Q&A: The State of Small-Biz Technology
IDC/LINK's Ray Boggs talks about what's hot — and what to wait for
Wading through the latest technology offerings for your business could be a full-time job all by itself. That's just what it is for Raymond Boggs. As director of small-business research for the tech consulting firm IDC/LINK, it's his task to decipher the tech habits of America's 23 million small companies, including what they buy and how they use the technology once it's brought back to the office. Boggs surveys hundreds of small companies each year, while monitoring the never-ending waves of new products and corporate marketing pitches. Frontier Online's Dennis Berman spoke with Boggs recently to get his view on how small businesses are facing the digital present and future. Here are edited excerpts of their conversation:
Q: The huge tech concerns have pumped up their marketing to small companies. Is this a packaging gimmick or a sincere move to design products for the small-company market?
A: I don't think it's packaging. Basically, people have been selling to small businesses unconsciously. Now they're consciously focusing on that market and are better able to meet those needs. There are dedicated Web sites from IBM, Compaq, Dell, all the major computer folks. And in other tech areas -- Sprint has a major small-business initiative.
Q: Why should small business see dedicated Web sites as a great advance? Isn't real-life customer service preferred?
A: Having a Web presence really provides the small-business customer a chance to explore, to drill down, and identify the areas that most interest them. For the typical small-business operator, it really becomes a challenge to take the time to conduct these kinds of explorations. They take place at oddball hours.
Q: What other offerings are being specifically designed for the small-business audience?
A: You see Lotus is doing it -- rethinking the scope and nature of their product offerings. And Microsoft has a small-business package that's got some interesting capabilities. This is a change from the way [small-business customers] were viewed in the past, which was as if they were in the Third World: "Give them the leftover technology and the day-old bread, and they'll be happy." They don't need 2,000 columns in a spreadsheet, maybe 500 is plenty. But they need the latest stuff, and ease-of-use becomes critical.
Q: What classes of products and services have gotten cheaper over the last few months?
A: Networking products have really come down in price...hubs, routers, switchers. Companies such as 3Com, Cisco, Intel, or Bay Networks are really getting the prices down but are also providing for upgrade capabilities. You probably could wait more, but why would you? You could get a router for $200 today, that might come down to $170 tomorrow. But heck, $200 is not $2,000.
Network servers used to be $15,000 or $20,000, now they're down to $5,000, $3,000, or even $2,000. If you can make the business case for adding a technology, then you should move forward on it. Take color TV. My grandmother said, "Why should I buy it now? It will be cheaper next year." She's right. It was cheaper next year. But she never got a color TV.
Q: What should small companies hold off on purchasing right now?
A: Certain broadband technologies. ISDN and 56K modems are here and available now, but other broadband solutions are only in the trial stages, such as DSL, ADSL, and cable modems. Before you get all excited, you'll have to explore and see what the [line installation] story is in your neighborhood. Call up everybody and see who knows what they're talking about. If it takes six phone calls to find a person who understands you're looking for an ISDN line, then that's a warning sign.
Q: How are interest rates -- and financing terms in general -- contributing to today's buying climate?
A: If you can already justify the purchase financially, then the interest rates are just one variable. But small firms especially benefit from innovative financing -- mainly leasing. Gateway has started that, and Dell has been doing it for a while. With the technology so rapidly changing, it doesn't make sense to capitalize it over 10 years. Small businesses are concerned only about what it's going to mean for cash flow -- that's their lifeblood.
Q: We're all told what cool things computers can do. But I suspect small companies actually use their systems for a very limited number of applications. What's your conception of a "rational" computer set-up -- one that focuses on the work that's being done, not the high-tech baubles that are rarely used?
A: It's hard to say how much of a de-featured approach you want to take. Do you want to pay for them and not use them? Ultimately, it's a function of how you're going to be growing and evolving. We ask survey questions about the hottest applications, what applications small firms are planning to buy. Accounting software was number one. Then we asked what software they actually used for accounting. And it was a simple spreadsheet, Excel. So it becomes a matter of whether you're ready to grow up into an accounting package.
Q: Small businesses can't ignore the Year 2000 computer bug. Have they started mobilizing?
A: From some very brief and unprojectable surveys, we've found that they're starting to wake up. A lot of them just need to be making sure that their stuff is upgraded. If all you've got are 486 machines, you've still got problems. You want to make sure your critical applications are running on the most current hardware. There is still a lot of ancient stuff out there.
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