Customers like the personal touch that a small business can offer, but they also value the confidence and convenience of dealing with a big one.
New online technologies now enable customers to have the best of both worlds. Technologies such as software-as-a-service (SaaS) and cloud computing not only help small businesses appear bigger than they are, more importantly, they provide them with the muscle of their much larger counterparts. These technologies boil down to using the internet to access software, store information, and combine separate streams of data in novel ways.
Ocean Broadband, a Perth wireless internet service provider with just 12 staff and more than 3500 customers in rural Australia, is making the most of such technology. When, for example, the company receives a complaint about a slow or lost connection, the call-centre operator can bring up on a screen overhead and street-level images of the wireless receiver on the customer`s roof. If something is blocking the signal from Ocean Broadband`s transmitter, a technician is advised. "We can make a much more accurate guess about what might be wrong," explains chief information officer David Wilson. "Previously, we would send a technician out there to survey the problem, then plan a repeat visit to fix it."
Remarkably, the software powering this top-end customer service is open to small and medium enterprises on a tight budget. In the past, such software came shrink-wrapped with a $1000-plus price tag. IT specialists were needed to install it over several weeks on a computer server that a business also had to buy - pushing the bill into the tens of thousands of dollars. By contrast, Ocean Broadband`s annual subscription to online customer relationship management company Salesforce.com costs $100 a user for its basic service of managing sales leads and customer records
It took Wilson just three days to get the SaaS application working. Customer relationship management was the first business application to be delivered over a standard internet connection through a web browser such as Internet Explorer or Firefox. Now SaaS versions are available for accounting, supply chain management, word processing and most other business processes. Wilson says Salesforce.com has enabled Ocean Broadband to increase its customer base 10 times faster than its staff numbers in the three years since he joined the company. "We had been using a Microsoft Excel spreadsheet: one worksheet per region, one row per customer, and one cell for their entire history with us. It was already difficult to find details of a particular customer [with just 100 overall]. It would have been impossible once we got past 200," he recalls.
SMEs feature heavily among the 1500 early adopters of Salesforce.com in Australia, notes the United States company`s Asia-Pacific vice-president, Doug Farber. "SMEs are normally resource-constrained and generally don`t have an IT department. Salesforce.com gives them the opportunity to build an enterprise application using the same infrastructure as bigger companies use," he says. This ability to hook into huge data centres filled with thousands of powerful computers, courtesy of ubiquitous and cheap broadband and mobile access, is another technology helping minnows to stand taller. Data centres such as the Sydney facility of London`s Global Switch form "clouds" of processing power and storage that businesses can tap into in a similar way that they tap into utilities for water and power.
The managing director of Sydney company Task Retail Technology (TRT), Kym Houden, is doing just that to send details of millions of customer transactions instantaneously across the country daily on behalf of thousands of stores in some of the most recognisable franchise names in Australia. Cloud computing has allowed Houden and his 12 staff at TRT to steal business from IBM, InfoGenesis and other, bigger rivals - not least the contract to deliver 1050 point-of-sale systems for Retail Food Group`s Donut King, Michel`s Patisserie, Brumby`s Bakeries and other franchises "The lightning speed of the technology means that instead of a franchisee taking up to three weeks to send sales data to head office, it is now a matter of seconds," he says. TRT`s Xchangexec software also sports bells and whistles such as accepting orders through SMS, and spitting out point-of-sale promotions and coupons based on the time of day. Houden is planning a cheaper, "lite" version for sole proprietors and small chains.
They are already within the reach of Canberra online payment services provider eWAY. For 50 cents, it ferries customer credit card details from a merchant`s online shopfront to its bank. It then carries back the bank`s response - accept or reject - within seconds. This is an example of a web service that can be combined with others, in this case a "shopping cart" for taking orders, to create a customer experience worthy of Amazon.com. Matt Bullock, Chief Executive of eWAY, says, "While it is very easy to link to us, linking directly to the bank is quite complicated." It is such complications that 47 per cent of small businesses claim are in part stopping them from taking orders online, a poll taken in May by advertising network Sensis shows. Bullock thinks these are more perceptions than realities, however, given the extent to which web technologies can automate the nuts and bolts of e-commerce. "They can get on with their business instead of working in the technical side of it," he says. Even so, acting bigger than you are has downsides. For one, SaaS and cloud computing can end up costing more than conventional alternatives.
Mike Lorge, the managing director of Sage Business Solutions, which offers offline and online versions of its software, notes that subscription fees are based on both the number of users and the amount of data. So the money saved on software and hardware purchases could be chewed up many times over in subscription charges as businesses grow. SMEs also have less control over web-based applications, Lorge says. True, they offer point-and-click wizards for users to add custom fields, design tabs and screens and create custom reports without IT support. But customisation options are typically much more limited than with conventional on-premise software. And although web services make some integration possible, Lorge adds that "in reality, the performance might not be adequate for applications handling lots of data". The US base of many web companies can also affect local support. "A lot of these services are American applications designed for the American market," notes a senior analyst at research firm Forrester, Tim Sheedy. "So businesses need to ask whether there is a local dial-in number [to the help desk], and whether it operates during Australian business hours." At the same time, Sheedy is confident that SMEs1 business information is safer on the servers of Google and Salesforce.com compared with "anything they are going to have internally". Forrester`s modelling suggests that SMEs with 50 users are better off over 10 years choosing SaaS than an on-premise solution. The fact that Forrester`s verdict is reversed for businesses with 250-plus users suggests SaaS, cloud computing and web services could provide SMEs with a lasting advantage.