SME Toolkit

Broadband lures small firms to hosted services

Peter Judge ZDNet.co.uk

Published: 23 May 2005 17:45 BST

Thanks to broadband, small businesses are increasingly likely to use hosted services such as calendar-sharing and collaboration, research published on Monday said.

According to the study, which was carried out by Microsoft, BT and hosting provider CobWeb Solutions, small businesses are ready to pick up services that make them look like large enterprises.

Microsoft predicted six years ago that businesses would move to software delivered over the Internet, but has let Salesforce.com and others get in first. The survey backs up the company's feeling that the time is finally right for software as a service.

Around 44 percent of small businesses are ready to pay for hosted services, which could produce a £167m annual market if they all sign up over the next three years, according to the survey of 5,000 small businesses in the UK. Fifty-two percent of the companies, the vast majority of which have fewer than 15 staff, wanted broadband-delivered communications services that mimic those used by larger companies.

Of those willing to pay, 82 percent said they were ready to pay £5 per month per user for a shared calendar, contacts and collaboration service.

"The initial investment and limited access to IT expertise required to realise the benefit of IT leaves many small businesses managing with what they have, and not in a position to choose and implement the right IT to help their businesses grow," said Clive Quantrill, general manager of business value added services at BT.

"As small businesses evolve, and their needs become more complex, they will have to invest in technology that allows them to remain competitive with larger enterprises — which now includes outsourcing non-core functions," said Mark Adams, managing director of CobWeb Solutions.

The application service provider (ASP) model proved unsuccessful at the end of the nineties, but widespread broadband take-up has made it more viable today, say the report's authors. The most likely customers for the renewed ASP business model are small businesses specialising in professional services such as law and consulting.

The growth of spam is another driver, as these small businesses want access to the high-tech spam filters that big companies can run. They also want to avoid loss of data in a catastrophe.