says, you should always ask, “What I can do? How much it will cost? And how much will I save?” Sound advice indeed.
Cisco and the RSPCA
The RSPCA invested in Cisco AVVID technology and Cisco IP Telephony solutions to increase efficiency and minimise costs at its new HQ near Horsham, West Sussex, with the aim of maximising funds available for animal protection and welfare.
Matt Winckless, Technical Communications Manager at the RSPCA, said, “As a charity we depend on the generosity of the public, so we need to make our investments wisely. Staying with PBX would have meant building two cabling infrastructures, investing in a massive PBX system and installing a new wiring loom. And it would have been outdated in a few months. The new [HQ] building has allowed us to take a leap in IP strategy and build voice, data and video on a converged network, to capitalise on the benefits of integrated applications. Cisco’s IP Telephony technology was an obvious choice. It helps us maximise the efficiency of our organisation by offering sophisticated communication tools. We chose to put a Cisco IP Phone on every desk because these allow people to access invaluable information at the touch of a button.”
The top technologies for SMEs
IP telephony In other words, telephony on data cabling. Businesses initially save money by eliminating multiple networking infrastructures while making communications applications easier for employees to use. However, IPT solutions deliver real and measurable ROI through increased employee productivity. For companies who want to test it before committing fully, they can run a networked telephony system alongside their existing PBX so they can become familiar with the technology and let the new telephony system grow at its own pace.
WiFi Wireless networks. Justifying the costs of wireless networking for the SME is simple: as the business grows, the company needs a network that will continue to offer reliable support. Wireless is the obvious solution as it does not require as much additional infrastructure investment as a hard-wired network extension.
Virtual private network (VPN) A VPN provides a secure, wide area infrastructure without requiring a large capital investment. A VPN enables a small business to use public telecommunications infrastructure without investing in their owned or leased lines by creating a secure, encrypted “tunnel” between the roving employees or branch offices and the core network.