Small Businesses Integrating Internet into Operations

One-quarter of all small businesses are now using the Internet to provide service and support functions to their customers, according to a study by The Kelsey Group and ConStat, Inc.

The Local Commerce Monitor, an ongoing study of 600 small businesses, found that small businesses are integrating Internet and e-commerce technologies with their offline operations in order to streamline customer interactions. Ten percent of all small businesses now report using email marketing as a promotional tool.

While much of the focus of small-business Internet use has been on e-commerce, the study found that small businesses have shown an interest in using the Internet to enhance operational efficiencies.

“What we’re now seeing is that because small businesses are being encouraged to conduct business with their suppliers online and over the Internet, they’re realizing they can use the same technologies and applications to interact with their customers,” said Neal Polachek, senior vice president of research and consulting at The Kelsey Group. “Most small businesses don’t have the technical skill or time to fiddle around with complicated solutions. As the applications become simpler, we can expect to see increasingly higher rates of penetration.”

Small and medium sized businesses are also exploring use of wireless technology. According to a study by Sage Research, an increasing number of small and medium businesses (those with fewer than 500 employees) are using wireless LANs (WLANs).

“We are seeing significant growth in adoption of WLANs by this segment,” said Jared Huizenga, Sage program manager. “In August 2000, 19 percent of small and medium businesses were using WLANs. An additional 38 percent plan to deploy WLANs by August 2001. However, as with many emerging technologies, actual deployment may fall short of these aggressive plans.”

Although early WLAN adopters report high levels of satisfaction, use of the technology remains limited. More than half (56 percent) of current WLAN adopters have only a small minority of their network-attached nodes running over WLANs. So while the number of organizations deploying the technology is high, the scope of deployment within most small and medium businesses is quite limited.

The Sage study also found significant deterrents to more widespread WLAN adoption. Of those small and medium businesses that are not planning to deploy WLANs, nearly half (45 percent) report that the cost is not justifiable and 31 percent said the technology is simply too new.

Small businesses have also done their share to increase the number of at-home workers in the United States, a market that has consistently grown over the last 20 years, according to Cahners In-Stat Group.

Roughly 24 percent of the U.S. workforce will telecommute some time during the week in 2001. This works out to be more than 30 million at-home workers. The In-Stat report “Entering the Access Era: U.S. Telecommuter Demographics,” expects this percentage to increase to 28 percent in 2004, growing to nearly 40 million telecommuters.

Most of these workers are employed by small and home-based (SOHO) businesses, consistent with the greater contribution of smaller firms to the size of the general telecommuter workforce. The SOHO business market supported an estimated 6.6 million Internet-accessing telecommuters in 2000, roughly 28 percent of the segment’s total workforce, and the small business market was home to more than 5.3 million Internet-accessing home-based workers in 2000, making up 13 percent of the small business workforce.

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