What is the art of ICT investments for your business? – More bang for your buck!

This is a simple but effective guide for the key principles what small businesses should consider when making ICT or telecommunications investments.

As small business owners are pressed for cash flow, they should ensure that CAPEX investments in ICT should be funded by their providers.

This post prods the small business owner to look beyond the tactical cost and take into account the total cost of ownership when considering any ICT investments for their small business.

This article authored by me is published in both the online and print versions of the SME Advisor Middle East magazine in the November 2010 issue.

This article authored by me was published in the SME Advisor Middle East magazine in both the print and online versions.

The ICT awareness and needs of the SMEs are diverse and disparate. Many SMEs feel that any investment in ICT is costly and does not generate the requisite returns. This is certainly not true. In this first edition of the expert advice column from du, John Lincoln, Vice President, Marketing (Enterprise segment), du, explains the importance of ICT investment.

SMEs contribute to the majority of the GDP in most countries, but are also the largest job generators in the global economy. It’s no surprise then that they form the backbone of the UAE economy. Recent studies carried out by du, in association with Frost and Sullivan, showed that 98.5% of the UAE businesses are SMEs. With this businesses in the UAE spend about AED 9.8 billion for their ICT needs. SMEs account for 50% of the ICT spend in the UAE.

ICT deployment enables any business to lower their costs, improve people efficiency and effectiveness and in many cases helps SMEs to generate more revenue. In other words, investments in ICT are a paramount requirement to increase an SME’s productivity. A minimal 10% increase in a SME’s productivity can sometimes determine whether the business remains competitive and sustainable.

The successful and economic deployment of ICT is critical to a SMEs success. A non optimal selection of a solution or a provider could have negative consequences for an SME. This impact is further exacerbated due to SMEs limited financial and people resources. As most SMEs do not have the necessary in-house ICT expertise to undertake ICT projects on their own, it is imperative that an SME select an ICT partner that is reliable, knowledgeable and offers the best value for money.

Value for money

Globally, all SMEs seek superior value for money – this means they want pricing predictability and transparency. SMEs cannot afford and do not appreciate sticker shock from their providers. Working capital management is critical for all businesses but for SMEs an optimal working capital management could mean survival or closure of the business. Therefore as part of the proposition for value for money, any offer for SMEs should have minimal capital outlay requirements. Instead they should translate their capital expenditure (CAPEX) to an operational expenditure (OPEX) model with minimal financing costs. If cash is king for SMEs, I would recommend that SMEs demand this of their suppliers and providers. In fact I would urge eligible SMEs not to consider any other option.

Make it easy and simple

Most SMEs do not have the necessary resources or know how for LAN installation, network or data base administration, IT security management or storage management among many other critical IT functions and elements which large businesses take for granted.

The opportunity costs of hiring a specialist with the requisite IT skills are high for SMEs. Money that could be reinvested into the business is now being reallocated to other areas. Therefore when SMEs select their providers, it is critical that your provider is able to offer these services for a pay as you use model albeit on a per employee basis, per port basis, or any other per unit basis.

Convenience

The wide and complex array of solutions, systems and sub systems mean that most SMEs without the prerequisite know how and skills will be confused and overwhelmed at the multitude of choices and proposals being offered to them. Therefore, it is critical that any offer to any SME should have a one stop economical solution. It is unconscionable to ask an SME to review, evaluate and select from such a complex and disparate pool.

How should an SME select an ICT provider?

There are 3 Cs an SME should remember when selecting an ICT provider.

Commercial model – does the provider offer a CAPEX to OPEX model? Is the pricing transparent and predictable?

Complexity – Does the provider remove the complexity away from the business? Does the ICT solution require an SME to further hire in house resources to manage and maintain. If yes, this is not an optimal solution.

Convenience – Does the ICT solution provider require the SME to source additional systems or equipment from other providers? Do they have a one stop shop?

