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How Small Businesses Can Cut Costs and Gain a Competitive Advantage With Technology

Written By: Abdul Kasim

Technology – especially communication and IT technology, if used prudently, can further the competitiveness of a company while reducing their cost structure. This scenario is definitely applicable amongst companies with a limited use of such technologies and whose market appeal (i.e. addressable market) is broad. This typically encompasses most small businesses today. Information and Communications Technologies (ICT), as it is usually referred, can now provide unprecedented advantages without the attendant costs.

ICT has been around for a while, and in fact, its benefits are well understood. ICT are invariably used by most large and medium sized enterprises, yet small businesses are just beginning to embrace such capabilities.

So what does ICT typically entail; while the definition is broad and academic, it simply refers to all those technologies that enable communication and information processing and presentation. To simplify this in more common terms, it encompasses capabilities like voice/phone, email, web, fax, printing, storage (of data/information) and security (of information) etc, which are delivered over hardware and software products (often from several different vendors).

The benefits of ICT to a business are vastly outside the scope of this short article, but it is important to stress that it enables even the smallest of businesses to extend its reach and be more effective, while making it more efficient (i.e. reduce the cost and time) to do so.

A simple example would illustrate this adequately. Consider a small business like a company selling T-shirts. Having an online presence means that it can literally offer its merchandise all over the world as opposed to being restricted to local or regional distribution. The company can communicate and sell its products more efficiently and possibly with fewer intermediaries, reducing its cost structure, and improving profitability. It can communicate with its suppliers and buyers at a very low cost using an email system, or even telephonically (using technologies such as Voice Over IP which allows calls to made even internationally at a fraction of what it would cost with the usual phone companies).  Sophisticated features in phone systems such as voicemail and call queuing also allow the SMB to present a professional front to its clients and improve customer service. 

The bottom line is that with ICT capabilities, SMBs can make their business run more effectively and at a lower cost. In fact, there are several options that SMB have, to get these capabilities at a significantly reduced cost or a deferred cost (i.e. minimal initial investment).

The SMBs can look to a new class of products in the market called, variously, ‘Office in a Box’, or a ‘Multi-Service Business Gateway’. These products consolidate all the voice, data and IT capabilities that an SMB would typically need into a single device at one third or less the cost of existing multiple product solutions. Further more, and importantly, these products are extremely simple which translates to minimizing on-going costs to a fraction. In more specific terms, we are talking about an average initial investment of about $3,000 with such a product (as opposed to $14,000 using multiple point solutions).

The dramatic disparity in costs between the Office in a Box products and previous solutions is due to the fact that the former is extensively based on free open-source software (note, however, that because it is free does not mean it is of a lower quality; ironically, it is state-of-the-art).

An alternative option that SMBs may have to acquire the ICT capabilities is subscribe to these capabilities/services from their local Service Provider (phone or cable company). In effect, what is being done here is the Service Provider typically uses the Office in a Box to deliver services, and charges a monthly fee; in this case, the SMB usually has no significant investment at all, and the cost of the product is usually spread over several monthly payments, making it less expensive and less risky.

Irrespective of the option that an SMB chooses, the Office in a Box enables a very attractive solution that will give it the capabilities to fully leverage the potential of its business opportunity. The cost barriers are manageable and for those seemingly prescient SMBs who take this step could actually transform themselves into stronger, and more profitable players.

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