Survey: Net Tops Phone for Small Businesses

Small and mid-sized businesses (SMBs) -- particularly those with broadband Internet access -- consider Internet access and e-mail more critical to productivity than voice connections, the Yankee Group reported Monday.

Fully 70 percent of small businesses (that have 20 to 99 employees) with broadband asserted that Internet access is "very important to the functioning and productivity of their business," according to the Yankee Group's 2002 E-Business and Web Hosting Survey.

"Voice is still very important to the ways SMBs conduct communications," Yankee Group analyst Helen Chan told the E-Commerce Times. "But from a functioning and productivity standpoint, they tend to view the Internet as more productive."

In comparison, just 49 percent of broadband small businesses said wireline voice connections are very key to the functioning and productivity of their business, and 43 percent characterized mobile voice lines this way, the report stated.

Net Surge

Over the past three years, Chan said, she has observed a distinct increase in the importance of the Internet to SMBs' overall business strategy.

"We have seen a shift from those that are lukewarm to those that feel the Internet is very important or somewhat important," Chan said.

Indeed, 24 percent of 1999 survey respondents deemed the Internet unimportant, compared with just 6 percent of the 2002 sample.

Buying Boom

Key tasks for which SMBs are using the Internet include conducting competitive analysis and connecting with customers, suppliers and other company locations, according to Chan.

Compared with previous years, online transactions are markedly more prevalent among SMBs, she noted.

In fact, the proportion of polled companies reporting they had purchased items online swelled from 68 percent in 2001 to 90 percent in 2002.

"In particular, SMBs have succeeded in using the Internet for customer service and building brand awareness," Chan said.

Online SMBs also rely on the Internet to recruit employees, conduct meetings and gain access to the company network, according to the report.

Speedy Connections

As broadband penetration increases among SMBs, more companies will use the Internet to increase productivity and improve competitive advantage, Chan suggested.

Currently, 40 percent of very small businesses (2 to 19 employees), 65 percent of small businesses and 83 percent of mid-sized businesses (100-499 employees) enjoy high-bandwidth connections.

Even now, for both dial-up and broadband-enabled very small businesses, e-mail surpasses voice by a margin of at least 11 percentage points for business efficiency, the report stated.

Hold the Phone

Looking ahead, SMBs will rely on the telephone for sensitive interactions, but e-mail and the Internet will continue to bolster firms' productivity, Chan said.

"While voice currently beats e-mail in adding a personal touch to exchanges that do not take place in person, broadband users are increasingly finding more Internet protocol-based ways to efficiently conduct and run their day-to-day business," she added.

The Yankee Group's annual E-Business and Web Hosting Survey queries 750 U.S.-based SMBs in seven industry segments, including construction, manufacturing and retail , with the goal of understanding e-business readiness among these companies.