QUOCIRCA INSIGHT REPORT
Soaring not Surfing
Contacts:
Rob Bamforth
Quocirca Ltd
Tel +44 1962 849746
rob.bamforth@quocirca.com
Bob Tarzey
Quocirca Ltd
Tel +44 1753 855794
bob.tarzey@quocirca.com
Linda Harris
Easynet Connect
Tel 020 7032 4031
linda.harris@uk.easynet.net
Research Note:
The information presented in
this report is based on a sur-
vey of 345 organisations in
the UK. It was completed in
April of 2008.
Those surveyed were from
small and medium UK-based
businesses and organisations
with between 10 and 250
employees.
Quocirca would like to thank
all the respondents to the
survey and thank Easynet
Connect for sponsoring this
research.
!
May 2008
Small and medium sized businesses make the connection
Over the past decade the internet has evolved from a technical environment into a commercial market-
place. The impact on consumers and large enterprises has been significant, but what about the small and
medium sized business? With few of the skills and resources of their larger counterparts, these organisa-
tions need to get the best value from the internet and the network-based services it enables, without risking
day-to-day operations. Although employees will be increasingly aware of the options for connecting to the
internet as consumers, this does not readily translate into the right knowledge for how to select the most
appropriate alternatives from internet service providers for the business they work for.
• UK-based small and medium sized businesses (SMBs) have embraced the internet
Widely accepted as a fundamental part of business IT, the internet has moved far from its academic
routes. Around two thirds of SMBs have been online for over 5 years, and for more than half of these
companies, this commercial use of the internet is part of a formal business strategy.
• New services and applications are playing a significant part
At one time many SMBs’ use of the internet was simply a web presence—an advertisement or com-
pany brochure—and a route to email. Now, over a third of SMBs are already selling online, over a
quarter are using IP telephony, one in six have some form of network video and almost 40% use the
network for remote backup/disaster recovery.
• Connection has become vital for many, with continuity levels an important issue
While a quarter of companies could work for days with no internet connection, most companies require
failures to be fixed inside a day. For one in four, time to fix is even tighter at less than an hour, and for
some no break in service is acceptable. In such critical situations, a second redundant connection has
to be worth considering.
• Quality of service is also an issue
Most companies expect good service levels and look to providers with reliable reputations, but around
one in four have noted connection performance dropping frequently or occasionally. This is more
prevalent among those companies whose internet connection has often failed, indicating that a drop off
in service level and connection failures go hand in hand.
• There is a simplistic view of the internet connectivity options available
While most believe they understand the range of options from internet service providers (ISPs), only
around a third understand the equivalent upload to download bandwidth advantage offered by sym-
metric (SDSL) over asymmetric (ADSL). A similar minority correctly identified the benefits of a low
contention ratio. These will become important aspects in assuring service levels in the broad deploy-
ment of applications such as VoIP, remote backup and video conferencing.
• Despite these challenges, companies are not rapidly switching between providers
Only around 10% are looking to change anytime soon, and of those who have most recently changed,
they based their decision mainly on quality of service and price. What most look for in their ISP is not
simply the best commercial terms, but solid reliability and technical skills. Most would also look first
to their ISP for information and guidance on making choices about internet connections.
CONCLUSION: SMBs have greater expectations of their suppliers, as they will often lack either the
knowledge or time and resources internally to deal with the complexities of products and services they
increasingly depend upon. As they embrace the internet and rely upon it for increasingly sophisticated
services, it will become more important to understand the different offers from providers, and look
beyond price to added value and support. This also places an onus on the ISPs themselves to differenti-
ate their connectivity options and services to demonstrate most clearly the benefits and business impact
of any technical nuances in those underlying services and technologies used to deliver them.
An independent study by Quocirca Ltd.
www.quocirca.com
Soaring not Surfing Page 2

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The focus of information technology (IT) . . . . . . . . . . . . . . . . . 3
Connecting the SMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Impact of new services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Reliance and dependence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Jargon and confusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The role of the internet service provider . . . . . . . . . . . . . . . . . . 6
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Appendix A: Interview sample distribution . . . . . . . . . . . . . . . . 8
About Easynet Connect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
About Quocirca . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

© 2008 Quocirca Ltd www.quocirca.com May 2008

Soaring not Surfing Page 3

Introduction
This report looks at the degree to which small and medium
sized businesses (SMBs) in the UK have taken advantage of
the internet, and where they are facing challenges.

