As part of extensive community outreach within Tennessee to drive participation in our utilization study, a media blitz shed light on the issues within the state. Channel 10 news highlights interviews with citizens who detail their challenges with their current Internet connectivity. In this video, watch for one citizen’s colorful description of the “slow circle of death” as they wait for connectivity.
In a world moving increasingly to gigabit Internet there is no doubt that, everything else being equal, faster speeds are better, but at what point does speed make a difference? How much of a measurable economic development difference does faster deliver? For communities and regions looking to make their own business case, this detail is critical.
SNG’s research reveals that speed is indeed important, but that upload speeds (more so than download) have a greater impact on actual meaningful use and utilization amongst small and medium enterprises (SMEs). These businesses that make up 90% of all businesses have the most to gain from broadband utilization. With that, it is alarming that SNG research reveals:
This is a major inhibitor to economic growth through broadband as SNG’s research shows that higher utilization of the Internet for online business activities brings higher revenues. SNG measures utilization using our own Digital Economy index (DEi), a normalized, weighted index of 17 potential online activities (eSolutions) covering a wide range of typical business functions. A DEi score of 10 means that all eSolutions are used, with a score of zero meaning that none are used. The average DEi score for SMEs is 6.6 (out of 10).
SMEs fully utilizing the Internet – a DEi score in the top range – generate 20% more of their total revenues from their online activities compared SMEs with an average DEi score. In a nutshell, the more – and more effectively – you use broadband, the more financial benefits there are to be realized by businesses. Higher utilization by SMEs increases direct revenues (and cost savings), which means greater and faster business growth, more jobs, and flow through impacts to the local economy.
Comparing DEi scores (utilization) with upload speeds we see a high correlation with high utilization when upload speeds are above 4 Mbps. Below 4 Mpbs the utilization drops off significantly.
This effect is even more pronounced when broken down by the major broadband technologies in use today:
Considering that about one-third of SMEs use DSL, one-third use cable, and only 8% use fiber [2], a significant portion of SMEs are constrained by lower DSL or cable speeds.
Speed alone will not drive utilization and impacts, but minimum upload speeds are a key enabler, empowering SMEs to take full advantage of broadband. Obviously the trend towards more fiber will help address this speed requirement. It is also important that when offering higher speeds with any technology that the service pricing is affordable compared to the lower speed alternatives.
A lot of resources have gone into broadband mapping, but to get a true read you need to do your own market research into which businesses in your area have access to 4 Mbps upload speeds and their Internet use – this may involve asking them to actually run the sped test in a survey. Identify the gaps in sufficient upload speed and make these a priority for investment in both infrastructure and broadband training so that local businesses are using the Internet applications they need to be competitive and grow.
If you are in a rural area you know that broadband is critical to keep your businesses and citizens thriving but it also is inevitably more costly to ensure availability to 4 Mbps upload speed. In the US for example, it’s unfortunate that the Connect America Funds are only requiring 10/1 Mbps fixed broadband which neither meets SNG’s recommended 4 Mbps upload nor the FCC’s new requirements of 25 down and 3 up.
For all businesses to have the opportunity to effectively participate in an economy that is increasingly online, 4Mbps is a critical minimum level of service. Some businesses will need more, however those businesses that do not have access to 4Mbps will be at a competitive disadvantage.
Next month we will cover some considerations for where you should look for funding and what your priorities to get started.
[1] Source – Strategic Networks Group, Inc. – Data collected from businesses across seven states since 2012.
[2] The remainder of about 26% use other technologies (T1, fixed or mobile wireless, satellite, etc.).
Not so long ago taking college courses online seemed like a far-fetched idea. Today, formal and informal online learning is the norm for students across the globe It’s not so different in the business world as just-in-time learning opportunities become more and more available. Despite available learning opportunities, it can be tough for entrepreneurs to “keep up” with trends and business knowledge. This is troubling when approximately 90% of all American businesses are classified as “small businesses” and they are often stretched too thin to understand how to leverage Internet applications. Counting on the Internet to magically create innovation and growth (build it and they will come) is a strategy proven to fall short time and time again.
