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Last week, Easynet Connect commissioned a study of UK SMEs in order to try and gauge the impact that the recession has had upon online strategy in this sometimes overlooked, but important, area of UK industry.

The research aimed to understand the everyday perspectives of SMEs (small and medium enterprises) facing the current economic climate and, perhaps more importantly, what impact this had upon the technologies they used on a daily basis. In the words of the report itself, the aim was to:

See which technologies were being used widely and to good effect, and which had yet to grab the attention of smaller businesses.... We particularly wanted to see where SMEs could make better use of the technology available to help them to reduce costs, enter new markets, and ultimately, lead the UK out of the recession altogether.

So, in online terms, how is the internet being embraced by smaller businesses? The report identifies four main areas:

The internet as the ‘critical difference’

According to the findings, 65% of UK SME respondents believe the internet is either an important, or the most important, tool for helping them through the recession.

While until now it was relatively safe to assume this, we now have some solid data to support this notion. It’s great to see businesses finally feeling confident about the internet, but it’s important to remember that to have any degree of success takes work. There isn’t some magic switch that suddenly transforms a company overnight, the instant it starts engaging with online media.

Having a good online strategy is essential and overall objectives need to be realised. There are an enormous number of factors that dictate whether a business survives or fails, so understanding your aims and how to achieve them, as well as potential hurdles you may face, is extremely important.

As the study notes, having visible confidence towards the internet is a good starting point, but “needs to be reinforced by clear strategies to convert opportunities into benefits.”

Following the idea of strategy, the second issue covered was:

The internet as a dual marketing and cost-cutting tool

When respondents were asked about their strategic views of the internet, interestingly, there was rough split of about half between those who were planning on using it to drive new revenues and market share (42%) and those who saw it as a means to cut overall business costs (43%).

Furthermore, most responding organisations said that they would be adopting both approaches during the next few years. This is extremely encouraging to see, especially given that it was recognised that a combination of the two can successfully drive a business forward. However, this also creates various challenges, as with limited resources, time and (often) expertise, smaller businesses can become overwhelmed by the vast range of options, technologies, strategies and resources available. Understanding how this ties in with unique goals and objectives can also become problematic.

Using the internet to cut core costs

The immediate benefits to businesses using the internet as a cost-cutting exercise are often very clear, very quickly. Often, the range of possibilities is viewed to be limitless, as the approach each organisation takes depends on their individual situation and the nature of their business.

Among the SME community however, the most popular options seem to be using the internet to deploy remote working (77%), using video conferencing to cut down on business travel (53%) and using VoIP to reduce telephone costs (33%).

As expected, to save investing in expensive and quickly out-dated packaged software programmes, a rising number of companies are looking towards using cost-effective online software solutions, such as Google Apps.

Returning once again to the well-written report, it notes that the internet is now consistently introducing new and innovative ways of managing business costs, from using price comparison websites to compare the price of office stationery or helping to reduce travel; "the challenge is to keep on top of it all and put these developments into practice."

The devaluation of IT hardware in favour of internet services

It seems that the value of having a good internet connection doesn’t really enter any cost-cutting exercise for companies, with only 8% of respondents saying that they would consider decreasing the quality of their internet connection.

This is in contrast to the 61% who would happily cut back or freeze hardware expenditure and the 28% would cut down on software licences.

Of the latter, only 17% or organisations would replace them with much cheaper, or even free, on-demand SaaS versions, which could possibly reflect a relative immaturity of what is still a very new form of technology, but could also demonstrate a lack of awareness by SMEs of various technological alternatives to current systems.

However, SMEs are essentially taking a step backwards by eliminating their software options, especially when it comes to the likes of SaaS , where financial savings can be potentially be made, without losing productivity. The survey suggests that “SaaS could be a real lifeline to SMEs, and a key differentiator between this recession and the last,” however, I personally feel that this is debatable.

I do however, agree with Richard Thurston, from Analysys Mason, who says:

The internet, and the way its benefits are leveraged, is a critical enabling factor for businesses during the recession... [It] has enabled businesses of all sizes to become more productive as well as save costs. These benefits have been amplified by the use of new tools [and] while many of these services are well established among corporates, the costs of delivering them via the web has fallen significantly, bringing them within the reach of much smaller organisations.

It seems extremely fair to say that SMEs have a wide and varying range of options now open to them through the internet and to see them beginning to realise this is encouraging. The routes that businesses need to take in order to flourish online may vary, but at the heart of it all is having the confidence to take the first steps.

Jake Hird

Published 14 April, 2009 by Jake Hird

Jake Hird is Econsultancy Australia's Director of Research and Education. Follow him on Twitter and Google+, connect with him on LinkedIn or see what he's keeping an eye on via diigo

126 more posts from this author

Comments (3)

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Tim Molony

We work with SME's and with the limited resources they operate under the internet is definatley a lifeline. The common benefit we hear day in day out isthe internet enables SME's to compete on a level playing field with other organisations (including larger corporations) acting as a 24/7 shop window to their services and to more customers that would ever have been humanly possible.

over 7 years ago

Alec Kinnear

Alec Kinnear, Creative Director at Foliovision

The days of big upfront costs for an application which doesn't do what you want in the end and being stuck with it are gradually coming to an end.

Online reviews of software and SAAS packages are saving people going through huge numbers of unsatisfactory solutions at great cost. Bad coders/good marketers are no doubt suffering.

For example, Microsoft is in a dfficult place now, running on legacy success.

over 7 years ago

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Greytip Online

Excellent article.Thanks for sharing

Internet can make critical difference to Small Enterprises in terms of cutting costs or marketing/selling online. In addition to this, the growing popularity of Software as a Service applications shows how SMEs can make use of Internet for intelligent business applications. Today, a small business promoter can easily sign up and start using Online Payroll with in minutes, that too without any spending towards CAPEX.

over 6 years ago

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