|
|
|
|
 |
|
|
|
|
|
|
|
 |
 |
 |
|
||||
| Internet
use among small and medium enterprises (SMEs) Summary of Oftel SME survey |
|
||||||
 |
 |
 |
|
||||
 |
|
|
|
 |
|
||
|
|
|
|||||
|
Q2 August/September 2000 1.1 This report contains a summary of the findings on Internet use from the second quarter of Oftel’s survey among small and medium enterprises (SMEs). 1.2 The survey was conducted among some 700 SMEs comprising 400 small (1-50 employees) and 300 medium (51-500 employees) businesses located across the UK with a minimum turnover of £50,000. Quotas were applied to small and medium businesses separately so that the sample was representative of SMEs in the UK as a whole in terms of business size, industry sector and region with further weighting of the results. The fieldwork was conducted on behalf of Oftel by Continental Research during August/September 2000. 1.3 This report has been prepared by Oftel based on the results provided by Continental Research. 1.4 The report covers:
(Footnote 1) Some sources of data (including the DTI SME Statistics) define SMEs as employing between 1-249 staff though the definition of medium businesses is arbitrary, defined sometimes by number of employees, sometimes by turnover. The current survey included businesses with up to 500 employees in order that the survey was as inclusive as possible. It was felt that, from the point of view of telecoms purchasing, little difference existed between businesses with 249 employees and those with 500. (Footnote 2) The survey was conducted amongst a representative sample of small and medium enterprises (SMEs) in the UK, reflecting the UK profile in terms of business size, sector and region. As small businesses (1-50 employees) make up around 99% of businesses in the UK, medium businesses were oversampled in the survey to produce a sufficiently robust sample to allow analysis of the results among medium businesses. The combined results were re-weighted to be representative of UK SMEs as a whole (99% small businesses; 1% medium businesses), consequently the results for small businesses closely resemble those for SMEs as a whole. The error margin for this survey of 700 businesses is about 2-4%, though higher amongst small subgroups. (Footnote 3) The report should not be seen as recommended best buys and should not therefore be relied upon when making purchase decisions. Oftel accepts no liability in respect of any of the results provided to it by Continental Research or any decisions taken by any person in reliance on the report. Internet penetration 2.1 Overall, 49% of SMEs were connected to the Internet, with 19% in the process of connecting and a further 5% likely to get connected over the next 12 months. 2.2 Small businesses (at 49% connected) were less likely to be connected than medium businesses (at 70%). Possible barriers to use of the Internet emerging from the survey included a need for information on how the Internet can benefit businesses and on the equipment needed and how to use it, in addition to the cost of equipment, subscription and call costs. Ownership of PCs 2.3 Over two-fifths (41%) of small businesses did not have a PC which was regularly used by staff compared with 7% of medium businesses. The survey found that lack of knowledge of computer equipment and cost of equipment were a deterrent to use of the Internet. Use of the Internet 2.4 The vast majority of small and medium businesses were using the Internet more now than when they were first connected. The main activities were e-mail and accessing information with relatively few businesses using the Internet for interactive or e-commerce activities such as purchasing, selling or banking. Internet Service Providers (ISPs) used 2.5 Businesses were making use of a wide range of ISPs, particularly medium businesses. In addition, a third of SMEs had switched ISP, taking advantage of cheaper deals and different offers of content provision. Type of Internet package used 2.6 At least a fifth of SMEs were using unmetered packages, either fully unmetered or partly (with free usage at certain times or for a certain amount of time). Connecting to the Internet 2.7 Approaching two-thirds of small businesses were connecting to the Internet via an ordinary phone line/dial up link. ISDN connection was most common among medium businesses.
Internet penetration among small and medium businesses 3.1 Overall, some 49% of SMEs in the survey were connected to the Internet at September 2000. This compares with 44% at June 2000. 3.2 Some 49% of small businesses were connected to the Internet at September 2000, with a further 20% in the process of getting connected and 5% likely to get connected in the next 12 months. 3.3 Within the small business sample, as in the June 2000 survey, Internet connection appeared lowest among micro-businesses (with 1-10 staff). 3.4 In contrast, 70% of medium businesses were connected to the Internet with 23% in the process of connecting and 3% likely to get connected in the next 12 months.
Reasons for not connecting to the Internet 3.5 The first quarter of the business omnibus (June 2000) found that smaller businesses were half as likely to be connected to the Internet as medium businesses and also that over four-fifths of businesses not connected simply felt that they had no use/no real use for the Internet. As a result, the second quarter survey attempted to investigate whether there were other factors behind this apparent lack of need, particularly among small businesses. 3.6 Small businesses that were not connected or in the process of connecting to the Internet were asked about their reasons for not using the Internet.