It is an unfortunate fact that many of the small businesses that stand to gain the most from enhanced utilization of Internet applications use it at a lower rate and are less likely to take advantage of training than those already leveraging the benefits of broadband. So how do we lead businesses to understand what they need to do online? A critical component is to cater to businesses’ stated method of learning preferences:
The classic classroom training session is the least appealing method of learning amongst businesses. This is consistent with the fact that “lack of time” is cited by SMEs as the biggest barrier to learning more about Internet applications. The more popular, learn-on-your-own-time method using online materials fits within the very nature of entrepreneurship, allowing business owners/managers to access materials when they need to, often during off business hours.
The challenge for communities and their economic development agencies is to both provide training in a myriad of ways and to also make the benefits of spending time with the training apparent and meaningful. Explain broadband’s benefits using the following learning methods to grow your local economy:
Together, each of the learning methods above will help drive results. Compelling and accessible information delivered by influencers and case studies can motivate entrepreneurs. Tech evangelists and trainers can provide the hands-on guidance needed to help small businesses make the transition to more fully connected operations. Proactive post-training with motivated businesses will capitalize on their desire to grow their business, and with it your local economy.
When it comes to meaningful use of Internet applications that drive business growth, many small-medium enterprises (SMEs) are falling behind. They are challenged to do what they should and could be doing online to grow their business. There are a number of reasons for this including a lack of time, skills, knowledge and resources to effectively to determine what, why, and how they should do more online.
This is critical as effective business use of the Internet and its applications promotes local competitiveness and growth, especially with small-medium enterprises. Community leaders with an interest in truly harnessing the power of broadband and its applications to foster innovation and growth need to help businesses overcome these barriers to better leverage broadband’s potential.
SNG’s extensive research across North America reveals that higher business utilization of the Internet has a direct and positive impact on business financials – revenues, cost savings, and earnings. In short, driving broadband utilization has a positive impact on local economies, creating more (and better) jobs, opening opportunities for innovation, and aiding in business attraction and retention.
This does not mean that the majority of SMEs do not understand the correspondence to utilization and growth. In fact, the smaller the business is. SNG research shows these businesses unclear on benefits while having barriers to adoption that are by no means insurmountable. Reasons for NOT moving forward include:
Lack of adequate speed further hinders full utilization, but bigger barriers exist. Many SMEs lack understanding on HOW to overcome barriers including privacy, security, and cost.
Economic development professionals have a compelling opportunity to confront this situation with activities to help businesses learn, fill the knowledge gap, and better understand just how much is to gain from a relatively low investment of time. Whether you deploy SNG’s solution, the Small Business Growth Program, or develop your own, make sure your efforts include the following steps:
Create awareness of the opportunities and their potential importance to each business.Communities across the nation are investing millions of dollars to upgrade their broadband but if they neglect to ensure that local businesses understand and have what it takes to use the transformative power of broadband, their returns on their investment will fall short. Deliberate targeted effort to driving full use of the power of broadband will fulfill the potential and maximize economic benefits.
Thoughts from Harvard’s Strategic Innovation SummitLast month I presented at the Strategic Innovation Summit: Enabling Economies for the Future held at Harvard University. The summit proved to be extremely worthwhile as discussions with my fellow presenters and attendees left me with a new and deeper perspective on innovation and how we should nurture it.
My main takeaway was this: innovation is a process. It requires scaling and ‘democratizing’ new technologies and new ways of doing business. To accomplish this community leaders need to continuously communicate and share a vision for effective use of technology with their citizens and businesses. The process of driving adoption and effective use of broadband in a community or region is the process of innovation.
More and more communities recognize broadband as a platform for innovation. They realize how important broadband is for economic development, but they are taking a ‘build it and they will come’ approach. This has proven to be a difficult and ineffective not only as a model for sustainable networks, but more importantly in realizing the economic and social benefits from citizens and businesses effectively using broadband networks.
