SMEs lost in the internet maze

SMEs lost in the internet maze

Small and medium enterprises are finding the web makes business more complicated. Sam Trendall investigates

Many SMEs have difficulty using the web to their advantage, according to a recent survey commissioned by ISP Pipex.

The study’s findings were discussed at an event hosted by Pipex’s parent company, Tiscali, in central London earlier this month. Pipex also used the event to unveil its range of business broadband services and Business Portal web site.

Professor Andrew Burke of the Cranfield School of Management conducted the research, which focused on the estimated 1.25 million businesses in the UK that have between one and 250 employees. A sample of 422 business managers were interviewed.

The survey found that 97 per cent of respondents use email, 94 per cent have broadband, 84 per cent run a company web site and 65 per cent use the internet for transactions.

Lagging behind

Burke compared the advent of the internet to the launch of the Big Bertha golf club. He said: “The internet enables companies to operate internationally from day one, and nobody can afford to be without the Big Bertha because they are going to be 30 yards behind everybody else.”

The survey revealed that the internet has enabled 56 per cent of SMEs to sell products or services abroad, while 47 per cent have been able to increase the range they offer, and the same amount have been able to negotiate better terms with suppliers.

But 46 per cent of respondents claim the internet has raised the complexity of running a business and 48 per cent believe the internet causes employees to waste time.

Just under 60 per cent think it is now more difficult to protect confidential information and 54 per cent say it has increased the number of companies in their market.

Burke said: “SMEs are dealing with a much tougher customer. There are issues for businesses in terms of consumers being able to compare prices and information.”

National vice chairman of the Federation of Small Businesses, Carol Wells, who attended the event, said: “I think SMEs have difficulties using the internet to their best advantage and do not realise how much time it takes up.

“Technological advice often comes from salespeople and is not very independent. Smaller businesses sometimes end up over-equipped for what they need to do.”

Pipex also unveiled its new range of four business broadband packages, with monthly prices ranging from £14.50 to £49. It also launched a Business Portal web site, which is designed to provide news, advice and helpful information to SMEs.

Neil McCleave, managing director of media services at Tiscali, said: “It would be arrogant to think we can truly be a one-stop shop, but if we cannot give them [SMEs] the information they need, we can show them where to go.”

Tiscali also announced plans to increase its market share of the business broadband market. Tiscali claims it is second in the market with a share of nine per cent, some way behind BT with a 71 per cent share when indirect sales are included.

Tiscali in competition

Lance Spencer, product and marketing director at Tiscali UK, aims to increase Tiscali’s share to 18 per cent by 2010. “The market is nicely positioned, with one incumbent not doing very much and one very ambitious second player. We have a window of opportunity for the next 18 months to take a bite out of BT’s market share,” he said.

In response, Ricky Ricketts, head of indirect sales at BT, said: “BT is continually developing and introducing new services and products to help small businesses take advantage of the latest technologies and the internet.

“Small businesses are the lifeblood of the UK economy. We are committed to understanding and meeting their needs,” he added.

Adam Harris, managing director of BT reseller Bear IT, thinks companies such as his can offer SMEs a level of service and impartiality that large ISPs cannot. “All the large ISPs are geared up towards the domestic market and are very price driven. We are a little more expensive than BT, but when a customer calls us they come straight through to a person who can deal with their problem immediately, rather than a call centre,” he said.

“I do not think I have heard anyone tell me a positive experience they have had with BT’s customer service. Everybody always has a complaint.”

Rob Bamforth, principal analyst at Quocirca, said: “I think we are going to see some fragmentation of the business broadband market and opportunities will open up for providers that focus on businesses.

“The ISPs vying for second place have to do two things: they have to position themselves as an acceptable alternative to the number one, but they also have to distance themselves from the pack, which is a different exercise entirely.

“I do not see that anybody has done that yet and it is still something for all the other ISPs to aim for.”