3.7 Two possible barriers to Internet connection among small businesses that emerge from these statements are lack of awareness of information and cost. However, the main reasons for not being connected remained that the Internet was not relevant to the work of the business (mentioned by 53%) and that the Internet could not assist the business in any way (52%). This may still partly be an educational issue with businesses unclear of the potential uses and benefits of the Internet. 3.8 42% of small businesses not connected to the Internet said that they would need more information on how they could benefit. Another 31% said that they lacked knowledge on the equipment needed and how to use it, however around a fifth of these businesses already owned a PC, suggesting that they lack information on telecoms equipment required such as modems or possibly that they believe that they require more/more complicated equipment than is actually needed. That businesses may believe that they need more/more complicated equipment than they do in reality is also supported by the 31% of small businesses that said that they could not spare the time to learn how to use the Internet. 3.9 With cost, both the cost of equipment (mentioned by 23% of this group) and costs of subscribing/call charges (22%) had discouraged small businesses from connecting. 3.10 Analysis by industry sector of factors which may be discouraging Internet connection should be possible in future by combining the samples from the next quarter’s survey with that of the current survey. Ownership of PCs 3.11 Overall, three-fifths of SMEs owned a PC that was regularly used by employees, ranging from 59% of small businesses up to 93% of medium business. PC ownership was lowest, at 55%, among micro-businesses (employing 1-10 staff). The June 2000 survey also found lower ownership of PCs among small businesses compared to medium businesses (67% of small businesses; 99% of medium businesses) 3.12 Lower ownership of PCs among small businesses may partly explain why small businesses are less likely to be connected to the Internet compared with medium businesses. The survey found that lack of knowledge of computer equipment and cost of equipment were a deterrent to businesses connecting to the Internet (see para 3.9) Use of Internet by business aims 3.13 Small businesses were also asked about the aims of their businesses through a series of statements. These statements were designed to investigate whether use of the Internet was likely to be lower among more ‘lifestyle’ businesses, that is businesses with aims other than expanding and maximising profits. As figure 3 below shows, businesses with plans/hopes to expand (at 83% connected/likely to connect) were clearly more likely to use the Internet than businesses with no expansion plans (at 54%).
3.14 In addition, the small group of mainly small businesses that were not connected to the Internet but who were likely to do so in the next 12 months were asked why they had not connected so far. The most common responses were:-
3.15 A few businesses mentioned that packages had been too expensive and that they were waiting for prices to drop and also that they needed more information/did not have sufficient knowledge about the Internet previously. However, no strong conclusions can be drawn from this given the small size of the sample. Amount of Internet use 3.16 Over four-fifths (83%) of medium businesses connected to the Internet and 71% of small businesses felt that they were using the Internet more now than when they were first connected. The remainder were largely using the Internet the same amount as when they first connected. Internet Service Providers (ISPs) Used 3.17 At least a quarter of small businesses and 10% of medium businesses were using more than one ISP. 3.18 A range of at least 24 different ISPs were being used by the businesses surveyed. The ISPs most frequently used by small and medium businesses are listed in Figure 4.
3.19 A quarter of small businesses were using BT as an ISP. AOL, Freeserve and Demon Internet were also frequently used by small businesses. In comparison, with the exception of Demon Internet and BT, medium businesses were using a wider range of ISPs in small numbers (including providers not shown in figure 4). 3.20 Approaching a third (29% of both small and medium businesses connected) had previously used different ISPs to those they were currently using. The main reasons for changing among small businesses had been cost (old provider too expensive, new provider offered cheaper service), better content/links, and speed (previous one slow/poor access). 3.21 The most common reasons for changing among medium business were also cost (new provider offered cheaper service and old provider too expensive), speed (previous one slow/poor access) and also poor customer service. 3.22 The main reason for businesses changing ISP was cost, either that their old provider had been too expensive (particularly among small businesses) or that the new provider offered cheaper service. Speed (previous one slow/poor access) and content (better content/links with new one) were also important. A proportion (13%) of medium businesses had changed due to poor customer service though no small businesses. Type of Internet package used 3.23 Overall, a fifth of businesses were using a form of unmetered Internet package, 7% using a fully unmetered package (subscription+unlimited free usage+no call costs) and 13% a partly unmetered package (subscription+free usage at certain times/for a certain amount of time+call costs at other time).
3.24 Small and medium businesses differed in the type of Internet packages they were using with their main ISP. 3.25 Small businesses were most likely to be using a package offering no subscription fee with cost of calls (36%) followed by subscription with cost of calls (26%). 13% of small businesses were now using a partly unmetered service (subscription with free calls at certain times or for a certain amount of time) and 7% a fully unmetered service.
3.26 Subscription with cost of calls (36%) was the most common package among medium businesses. A fifth of medium businesses were now using a fully unmetered service with 6% using a partly unmetered service. Packages offering no subscription fee with cost of calls (used by 15%) were also popular among medium businesses. 3.27 A relatively high proportion of businesses (15% of small businesses; 23% of medium businesses) did not know what package they were using. Taken together with the proportions that did not know which ISP they were using (18% of small businesses; 30% of medium businesses), this may suggest that Internet matters may be managed separately from other telecoms issues by other staff, a finding that has emerged through research conducted by Oftel among corporate businesses. Connecting to the Internet 3.28 Overall, ordinary phone line/dial up access (used by 64% of SMEs connected) and ISDN (used by 32%, including 11% specifically using BT Highway) were the most common methods of connecting to the Internet. Around 6% of medium businesses were using more than one type of connection against just 1% of small businesses.
