SME have not yet found their VoIP

Internet Research

In contrast to the corporate environment, small, medium and micro enterprises will shy away from Voice over Internet Protocol (VoIP) in 2005.These are the latest findings from the VoIP in SA 2005 study conducted by World Wide Worx, which announced in January that 78% of corporations surveyed would be using the technology by the end of the year. Almost half of the corporates had adopted it in 2004.

In contrast, less than 2% of SMEs had implemented VoIP in 2004 and, while the number of implementations will enjoy a similar rate of increase as in the corporate environment in 2005, i.e. double of what it was in 2004, this still amounts to less than 4% of SMEs intending to use the technology.

IT, technical and business decision-makers at more than 1000 small, medium and micro enterprises were interviewed about their adoption and expectations of VoIP and least-cost routing – a system for cutting telephone costs by diverting outgoing calls over the cheapest available route.

A completely different picture emerges around Least-cost routing (LCR), which was deployed extensively in 2004, with 41.25% of the surveyed SMEs making use of it. However, those who have not yet used it do not expect to adopt in 2005, and a small proportion of those who have tried it will not maintain their implementations in 2005. In other words, LCR will drop slightly in usage among SMEs in 2005 – again in direct contrast to significant growth expected in the corporate environment.

“It comes down to education of the market. VoIP is an emerging technology, having been held back by telecommunications regulations until deregulation occurred on 1 February,” says Arthur Goldstuck, MD of World Wide Worx, who co-authored the report with veteran telecoms analyst John Joslin. “Unless its value is more clearly spelled out to SMEs now, the service providers in both VoIP and least-cost routing will have to wait until 2006 for a boom in demand from small business.”

Says Joslin, “As with VoIP among corporates, least-cost routing is still an emerging technology among SMEs, and demands the same huge need for education around options, applications, implementation strategy and cost-benefit issues.”

SMEs in the Gauteng region have the highest propensity of SMEs in any province to deploy LCR, with 60% planning to have it in place in 2005. This is still down from 63% in 2004, whereas most other provinces see precisely the same number of SMEs deploying LCR in 2005 as in 2004. This indicates that the Gauteng region is prone to poor implementation, resulting in dissatisfaction and de-commissioning of the implementations. Nevertheless, the proportion of companies still utilizing it suggests that ready access to suppliers, as is the case in Gauteng, is a critical component of uptake of LCR.

More than half of the respondents were also unable to give a rating for the importance of LCR in general – emphasizing the need for education. Of those that could give a rating, on the other hand, almost three quarters regarded it as somewhat important or very important.

“It is clear that, where the nature and benefits of least-cost routing are known, there is significant enthusiasm for it,” says Goldstuck. “It is equally clear that there is little understanding of the role played by VoIP in least-cost routing or its benefits among SMEs. If providers want to sell into this key market, they will need to engage with potential clients from an educational point of view, much as early vendors in the Internet environment were required to do.”

Media Contacts:
* John Joslin, telecommunications analyst, co-author of VoIP in SA 2005, tel. 082 969-2497
* Arthur Goldstuck, MD of World Wide Worx, co-author of VoIP in SA 2005, tel. 011 782-7003

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