Jola Cloud Solutions' Blog

1. Acceptance of the concept

Before IP voice was commercially viable, millions of US SMEs were already using Centrex. In the early 1980s the US telecommunications market liberalised, creating 7 local operating companies (the equivalent of Openreach) nicknamed ‘Baby bells’. These all launched their own central exchange offerings (Centrex) in preference to on-premise telephone equipment. With a big stake in the equipment market, BT was never really interested in Centrex and the UK’s first Centrex product launched by Mercury in the early 1990s was clumsy, unreliable and expensive.

1. Reliable connectivity is cheaper

The biggest barrier to cloud-based telephone systems has been broadband because voice traffic is intolerant to varying speeds and congestion. This issue, coupled with the ‘best-effort’ nature of broadband technologies, has given hosted voice a bad start and a bad name. Now that companies can buy fibre broadband and a dedicated 20Mb leased line for £199 per month they are starting to use it.

1 - Your customers want faster broadband - why not get it from you?

The first company to deliver internet connectivity into a business will often retain that customer as they upgrade their connectivity and move into hosted applications. If you are a business supporting SMEs, internet connectivity is a great first product and a good platform to upsell additional services from.

Investment in IT hardware and software reaches a record high but SMEs struggle with complexity

A new survey by BNP Paribas reports that business investment in IT hardware and software has hit a record high, up by a quarter since the start of the 2008 financial crisis. The report says that business investment in information and communications technology jumped to £34.4 billion last year – up by 24% since the height of the recession in 2009, when businesses’ IT capital spending was just £27.6bn. 

As the amount of voice traffic carried over the Internet increases, we are seeing both pros and cons to moving to a converged data network in the SME market, but will this affect SME suppliers such as IT support services and business telecommunications providers?

In the mid-1980s the government broke British Telecomm's monopoly and suddenly anyone could sell telephone systems to businesses.

Although some companies started up specifically to sell telecommunications most of the new suppliers of phone systems already sold office equipment (fax, copiers, furniture) and had decided to diversify. To a lesser extent IT Support companies also added telecommunications to their portfolios but they were more service-orientated than equipment and early set-backs with these products often put them off. When the market for telephone calls liberalised later in the decade the channel was really born and thousands of small local companies started supplying calls and lines as well as telephone systems. Some of the large indepedent telecommunications companies we see today e.g. Daisy, Alternative, Kcom were only made possible by the actions of the government.

SME growth

According to the latest Small Business Research Report 2015 from Exemplas 40% of SMEs reported an increase in sales turnover on the previous year of trading and 73% plan to grow their business in the next two to three years. As suppliers to this market how can we support their growth?

Increased competition

As more companies enter the market IT support for the SME market is becoming increasingly competitive. It is hard to win new business so there is a focus on providing excellent service to existing customers. One way to win new business especially with local start-ups is internet connectivity. The first company to sell connectivity into a business will retain that customer as they upgrade their connectivity and move into hosted applications. If you are a business selling to SMEs, connectivity is a great first product and a good platform to upsell additional support services from.

To become a one-stop-shop

The mobile market is saturated and mobile companies are taking on specialists to sell IT Support, connectivity and cloud products into their bases. For the SME a converged solution finally makes the one-stop-shop proposition attractive and suppliers that don’t have a complete solution risk exposing core business to new competitors.

Demand for SIM-only deals is increasing in the SME market

Following consumer behaviour, the business market in the UK is finally breaking the link between airtime and handsets. Leasing is now available for handsets and SMEs are moving to SIM only contracts - either using existing handsets or leasing new ones separately. With no base of legacy term contracts to protect this is an ideal time to get into the mobile market.

Textile manufacturers in rural areas are upgrading their internet connections to leased lines for faster speeds and increased security. Those with ERP software found leased circuits met their requirements.

Reason 1 - Faster speeds

Copper broadband is limited to 24Mb/s, fibre broadband offers up to 80Mb/s and Ethernet circuits offer up to 100Gb/s. The more manufacturers use their internet connection the more important speed becomes. 

Reason 2 - Cost reduction

The cost of leased lines has reduced in recent years due to increased competition in the market and the introduction of lower cost technologies such as fibre Ethernet. In addition many SMEs have taken advantage of the government's BDUK voucher scheme which is funding internet upgrades in many UK cities.