Following the financial woes at the end of last year, the first six months of 2008 have seen little improvement for businesses. While there is much noise about the current state of the UK economy and the drivers for slowing growth, it is hard to escape the fact that the current economic conditions mean many organisations are faced with some difficult challenges. As such, it is worth returning to a topic we touched on at the beginning of the year about how technology can help organisations in uncertain economic times.
Impact of the credit crunch on UK enterprises
For many small/medium enterprise managers this is an unsettling period. If wholesale commodity prices carry on rising then consumer confidence is likely to continue to decline, meaning sales will slow further at a time when competition is likely to increase. This will be compounded by the fact many organisations will be unable to pass on this increase in costs, further increasing the pressure on small/medium enterprise managers to find efficiencies and savings to protect margins and cash flow.
It is not surprising then that business confidence is reported to have fallen to its lowest level for nearly 16 years, according to BDO Stoy Hayward in their Business Trends Report(1). This comes on the back of another downgrade to GDP growth by the Confederation of British Industry(2), which has revised down its GDP growth forecasts for the UK for 2009 by 0.4% to 1.3%, due to continuing upward pricing pressures on commodities and weaker consumer demand.
More worryingly though, is the finding(3) that many businesses are putting investments on hold with the downgrading of investment growth to just 0.3% for 2008 compared to 6.7% for 2007. This would indicate that enterprises are foregoing investment to improve cash flow as markets weaken.
The first place many organisations look to cut back on is investment in technology. While this makes sense, since managing cash is key to surviving any downturn when revenues weaken and access to funds becomes harder, it can be counter to the need to focus operations and improve organisations' ability to understand what is going on in their key customer segments and to respond effectively to these changes.
Cost containment and reviewing suppliers
This raises the question of how, and which technology will offer ways that will help the organisation improve its operations and thus improve its competitiveness and sales. However, this does not necessarily mean rushing out and adopting the latest technology, but rather first understanding what you have now and how that can be better utilised to improve what the organisation does, and then considering what technology will best support the organisation going forward.
The first place to start should be by looking at your current spends by reviewing bills regularly. It is estimated organisations can be overpaying for telephone bills by 10% per month(4), which taken over a long period can add up to a significant amount. Also bills might not reflect changes to rates or disconnected circuits.
While this can be time consuming and confusing if you have to manage several suppliers, an easier option would be to compare prices on price comparison websites. Although your current incumbent might have history on its side, it is always worth shopping around to ensure you are getting competitive rates. This also has the advantage of allowing you to see what else is on offer. However, any change in supplier has to be weighed against the risks of changing supplier.
Analyse your communication needs
Once you know what you have and how competitive it is you can start to look at what you need. We believe that a couple of key areas to focus on should be ways to improve efficiency through remote access and mobile services. Many remote access users still rely on dial up or separate broadband accounts(5), this is the perfect opportunity for organisations to consolidate these centrally and have one bill. Also, look to see if your provider offers bundle solutions to include mobile data and/or voice services.
The move to broadband would also allow an organisation to begin looking at migrating towards VoIP without having to use a peer-to-peer piece of software, which can raise security and management issues. You can even get pay as you go voice over broadband contracts now(6).
If your organisation is large enough you might be running a separate voice and data network. By merging legacy data services and separate voice and data access lines organisations can save money and begin to build a platform that allows the organisation to deploy new services faster. Where sensitive data needs to be shared and the organisation is of a size that justifies the investment, it should also consider IP VPN (Internet Protocol Virtual Private Network) solutions, utilising MPLS (Multi-protocol Label Switching).
In an ideal world, organisations would be able to create an IT infrastructure, which catered for transparency and greater clarity of billing information. This would support scalable and efficient systems, such as those services offered by THUS, which can act as a key pillar of enabling flexibility in the organisation. This might sound obvious; however, this is often not possible because many organisations do not have either the infrastructure or time to undertake these tasks. Organisations, therefore, need to look towards their provider to work more closely with them to understand their current usage, how they can improve it and make it more efficient.
(1) UK business confidence hits lowest level since 1992. BDO Stoy Hayward, 2nd July 2008
(2) Press release; Slowest growth in seventeen years expected 2009, as high commodity prices put brakes on economy. CBI, 16th June 2008
(3) Press release; Slowest growth in seventeen years expected 2009, as high commodity prices put brakes on economy. CBI, 16th June 2008
(4) Cost cutting for midsize businesses through reduced network spending, Gartner, March 2008
(5) Cost cutting for midsize businesses through reduced network spending, Gartner, March 2008
(6) http://signup.voip.demon.net