The research behind this report involved interviews with 345

UK-based managers with operational or commercial responsi-
bility for IT and data communications. Each organisation inter-
viewed employed between 10 and 250 workers.

It is intended to be read by those who face a similar IT manage-

ment task in their own organisation, and those who are looking
to see how to get best business value from the internet and
ensure the service levels they get best meet their particular
business needs.
remainder are lagging, with the majority of those just carrying
Quocirca would like to thank all the participants for their time on with ad hoc use and without any strategy (Figure 3).
to take part in the telephone interviews from which the data for
this research was derived and thank Easynet Connect for its
sponsorship of the research.

The focus of information technology (IT)

Businesses face many diverse challenges, which fall into three
broad categories—uncertain risks, rising costs and new oppor-
tunities. Technology brings its own costs, risks and opportuni-
ties, and the overall value of a new technology to a business
must be considered before an investment is made. If well
applied, IT, in general, and the internet, in particular, can help
address these business challenges (Figure 1).

This might fit business needs for the moment, but over time,
and as commercial pressures grow, the need to get the best out
of online investments will soar. This is especially true for those
that come to rely on internet connectivity to communicate with
customers, prospects, suppliers and, increasingly, enable their
employees to work more flexibly.

While a third of SMBs have only embraced the internet in the

last five years, by far the majority have been connected for
some time (Figure 4).

Many companies have found that the internet has provided

a new effective channel to interact with existing customers,
reach previously untapped customers, either locally or in new
territories, and offer better service levels to gain competi-
tive advantage. Some will use communication technologies
for allowing remote or home working and mobile access to
enhance productivity, widen recruitment options and reduce
their impact on the environment.

Recognising the contribution IT might make to a business

makes investment in it a strategic decision for many companies,
although others still view this as a tactical cost (Figure 2).

Connecting the SMB
Business use of the internet has rapidly become part of a longer
term strategy. What started out as a ‘connect to avoid being left
behind’ message in the late 1990s survived the dotcom crash to
emerge as a serious business commitment.
However, while just under half of SMBs recognise the impor-
tance of a strategic approach to their internet connection, the
Over this time, they will have seen the internet support an
industry that has grown rapidly with many more specialised
internet service providers (ISPs) focussed on business users,
and differentiating themselves on price, service levels and value
add. This has led to connection costs falling, and a growth in
bandwidth or capacity but, surprisingly, not very high levels of
churn or rapid switching to new suppliers (Figure 5).

