Options open up for the minimialist business

Options open up for the minimialist business
By Stephen Pritchard

Published: March 17 2010 15:17 | Last updated: March 17 2010 15:17

Twenty years ago, a laptop computer represented a significant investment for any business. Today, it costs little to buy an entry-level laptop capable of running day-to-day business applications, reasonably demanding graphics or computational software, and even entertainment applications.

According to Eilert Hanoa, chief executive of Mamut, a Norwegian software vendor specialising in small and mid-sized businesses, the cost of providing an employee with a laptop and a phone is now as low as one pound a day – an historically low figure for equipping a member of staff with the tools of their trade.

As a result, smaller businesses have also benefited from the way both the internet and mobile networks have changed their communications.

Companies can set up their telephone links, as well as links to the internet, using inexpensive mobile phones and cellular data “dongles”.

For more permanent set-ups, technologies such as voice over the internet (VoIP) have largely replaced conventional phone lines for a growing number of businesses. According to Forrester, the industry analyst firm, 14 per cent of all companies have deployed VoIP to the desktop, and a further 34 per cent are considering doing so.

Cheap, ubiquitous and increasingly quick internet access opens up a further set of options to businesses when it comes to running their IT: moving to “cloud” services.

Rather than hosting back office applications on their own computer hardware, businesses can rent space on remote servers, or even rent applications on a per-user basis from companies such as Salesforce.com and NetSuite.

Even traditional desktop applications such as word processing are moving towards the cloud, through services such as Google Docs and Microsoft’s Office Web suite. It might not be going too far, to suggest that a functioning business needs little more than some bandwidth, a web browser, and a way to print documents.

“It’s becoming rather like ordering a dish off an a la carte menu,” says Rob Lovell, chief executive and founder of ThinkGrid, a company that provides hosted desktop applications to SMEs over the internet. “You can have your e-mail, phone and desktop applications anywhere you want.”

But the flexibility and productivity gains offered by information technology have to be balanced against the time, skills and money needed to manage the technologies.

As Andy Mulholland, global chief technology officer at Capgemini, the consultants, points out businesses now spend, on average, just 5 per cent of their time on back office processes, mostly as a result of efficiencies brought by IT.

But for smaller companies, and owner-managed businesses in particular, IT is also seen as a burden. ThinkGrid’s Mr Lovell says: “They are spending more time fixing it when it is broken. They don’t want to install or manage it.”

This is leading to a new generation of companies taking a radically different approach to technology, seeing it less as an asset to be bought and managed, and more as a service to be rented or paid for as it is used.

Companies such as ThinkGrid, Salesforce.com and NetSuite base their business models on the premise that companies want IT specialists to run their IT, so they can focus on running the business. Larger enterprises have long turned to outsourcing service providers to do exactly that.

The cloud, though, breaks down IT services into bite-sized chunks that make them affordable to smaller businesses.

“All applications will move to the cloud,” predicts Zach Nelson, NetSuite’s chief executive.” Businesses will move away from software applications that force them to buy, run and maintain expensive operating systems, Mr Nelson suggests.

But not all businesses are moving at the same pace: “We do see traditional businesses migrate from on premise software to cloud, but we also meet entrepreneurs who would never run their own software,” he says. “They play games over the net, so they ask why they should run their own ERP (enterprise resource planning).”

Independent analysts agree that today’s technologies allow businesses, especially smaller companies, to do away with a whole tier of IT infrastructure.

“If the question is: ‘is it feasible to have a laptop with a net connection on tap and a range of services delivered over the internet?’, then that is the case,” suggests Joslyn Faust, an analyst in Gartner’s small to midsize business research group.

At the same time, it is not yet the case that a business can move into an office with a broadband connection, plug into an Ethernet socket or connect up to a mobile broadband service and find all their applications and services on tap.

One reason is that, according to Karl Boone, a Boston-based IT delivery expert at PA Consulting, it still requires a high degree of skill to pick the right cloud-based services. “There is still a view that IT is something that runs on boxes but what businesses need are applications. But they do need help with which applications to run,” he explains.

Businesses might also need guidance on how to connect a range of cloud-based applications together – in itself a challenging task, and one that cloud service providers have only recently started to address, through hosted applications that can mediate between programs.

Organisations also need to think about where their data is stored, and how well protected it is against virus attack or data theft, especially if they are handling personal or customer data.

Then there is the question of data ownership, and what would happen if a cloud-based software provider were to fail, or ceased trading. Simply having a local copy of the data on a PC or laptop is of limited use, if the business is unable to access the application itself.

A further concern is that access to a broadband connection cannot be guaranteed. While Mr Lovell at ThinkGrid points out that five or even 10 users could connect to his service over a conventional domestic or small business broadband link, even advocates of a minimalist approach to IT concede that businesses need a robust broadband service.

This might need to include SDSL (symmetrical digital subscriber line) or redundant ADSL connections, especially if they also use their broadband lines for streaming media or telecommunications.

As a result, some businesses might prefer to continue to run some applications themselves, or look at applications that work offline.

“That’s why we’ve adopted a hybrid software and services model, with the application running locally but 100 per cent in sync,” explains Mr Hanoa of Mamut. “To play both horses you have to be able to access the software offline, but also still access it remotely.”

None the less, the pressure on companies – especially smaller companies – to stretch their budgets further and reduce both the cost and complexity of IT, is set to continue through 2010.

“Small business has two problems: a lack of access to capital, and a lack of access to skills,” says Sean Poulley, vice president of online collaboration services at IBM. “Anything you can do to restrict these two issues is welcome. And smaller businesses want to align their [IT] costs more closely with their business needs.”
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