Your business is unique

The UAE telecom market is maturing and the demand for more and more segmented offers is growing. SMEs should move away from ICT providers who offer a one size fits all proposition.  SMEs are a unique business group and need to be addressed and served as such. For many years, the UAE did not have specific segmented offers for SMEs. However today there are a set of emerging major players offering niche and differentiated propositions, solutions and services for SMEs.

Business mobility

Research has indicated that the SME segment requires value driven, simple to understand and predictable mobile offers that meets the varied calling pattern and user sophistication. It has been observed that the key requirements from SME owners have been driven by a need for competitive international calling rates, special calling rates within their business, international roaming benefits and a choice of smart phones with a low CAPEX commercial model. It is important therefore that SMEs select calling plans from providers that do not confuse SMEs with peak, off peak and different country rates. For most SMEs any day and any time is peak for business.

Business fixed voice services

SME business customers also need a reliable and cost effective fixed line service that meets their immediate and growth requirements. It has been observed that key requirements from SME’s for fixed line services include significant savings on international and national calls.

Look for voice service provider that enables your customers access to your employees at a moment’s notice and offers a variety of calling features like call forwarding and three way calling. Look for offers where the more you use the more you save.

Business broadband services

Cost effective business broadband services is an important parameter used to measure the maturity of telecommunication sector in the UAE. The UAE now ranks eighth globally in broadband leadership. However, according to an Arab Advisors Group report, the UAE has the fourth most expensive broadband rates in 19 Arab countries. Research has indicated that SME customers need an unlimited and cost effective business grade broadband service.

In the last few years, it has been observed that volume based usage billing is slowly ebbing out globally, giving way to unlimited usage packages. Unlimited usage comes with predictable costs which can be built into a SME’s OPEX budget.  SME customers are looking at bundled benefits that offer significant savings on the overall telecommunication spend. With the impending opening up of the UAE market for both telecom operators soon, business customers and primarily SME’s can look forward to great offers and packages in the fixed broadband arena as it is now in the business mobility arena.

Managed services

Doing more with less remains the perennial challenge for organisations of all sizes. That challenge has special significance for IT departments, as the race to keep up with advancing technology gets more complex and critical every day. Businesses need to focus on their core strength and there is a growing trend globally as well as in the UAE to outsource non-core business functions including ICT.

Research indicated that more than 40% of the business customers look upon their telecommunications provider as an experienced and reliable partner to handle end to end ICT needs, which includes core telecom services as well as non-core telecom services such as IT security, network management, hosting services, storage, back-up and software applications.

Business continuity services

Business continuity requirements and cost controls typically drive the decision to use managed services and businesses are increasingly moving towards managed and hosted models.

Most SMEs never really know nor understand the impact which data loss can have on their business. Viruses, theft, hard drive crashes, and accidental file deletion can happen at any time and put any SMEs future in danger.

There are solutions that ICT providers have to safeguard files and drives. Whether its automatic storage, backup or virus-prevention, there are a large suite of cost effective solutions to help an SME remain protected.

SMEs should select a provider who understand their company’s security needs, and have partnered with leading security brands to provide products developed with SMEs in mind. SMEs should select scalable products which have the capability to add as much storage and units as they need, change whenever they want, manage multi-user environments, schedule automatic backups, and monitor the health of the SMEs backups and computers from the convenience of a web based access.

Conclusion

In summary, make a smart choice for providers with complete packages designed with your unique business needs in mind. Look for a partner that has a reputable brand, is considered innovative, dynamic and flexible and one who has the financial muscle to serve you better in the long term. Last but not least, the 3 Cs matter. Is the commercial model correct? Does it remove complexity? Is it convenient? If the answer is yes to all 3, SMEs can be assured that they will get a bigger bang for their bucks.

This article authored by me was published in the SME Advisor Middle East magazine in both the print and online versions.

Here is the ink to the home page of SME Advisor – http://www.smeadvisor.com and here is the link to the online version of this article that was published in the online version of the magazine in November, 2010.

More bang for your buck!


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This entry was posted in Customers, Decision, ICT, ICT investments, Leadership, Management, Marketing, Telecommunications and tagged . Bookmark the permalink.

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