© 2008 Quocirca Ltd www.quocirca.com May 2008

Soaring not Surfing
This can partly be explained by a desire to avoid the upheaval
in the IT department, and partly that the costs form a smaller
part of the IT budget than many other line items. It also reflects
the difficulty in really understanding how internet connectivity
offerings differ between suppliers and what impact those dif-
ferences could have on the business.
Impact of new services
The widespread availability and affordability of broadband
has widened the market for permanent internet connection to
both SMBs and consumers alike. This has enabled the world
of e-commerce and other online services, as it can be assumed
that a prospective customer base is now also able to be ‘always
on-line’.
Other internet-enabled applications, such as on-line order
tracking, IP surveillance cameras and media downloading
have become viable as the availability of bandwidth capac-
ity has led to more content-rich networked applications and
data. Coupling the digitisation of all types of data storage and
transmission, from off-site backups to video and phone calls,
with lower cost and pervasive high-speed connections has led
to new uses (Figure 6).
The reasons for such interest in new applications link back
to the primary business needs. E-commerce extends the
customer base beyond the confines of the local geography.
Remote backup reduces risk by improving business resilience,
and adds the flexibility of remote access and management of
backup procedures. Voice over IP telephony converges net-
work requirements, increases productivity by linking the mak-
ing of calls to IT applications and can reduce call costs, or at
least make them more predictable.
Even video conferencing, once thought of as expensive, spe-
cialised and difficult to use, is becoming more popular amongst
© 2008 Quocirca Ltd www.quocirca.com
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SMBs and is also of growing interest as it reduces the need to
travel, saving time, cost and environmental resources.
Reliance and dependence
This increasing use of sophisticated and powerful internet-
based applications is not without its own risks. In particular,
for those companies who rely on their internet connection for
vital services such as telephony or customer sales the stability
and continuity of service is vital.
While frequent failures of internet connections are not com-
monplace for UK companies, a great many have noticed occa-
sional failures of their service (Figure 7).
This type of gap in service could be catastrophic for a company
reliant on the continuity of connection, but may not be notice-
able for those companies where the internet is really only
providing a little extra visibility, or employee access. Many
companies have already passed that point, and for a significant
majority of businesses a gap in service longer than the business
day would be a problem (Figure 8).
The internet has moved from something nice to have, to a way
to extend the business, and now to an integral and critical com-
ponent. This has to be borne in mind when seeking suppliers
and validating their offerings. Simply looking for lower cost
or higher bandwidth at the same price will be false economy
if the service fails.
Even if failure is not total, the vagaries of the packet switched
network, and how the ISP is connected to the rest of the infra-
structure, might affect the performance of the connection peri-
odically. This is especially true if all or part of the connection
backbone is contended, or shared, with other customers of the
same ISP. It might also result from applications that occasion-
ally overload the network capacity, either deliberately, as in
malicious software causing a denial of service attack, a greedy
application or employee behaviour.
May 2008
Soaring not Surfing
Any of these might cause a drop in network performance that
is difficult to notice at an individual level, or may be miscon-
strued as a problem somewhere else, for example believing
an application, computer or operating system to be at fault.
Despite those other potential causes, almost one in four busi-
nesses noticed occasional dips in the performance of their
internet connection (Figure 9).
A more troublesome concern is how much or how often are
customers, partners and other external contacts noticing? If
they are, they might not be thinking first about what technol-
ogy is below par, but that the SMB is not as committed as they
might be, leading to questions about their ability to support
customers or deal effectively with partners.
Making sure the service levels and characteristics of the inter-
net connection meet the business needs is therefore important
not only for critical services and those companies dependent
on their connection, but also for the external perceptions of all
companies. The problem many face is that internet connection
is a more complex issue than simply speed and cost in mega-
bytes per second. Thankfully most businesses recognise this,
even if they struggle to express their business needs in techni-
cal terms, or to understand how the technical aspects of the
providers’ services meet those business needs (Figure 10).
Jargon and confusion
On balance, most SMBs expect their spending on IT to grow
over the coming year. Those companies that reported the high-
est dependence on an internet connection—essentially those
that can cope for only short periods without it—expect bigger
growth than those with little dependence (Figure 11).
This might occur for several reasons, and perhaps reflect higher
levels of commitment to spend associated with businesses that
© 2008 Quocirca Ltd www.quocirca.com
Page 5
rely on connectivity, or a concern and susceptibility to price
rises outside of their control. In return for increased spending,
organisations will expect more from their internet service in
terms of performance, reliability and business value. These are
the questions they should seek answers for from their ISP.
Glossary of Terms
VoIP: Voice over IP—using the internet and data networks to carry
telephone calls
ISP: Internet service provider—company providing a connection to
the internet
Contention ratio: the number of customers sharing a connection, and
available bandwidth
DSL: digital subscriber line—an internet link over a conventional
telephone line
ADSL: A = asynchronous, with faster download than upload speeds
SDSL: S = symmetric, with same download and upload speeds
The challenge for many is how to assign or understand how
business value maps onto the service capabilities offered
by their provider. While a number struggle with the jargon
involved, most of the respondents (many of whom had job
titles suggesting several years experience in IT) felt it was not
too much of a problem (Figure 12).
However, the reality, when they are faced with the technical
terms often used by ISPs to discriminate between different
service types, is more mixed. Two particular problem terms
are; Symmetric Digital Subscriber Line (SDSL) for a con-
nection with the same bandwidth for upload as download and
‘contention ratio’ for indicating how many subscribers share
the same aggregated connection (Figure 13).
May 2008
Soaring not Surfing
It is no surprise that many do not really understand the correct
meaning for the technical terms, but this does have an impact
both for ISPs and their customers. Firstly, many of the novel
applications and services that users are increasingly starting to
use—VoIP and video conferencing, for example—are impacted
by many other attributes than the often-used criterion of avail-
able peak downstream bandwidth. Latency will greatly affect
the quality of interactive voice and visual services. Upstream
bandwidth limits will impact these services further, especially
with additional periodic loads such as remote backup.
The role of the internet service provider
For the ISP, being able to articulate the value and effects of the
additional parameters of connectivity options—such as SDSL
or contention ratio—in terms of application benefits allows
them to differentiate its services. This makes the task of the
person responsible for selecting a network provider easier as
they can justify investment more easily by referring to tangible
business values.
Choosing and short-listing any category of supplier is always
troublesome, especially in a technology sector where the
impact of misunderstood technical parameters affects busi-
ness requirements. When evaluating ISPs and their offerings,
although price remains important, dependence on good service
indicates that business reliability and technical competence
matter just as much or even more (Figure 14).
Unlike many areas, brand and company image are less impor-
tant, perhaps as some well known brands have stumbled,
poor service stories have hit the media and the market is very
fragmented. Poor understanding of the differences between
services mutes the importance of the range of connectivity
offerings from ISPs, but better awareness of their value and
application to support various business services will make this
a more important factor in the future.
© 2008 Quocirca Ltd www.quocirca.com
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Also, as services become more markedly differentiated through
better understanding and as commoditisation in the market
drives mergers and increased competition, being able to pro-
vide more flexible contracts will be seen as adding greater
value. However, at present, most SMBs seem reluctant to make
changes by switching to another provider (Figure 15).
For some this will be a case of ‘better the devil you know’, but
for many others there is probably no pressing need. If the price
seems reasonably competitive, it is going to be less trouble-
some or obvious than other IT and communications costs, and
if the service levels remain tolerable, that is unlikely to cause
churn either.
The challenge will come from looking forward to the increas-
ing demands of more mobility or flexibility in employee use
and growing numbers of internet-enabled applications. Far
better for IT managers to be prepared and tackle this problem
head on, and ahead of time, by taking a closer look at the dif-
ferences in services, and adopting a more strategic plan around
their future internet connectivity needs.
So, where should the IT and communications manager go for
help in understanding what is on offer?
Today, few small businesses will go to the presumed expense
of asking the advice of an analyst company, or risk the views
of the media or their ephemeral online contacts in social net-
works. Some will look to IT colleagues or suppliers, but many
will go to search on the internet, or ask their existing provider
(Figure 16).
Most internet content is not policed, and so there is a risk of
being led astray by the herd instinct rather than the wisdom of
the crowd. Seeking the views of ISPs is more beneficial, but
rather than simply approaching an existing supplier, far better
to take a broader view.
May 2008
Soaring not Surfing Page 7