3.29 Around two-thirds (65%) of small businesses were accessing the Internet using an ordinary phone line/dial up connection and a 31% (including 10% BT Highway). In comparison, medium businesses were more likely to be using ISDN (42%) than ordinary phone line/dial up (34%). 13% were also using leased lines. 3.30 Few businesses, whether small or medium, were using DSL reflecting the relatively recent availability of the service. However, 26% of small businesses and 32% of medium businesses said that they would be likely to use DSL in the future. Use of the Internet among small and medium businesses 3.31 As at June 2000, e-mail was the most common application for the Internet (used by 62% of SMEs), with use of e-mail rising among small businesses (at 62% a rise of twelve points since the previous quarter). A third of small and medium businesses used the Internet to surf and access information generally. 3.32 Despite an increase in e-commerce since June 2000 (use of Internet for customers to make orders rising by 9 points and to order from suppliers up among medium businesses by 8 points), on-line activity remains relatively undeveloped, particularly with applications such as banking and advertising/marketing. 3.33 Figure 8 overleaf shows Internet activity by business size. Please note that, due to small sample sizes, the differences between the activities of small and medium businesses are not significant with the exception of small businesses being more likely to use the Internet for banking and medium businesses being more likely to use the Internet to find information on business products/services such as travel.
(Footnote 4) Compared with the June 2000 survey, Internet connection among medium businesses appeared to have dropped by 20 points. However, this apparent fall is due to a change in the question regarding those connected, those planning to connect and those in the process of connecting. Taking those connected and those in the process of connecting together, the proportion of medium businesses connected to the Internet is roughly the same (93% at September 2000 compared with 95% at June 2000). (Footnote 5) Please note that, as DSL was on trial among a few thousand customers only at the time of the June survey, it was felt that any figures collected on use of the service at that time were likely to be inaccurate. These September figures should be more reflective of the market. Lower Internet use among small businesses 4.1 The first quarter survey found that small businesses were half as likely to be connected to the Internet as medium businesses, with those not connected largely feeling that they had ‘no need/no real use for it’. One of the aims of the second quarter survey was to establish whether businesses actually had no need for the Internet or whether other factors were involved, for example a lack of understanding on how the Internet could benefit their business. 4.2 The findings from the second survey suggest that, whilst around half of the businesses not connected felt that the Internet was simply not relevant to their work or could not assist their business, other factors do seem to be discouraging small businesses from connecting, in particular, a lack of understanding of potential uses and benefits indicating a need for greater information. 4.3 UK online for business (formerly the Information Society Initiative) is a partnership between industry and Government geared to help British business - particularly SMEs - to get the full benefit of new technologies. UK online for business activities focus on raising small business awareness and understanding, and providing advice and signposting to help small companies incorporate Information Communication Technologies into their business. Businesses can receive expert, impartial, jargon-free help and support, available face-to face, online and by telephone. More information is available on their website at: http://www.ukonlineforbusiness.gov.uk 4.4 Another initiative that should assist small businesses in their use of telecoms and the Internet is the industry-sponsored, independently edited TelecomsAdvice site (www.telecomsadvice.org.uk) should assist in this education process. The site contains advice for small businesses on telecoms equipment and services including Internet with case studies of small businesses and their telecoms problems. Visitors to the site are also encouraged to share their own telecoms experiences. It is hoped that the site will provide small businesses with the information they require on Internet connection – as well as acting as a portal directing them to other sources. 4.5 The survey also found that small businesses with no plans to expand were less likely to be connected to the Internet. Future surveys will continue to investigate influences on Internet use with the aim of identifying any barriers there may be to Internet use among small and medium businesses and establishing the extent to which low use of Internet is simply due to lack of demand. 4.6 Cost of equipment, subscription and calls also appear to be potential barriers to Internet use for some businesses. The introduction of unmetered packages should encourage more of these businesses to connect. The survey found that a fifth of small and medium businesses were already making use of some form of unmetered package. Future research 4.7 In addition to this survey, Oftel is undertaking a series of focus groups among small businesses to investigate their use of the Internet and e-commerce, its usefulness in terms of increased efficiency or profitability and any problems/barriers businesses are encountering in getting on-line and using the Internet. The findings from these groups, which will be published on the Oftel website with the next quarter’s research (January 2001), will be used by Oftel, together with the results of this survey, in its policy work to identify potential barriers to the use of the Internet among small businesses. 4.8 Oftel will continue to track Internet use in future quarters. This will include differences in Internet use by region and industry sector. This is of interest as it may emerge that Internet connection is not relevant to some types of business and also that some types of business are clustered in particular areas of the country.
|
|
||||||
|
|
||||||
 |
 |
|
|||||
 |
|
||||||
