NBN debate overlooks regional SMBs: Kazacos

IT entrepreneur Peter Kazacos says debate around Australian's National Broadband network is missing the point, because its business value is not being discussed.

While debate rages over the NBN – whether $43 billion is too much, whether consumers will pay for the services on offer, how best to deal with Telstra – Peter Kazacos believes the business value of the network has received far too little discussion.

Since departing the company he founded, Kaz Computing, after its acquisition by Telstra, Kazacos has been building up a new venture in the outsourcing space. The announcement last month that Hostech is to merge with Kazacos’ much lower-profile Anittel business, along with services firms Accord, Aspirence and Axxis, has put Kazacos in charge of a services business with a national reach and a largely regional focus.

And it’s out in the regions that Kazacos says businesses are still being held back by the networks they have to deal with.

“I was in Dubbo the other week,” Kazacos told SearchNetworking. “It’s got construction companies, it’s got medical companies, all sorts of business there, and they have to move data backwards and forwards to clients in other cities.

“And they’re constrained, in most places, to barely a 512 K link.”

It’s bad enough that for even today’s IT operations, 512 Kbps is insufficient to keep data moving back and forth quickly, he said: it also means that businesses in regional centres are denied the chance to use the kinds of technologies now taking hold in the capitals.

They can’t, for example, consider moving their IT systems to a hosted environment, "opportunities and productivity gains available to companies based in capital cities.

“And the current schedule says [places like Dubbo] are two-and-a-half years out from the NBN.”

The regional question is going to be a lot on Kazacos’ mind as he looks to integrate the acquisitions and set the strategy for the next round of growth at the newly-merged business.

The company he heads now has a presence in regional NSW, and “very good coverage” in South Australia and Tasmania, but he sees further opportunities in regional areas in Western Australia, Queensland and Victoria.

And he does see room to take the SME IT infrastructure offsite, if their access to good networking improves. Even in the cities, where bandwidth may be adequate, Kazacos believes today’s networks aren’t good enough for SMEs to look at a fully hosted environment.

“The resilience of the network allows us to remotely manage the customers’ desktops, but not to put their servers into a data centre that we control, or into the cloud,” he said.

Such considerations are particularly important for an outsourcing company focussing on businesses with around 50 employees, instead of the much larger outsourcing deals that were Kazacos’ bread and butter in the days of Kaz Computing, because you need so many more customers to make the business profitable.

“At the large end of the market, you could to a few multi-million dollar deals, and that would be profitable,” he said. Providing services to SMBs, “you have to get a lot of scale.”

However, Kazacos believes the changes in business operations over recent years mean that SMEs have developed the same kind of reliance on their IT systems as once drove the outsourcing business in the big end of town.

“In the early days, SMEs had very little reliance on the technology. Now, they’re using the IT systems to take orders, they’re dependent on telephony, they do their banking online, they get their orders through e-commerce.”

While they’re not looking for the huge balance sheet adjustments that large companies achieved through outsourcing, they are looking for reliability that’s in line with their dependence on the technology, he said.

One of the big things to come from the recent merger, Kazacos said, was that he now heads an organisation able to provide both the IT services and (via a resale arrangement with Telstra), the telecommunications services.

“As the types of services our customers buy become more converged, they like to buy these services from a single source,” he said. And by combining the management of telecoms and IT systems under a single orgnaisation, he said, Hostech can eliminate finger-pointing when something goes wrong.

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