Conclusion
The use of sophisticated information technology has spread
from smallish numbers of isolated powerful computers to per-
vasive information and access of applications almost anywhere
through open and interoperable standards. At the same time,
telecommunications capabilities have grown in speed, capacity
and reach from high bandwidth fixed to low cost mobile net-
works, bringing voice and data communications everywhere.
This serves to increase the demands on IT resources and staff
in any business. The information from suppliers has been
historically poor and couched in too many technical terms to
facilitate an easy correlation between service capability and
business need.
For many SMBs any technical resources or knowledge at their
disposal will be limited and should not have to focus on gain-
ing a deep understanding of supplier capabilities in order to
select the right products. A technical understanding might
help, but it should not be a necessary requirement of being a
customer of an ISP.
Those in an SMB with responsibility for IT and networks
should therefore seek out providers that can describe their
different technical offerings in business terms, and can dem-
onstrate tangible benefits. This not only makes the internal
justification for investment process easier and better matched
to user and application needs, but also should make life for
those managers simpler in the long term through fewer support
issues and crises.
As the use of the internet continues to expand and become
more closely entwined with the business, SMBs that use ISP
expertise for guidance in optimising their internet connectiv-
ity and services will be free to focus more of their precious
resources and time on their core business needs.

Recommendations
• Take external soundings on quality and service, and from this draw up a shortlist of ISPs with good
reputations for service in your market sector or local area. At this stage, ignore price.
• Evaluate current use to assess future network needs. Look beyond the average load to account for peak
demand, and ensure that traffic sent (uploaded) as well as received (downloaded) is correctly identified and
measured.
• Query internal users directly on their current network use, and business plans for further applications such as
VoIP etc.
• Seek out free or publically available industry comment, from analysts and the media about the direction of
internet applications in your business sector—for example VoIP trends, the shift in security provisions etc.
• Use this and user comment in combination to solicit responses from the shortlist of ISPs to get their business
justification for the differences in the services they can offer, and demystify the jargon.
• At this point make an evaluation inviting commercial proposals (price, contract flexibility, etc.) based on the
business propositions, and balance cost with demonstrated business understanding and service reliability.
• Try to take as short a contract term as possible at first to check performance and service levels match those
stated in the proposal.