SNG has witnessed firsthand the challenges of fostering innovation through our work with a dozen American states. A large problem rests with how broadband is presented and that ‘speed’ is assumed to be the magic ingredient that creates innovation. SNG has found that the process of engaging people in any community or region is actually the biggest challenge because the majority of people (approximately 80%) need to understand the benefits of technology and how it can help them before they adopt – they are technology pragmatists. Getting these pragmatists to change their behaviors will require more than promoting a feature like gigabit speed and waiting for growth to happen. These pragmatists need to understand the anticipated benefits and the actual return from their technology investments (in time and money).
Communities need to develop and implement processes to move businesses to an understanding and comfort level where they are ready, able, and excited to take action. And what is “action?” Incorporating broadband and its accompanying Internet applications have the power to transform and grow businesses.
Broadband can be your community’s platform for innovation, but availability is merely the first step. Your community must find a way to foster innovation through effective broadband utilization. This requires dedicated and ongoing communication of challenges, potential solutions, and vision about how broadband will transform their lives. This is innovation. Local resources must support and continuously communicate the benefits of broadband initiatives across stakeholder groups to foster innovation.
To borrow from a fellow presenter at the summit, “technology does not cause change – it enables, facilitates, and accelerates changes we already aspire to.” Communities that communicate their vision and mobilize stakeholders will create opportunities and success. This includes keeping and growing existing businesses, as well as attracting new businesses.
SNG has a program that helps numerous communities foster innovation among small businesses, where innovation lives in growing regions. Almost 90% of businesses in the US have less than 20 employees and do not have the technology staff or advisors to guide them through this process. Find a way to help these businesses innovate and your community will reap the rewards.
Download white paper from event, “Enabling Economies for the Future” >>
Partnership with Strategic Networks Group helps businesses leverage broadband for business growth
Today, the City of Kansas City, Missouri announced an exciting partnership with Strategic Networks Group (SNG) to provide local business owners with the tools they need to leverage online resources for business growth resources and guidance. The partnership will grant business owners with access to SNG’s Small Business Growth Program, which is designed to educate small business owners on how to use the Internet and how to best direct limited online resources for maximum effectiveness.
“Thanks to Google, we have the infrastructure in place,” said Mayor Sly James, Kansas City. “It’s time to show our businesses how to capitalize on it and all the Internet has to offer in terms of growth opportunities.”
As part of the program, small business owners will complete a self-assessment which will provide SNG with important data about the company’s internet usage and business goals. Using this information, SNG will provide the business owner with a customize roadmap to help guide the small business to better utilize the Internet to drive revenues and reduce costs.
“We see this program as being incredibly beneficial for our local businesses,” explains Scott Taylor, City Councilman for Kansas City’s 6th District at Large. “We have been incredibly fortunate to see significant investment in our City’s broadband infrastructure recently. Now is the time to help businesses capitalize. With this program we are able to show businesses just how to do so by revealing what their direct peers and competitors are doing online.”
SNG has surveyed tens of thousands of businesses across the nation regarding their Internet use and accompanying financial benefits. Using this data, SNG is able to compare how a business in Kansas City is leveraging the benefits of broadband connection in comparison to their peers and competitors. For example, a participating manufacturer with 10 employees will receive a customized report that shows the top three Internet applications (in terms of revenue and cost benefits) that they should be undertaking – along with the average financial impact their peers are realizing.
“We’ve found that small businesses across North America are notoriously slow to adopt Internet applications,” explains Doug Adams, VP of Communications for SNG. “Research in more than a dozen states shows us time and again that small businesses either don’t understand how Internet applications are relevant to their business or lack the will to take the time to deploy them. The smaller the business, the more significant this is, which is especially disconcerting considering a vast majority of businesses are small.”
Digital Economy Industry Insights Barometer Gives Businesses Better Understanding of Online Activities that Impact Their Bottom Line
Strategic Networks Group rolled out a new tool for small businesses to assess their digital effectiveness at America’s SBDC 35th Anniversary Annual Conference in San Francisco, earlier this month. The Digital Economy Industry Insights Barometer will be available on America’s SBDC ( www.americassbdc.org) and at sngroup.com/barometer.
Starting today, SBDC’s business clients can take a two-minute survey to uncover how the most common Internet applications and platforms financially impact their bottom line. The potential revenues and cost savings are based on SNG’s proprietary database of impacts reported by nearly 40,000 businesses from across the United States. Results are reported based on company size and industry to ensure relevance and businesses are provided a basic utilization score to help then gauge where they stand against their industry average.