© 2008 Quocirca Ltd www.quocirca.com May 2008

Soaring not Surfing Page 8

Appendix A: Interview sample distribution

The information presented in this report was derived from interviews with 345 UK-based managers with operational or commercial
responsibility for IT and data communications in SMBs from all across the UK. Each organisation interviewed employed between 10
and 250 workers and the interviews were completed in April 2008.

The sample distribution was split as follows (Figures 17 and 18):

© 2008 Quocirca Ltd www.quocirca.com May 2008

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About Easynet Connect

Easynet Connect is a leading provider of quality connectivity and internet access for small to medium size businesses.

Established in 1994 and part of BSkyB Group since 2006, Easynet Connect has the second largest network in the UK with 4450km of
fibre and last mile access to more than 70% of UK businesses via a network of more than 1200 unbundled exchanges.

We were the first provider in the UK to offer DSL services over an unbundled local loop and have pioneered managed LLU services
for businesses. Our services range from business class ADSL and SDSL through high quality leased line equivalent and Ethernet based
services. Our SDSL coverage is currently the most extensive in the UK.

Easynet Connect’s EtherStream™ service is pioneering Ethernet in the first mile allowing businesses to enjoy fast reliable Internet
access. EtherStream™ is breaking through the limitations of traditional fibre connectivity.

Our services offer low or zero contention, the option of high speeds of up to 20Mb and are backed up by 24x7x365 UK-based support
and Service Level Guarantees.

Easynet Connect’s customer base of small to medium sized businesses, ranging from 10 to 250 employees, spans a variety of sectors
including media and advertising, construction and financial services.

For more information on some of our customers and their stories go to:

http://www.easynetconnect.net/case/

For further general information on Easynet Connect please visit:

http://www.easynetconnect.net/Default.aspx

© 2008 Quocirca Ltd ! www.quocirca.com May 2008

Soaring not Surfing Page 10

About Quocirca
Quocirca is a primary research and analysis company specialising in the business impact of information technology and communica-
tions (ITC). With worldwide, native language reach, Quocirca provides in-depth insight into the views of buyers and influencers in
large, mid-sized and small organisations. Its analyst team is made up of real-world practitioners with firsthand experience of ITC deliv-
ery who continuously research and track the industry in the following key areas:

• Business process evolution and enablement

• Enterprise solutions and integration

• Business intelligence and reporting

• Communications, collaboration and mobility

• Infrastructure and IT systems management

• Systems security and end-point management

• Utility computing and delivery of IT as a service

• IT delivery channels and practices

• IT investment activity, behaviour and planning

• Public sector technology adoption and issues

• Integrated print management

Researching perceptions, Quocirca uncovers the real hurdles to technology adoption—the personal and political aspects of an organisa-
tion’s environment and the pressures of the need for demonstrable business value in any implementation. This capacity to uncover and
report on end-user perceptions in the market enables Quocirca to advise on the realities of technology adoption, not the promises.

Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to
transform business and business process, but often fails to do so. Quocirca’s mission is to help organisations improve their success rate
in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time.

Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and serv-
ices on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long-term investment trends, provid-
ing invaluable information for the whole of the ITC community.

Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for
business. Quocirca’s clients include Oracle, Microsoft, IBM, Dell, T-Mobile, Vodafone, EMC, Symantec and Cisco, along with other
large and medium sized vendors, service providers and more specialist firms.

Sponsorship of specific studies by such organisations allows much of Quocirca’s research to be placed into the public domain at no
cost. Quocirca’s reach is great—through a network of media partners, Quocirca publishes its research to an audience possibly measured
in millions.

Quocirca’s independent culture and the real-world experience of Quocirca’s analysts ensure that our research and analysis is always
objective, accurate, actionable and challenging.

Quocirca reports are freely available to everyone and may be requested via www.quocirca.com.

Contact:
Quocirca Ltd
Mountbatten House
Fairacres
Windsor
Berkshire
SL4 4LE
United Kingdom

Tel +44 1753 754 838

© 2008 Quocirca Ltd www.quocirca.com May 2008