“Intuitively, building out broadband networks across America will afford small businesses an advantage in growing and sustaining their businesses. However, providing SBDC small business clients with actual ROI numbers for Internet applications empowers them to make decisions regarding the online business activities that will impact their businesses the most,” explained Donna Ettenson, VP of Operations at America’s SBDC
“We’re looking to help businesses understand the financial impacts they can realize online no matter their size or industry,” said Michael Curri, president and founder of SNG. “America’s SBDC’s stand at the intersection of Internet and small businesses and have a unique opportunity to help drive real economic impact through these yet-to-be-adopted applications.”
About Strategic Networks Group (SNG)
Focused on economic advancement through broadband utilization, SNG is a group of broadband economists who develop strategies for most effectively leveraging broadband investments. SNG addresses broadband utilization from the individual organization level all the way up to working with more than ten American states. SNG looks to help make the most broad-reaching and transformational impacts that broadband can bring to enable businesses, communities and regions by delivering the data and analysis decision makers need to maximize broadband’s potential. Learn more about SNG online at www.sngroup.com
While the world seems to be obsessed with the “supply side” of broadband, SNG is focused on the less considered and studied “demand” side and Internet utilization. Sometimes it seems we are a foreigner in the land of gigafyers.
It is not that we don’t support or recognize the critical need for speed, reliability, and availability – quite the contrary, it is critical infrastructure. But our research shows that no matter what the speed availability is, small businesses (according to the 2010 US census, 92% of American businesses) are falling behind.
So what do we mean by falling behind? We’re not talking Netscape browsers and AOL email addresses, as much as an inability to keep up with online business practices. Larger businesses are utilizing the Internet faster and more effectively than their smaller counterparts. There are a variety of reasons for this, including a gap in understanding the benefits of and what is required to implement Internet applications. This is occurring at both the micro (business) and macro (regional) level.
What’s needed is for businesses to see the value in adopting new Internet practices. They don’t know what they don’t know – missing growth opportunities for their business and slowing job creation in your region. Furthermore, when they do understand the benefits of Internet applications, they are often stretched too thin to choose and implement the right solution(s) for their operation.
If you are interested in economic development in your area, you’re missing out on job creation if you aren’t doing more to bridge the digital divide that exists in small businesses today.
Looking at SNG’s job creation statistics across nine states reveals that Internet utilization has been a huge driver in job creation in organizations across the board since 2010. Between 2010-12, the percentage of jobs created within small businesses was highest (33%) for businesses with less than 20 employees.
Since then, job growth within those small businesses has slowed. Meanwhile larger organizations have been faster at implementing Internet applications and are seeing a significant bump in Internet-enabled jobs. For businesses with 100 plus employees, that jump has been 18% during the past two years. In fact, the smaller the business, the slower the growth of jobs and every other business size classification is seeing slower job growth. For businesses with less than twenty employees, who were the biggest creators of jobs in 2010-12 there has only been a five percent rise between 2013-15.
If your organization is dedicated to proactive economic development by helping businesses grow – helping them better capitalize on the Internet should be a key component in your efforts. Be it through group training or a more one-on-one vehicle like SNG’s Small Business Growth Program that shows the financial impacts of broadband utilization – you need to ‘lead your businesses to water’ and show them not only new speeds of broadband, but what they should be doing to be competitive and what the ROI is from increasing their utilization of Internet applications.
Within the past 6 months SNG has conducted research across both the states of Kansas and Arkansas. Each State had a distinct interest in how their small and medium businesses were utilizing the Internet. Why? As we have previously reported, SNG has found a consistent and disturbing trend – the smaller the business, the less they are capitalizing on the benefits and promise of the Internet and its applications, or as we refer to them, esolutions.
With fewer resources, smaller businesses are less likely to truly comprehend how the Internet can benefit their business, whether they are a small retailer or manufacturer. Our research also reveals that the cost to implement an esolution (e.g. a website) can be prohibitive to deployment or utilization. What our Small Business Growth Program is doing is revealing to business owners the cost as well as anticipated revenues… and thus the ROI for each investment.
Small businesses have limited time and resources to understand whether they should be online and what that could mean for their business. These same businesses also may not have the background or knowledge to understand how numerous Internet applications can help them compete and what the ROI accompanying each application may be.
It’s illuminating to see just how limited Internet utilization is when examining the 2,200 businesses surveyed that have less than 50 employees in Kansas and Arkansas. These states are only selected to illustrate this because they are our most recent statewide studies.
Top Business Goals from Using the Internet
Increasing sales, reaching markets, and expanding reach are all goals you would expect that a business of any size would cite as reasons for being online.
It’s the bottom three that is alarming both in the research as well as on-the-ground interactions the SNG team has had with small businesses. It takes “out of the box” thinking for businesses to develop strategies to increase foot traffic, roll out new offerings, and leverage non-local resources. But the most successful small businesses we’ve come across are doing just that.
So what are small businesses doing online? If we look at the actual utilization, we see significant under-utilization, as every tactic we asked about came in less than 50%.
This is more disappointing than surprising. And it is revealing – small businesses don’t have the resources or business case to overcome a lack of resources.
With the proper motivation, online resources, and coaching, small businesses can close their own digital divide to compete and thrive.
Even if coaching and training is available, business owners and managers need to be motivated to take the necessary steps to “get online.” That is why we designed the Small Business Growth Program – to show businesses exactly how much they have to gain from various esolutions, including online marketing tactics. More significantly, the program provides anticipated ROI based on results their peers (by industry and company size) across the nation have reported to SNG.
Connect Arkansas 
is a private nonprofit dedicated to increasing high-speed Internet implementation and utilization throughout Arkansas. As a project of the Arkansas Capital Corporation Group, Connect Arkansas is now taking significant steps in partnership with SNG to drive broadband utilization amongst its businesses.
As actual Internet utilization (beyond infrastructure and adoption) is critical for business growth and prosperity, Connect Arkansas commissioned SNG to conduct a statewide eSolutions Benchmarking Study amongst small-to-medium sized businesses.
This study will help Connect Arkansas better understand the gaps and barriers to utilization as well as the current financial impacts of broadband and its applications, including:
An overview of SNG’s Arkansas findings as well as the potential financial impacts, quantified!
Also fascinating and consistent with SNG’s findings across the United States, there is a digital divide in utilization amongst smaller and rural businesses. The smaller a business, the lower the Internet application utilization. The same goes for the more rural an organization is (see accompanying article). This is especially troublesome given the fact that more than 90% of Arkansas’ (and America’s) are small businesses.
Arkansas businesses realize there is more they can and should be doing online. Nearly half (46.4%) say that they are not taking full/better advantage of broadband and its solutions because of a lack of in-house knowledge. Nearly a third (31.4%) are not utilizing the Internet because they don’t fully understand the benefits.
So how do we help small businesses better utilize broadband and its applications to increase revenues, jobs, and the tax base?
Connect Arkansas is currently running a pilot of its Small Business Growth Program with 100 Arkansas businesses which includes coaching, online tools, and most importantly a utilization scorecard. This scorecard compares the current level of Internet use to other organizations of similar size in the same industry. It identifies the top three Internet tools and strategies to drive new revenues and/or cost savings for this particular business.
The recommendations provided to the 100 small businesses in Arkansas averaged a financial impact (revenues and cost savings) of $225,000 per company. If all of these 100 businesses undertake these recommendations, the overall impacts would be $22.5 million aggregate positive financial impacts to the businesses. This also equates to a potential job growth of 100 direct and 250 total jobs.
Moving forward Arkansas will have the ability to drive their economy through the better utilization of broadband among all businesses who participated in the benchmarking study, carrying with it a potential of $202 million in financial impacts across the State, 900 direct and 2,250 total jobs amongst approximately 1,000 small businesses.
Infrastructure is critical and gigafying… everything… is certainly the sizzle. Utilization is the steak and we’d love to help you “feed” your small businesses the sme way we’re helping Arkansas and others across the globe.
You can find SNG’s Arkansas findings here >>
