The following white paper outlines the findings of a study sponsored by Siemens Communications and prepared by SIS International Research. It discusses and quantifies the hidden cost of communications barriers and latency that small and medium sized business in 8 different countries, across 8 different verticals, and up to 400 employees experience in their daily business activities.
An SMB with 100 employees could be leaking a staggering $524,569 annually as a result of communica-tions barriers and latency. Communications barriers and latency surrounding everyday business process and collaboration is referred to as “communications pain”. Not addressing these everyday communications pains leads to increased operating costs, unsatisfied customers, and impaired competitive advantage. Siemens commissioned a study performed by SIS International Research to uncover the real costs to small and medium businesses (SMBs) around the globe.
Key findings from the study include:
- SMBs and LEs experience similar communications pain
- Communications barriers and latency are widespread
- Communications pain is costly for SMBs
- Addressing communications inefficiencies is a high priority for SMBs
- Evolving business environment is driving mobility among SMBs
- SMB mobility is driving the need for improved communications solutions
- Fragmented and varied technologies limit communications efficiency
- Unified communications is taking root with SMBs
Siemens Enterprise Communications is a global leader in unified communications. They have commissioned several studies on the topic of communications barriers, including those by Forrester, SQM Research, BaseX Research, Aberdeen Research, and Insignia Research.
Unified communications (UC) and mobility are emerging solutions areas in SMB communications. The promise of UC is to make communications technology seamless, easy, and cost effective via internet protocol. The promise of mobility will speed the nature of communications. Many large enterprises have been evaluating and adopting these technologies to improve business processes, reduce costs, and increase customer satisfaction.
Unlike previous studies, this study was designed to explore and quantify communication difficulties ex-perienced specifically by small to medium-sized businesses (SMBs) of up to 400 employees. This has al-lowed us to understand the pain points, delays, and costs experienced by SMBs. Further, we were able to uncover that, like large enterprises, SMBs are seeking solutions to communications latency and to improve communications for mobile employees.
This study is designed to address four main objectives:
- Compare communications pain points between small to medium-sized businesses and large enterprises
- Examine communications barriers and latency surrounding process alignment and collaboration
- Examine the current use of and interest in non-traditional technologies by SMBs
- Understand how unified communications can help SMBs improve processes and costs through improved communications
Telephone surveys of 513 respondents were conducted September through November 2008. Contacts were managed to achieve balance across three key segments: employee size, industry vertical, and country.
NOTE: The numbers used in the figures, tables, and diagrams in this white paper have been rounded and may not always add up to 100%.
Profile of Respondents
Respondent companies were located in one of eight countries from three of the world’s major economic zones: the United States, Western Europe, and three of the BRIC nations. Specifically, the countries included in the survey are: Brazil, France, Germany, India, Italy, Russia, United States (US), and United Kingdom (UK).
The businesses identified for participation in the survey fall into one of eight industry verticals: communications, finance, healthcare, insurance, manufacturing, professional business services, real estate, and wholesale or retail trade.
For the purposes of this study, Communications refers to a collection of communications-related professions including computer technology and hardware and software development. Similarly, Professional Business Services refers to a collection of professions including accounting, consulting, and legal business services. Finally, care was taken to ensure respondents within the Healthcare vertical were employees of non-government healthcare-related businesses.
All respondents were knowledge workers in small to medium-sized businesses of up to 400 employees. This document makes use of the terms “knowledge worker” and “employee”. For the purposes of this document, a knowledge worker is defined as an employee that primarily utilizes information/knowledge to accomplish work tasks. Knowledge workers include resources that regularly leverage communications technology and are in roles such as management, information technology, customer service, and sales and marketing. “Employee” refers to all employees of an organization, regardless of their role or use of communications technology.
Salary information was gathered from www.salary.com for knowledge workers in each of the eight verticals within each of the eight countries in review. The data reported from this source does not include the cost of benefits, therefore a standard 30% was added to account for these costs. For the purposes of this report, compensation rates are shown in US dollars and based on exchange rates as of December 1, 2008.
This study was designed to build upon research and findings from a communications pain study con-ducted on behalf of Siemens Enterprise Communications by Insignia Research in 2007. SIS International Research’s analysis of the Insignia data looked at the relative importance of the ten pain points across small to medium businesses (SMBs) and large enterprises (LEs). As shown in the table below, the cost in USD per knowledge worker per year was used to determine the relative ranking of pain points.
Various communications barriers and latency surrounding process alignment and collaboration can be called communications pain. Coordinating communications between team members, juggling multiple means of communication, and handling unscheduled or low-priority communications that disrupt the flow of work are all types of communications pain experienced by SMBs. Individually and collectively, these various types of communications barriers are referred to as pain points.
SMBs and LEs Experience Similar Communications Pain
While differences in productivity cost exist in absolute dollar terms and in the relative ranking of individual pain points between SMBs and LEs, the top five pain points are the same. Waiting for information, unwanted communications, inefficient coordination, barriers to collaboration, and customer complaints were the five most expensive pain points for both groups. Further, the cumulative annual cost of the status quo for these five pain points was not significantly different between SMBs at $35,196 and LEs at $36,443 per knowledge worker per year. This is based on the time spent addressing these pain points and an aver-age hourly compensation rate of $37.
Communications Barriers and Latency are Widespread
In the 2008 study, SMB respondents were asked to tell us about their experience and that of their col-leagues with each of the top five communications pain points. On average, 70% of respondents said they have experienced these pain points. The respondents also stated that they spend, on average, a total of 17.5 hours per week addressing them.
68% of respondents stated that they experience difficulty coordinating communications between team members, which affects a team’s ability to respond quickly to time sensitive customer requests. Further, they spend an average of 3.7 hours per week attempting to coordinate communications between team members, hindering a team’s efficiency in moving towards goals and deadlines.
Waiting for Information
68% of all respondents experience work delays while waiting for information from others that they have attempted to reach live multiple times using multiple methods. The average delay is 3.5 hours per week per knowledge worker. This is a considerable amount of time to spend before making progress on a par-ticular task, which could negatively affect critical business processes.
Unwanted communications, including low-priority calls and voicemail, is the pain point most frequently experienced by the survey group. 77% of respondents cited spending two or more hours per week dealing with unwanted communications. These interruptions create distractions and disrupt workflow, leading to lower productivity and missed deadlines.
74% of all respondents stated that they spend, on average, 3.3 hours per week dealing with negative comments or complaints from customers, specifically because the customer was unable to reach them in a timely fashion. While an 8% loss in productivity is itself significant, the true cost of customer dissatisfaction is surely much greater.
Barriers to Collaboration
61% of respondents find difficulty in establishing collaboration sessions with colleagues. Further, they spend an average of 3.3 hours per week attempting to address issues of inaccessibility, or other communication-tool based lack of full collaboration with colleagues.
Consider that 40% of the work week is lost to these communications inefficiencies and that the majority of respondents are in customer-facing and decision-making roles. The negative impact on critical business processes, new revenue, and customer satisfaction becomes painfully apparent.
Communications Pain is Costly for SMBs
The cumulative cost of the status quo due to productivity losses resulting from communications barriers was estimated to be $26,041 per knowledge worker per year. This was calculated by factoring the time spent dealing with each pain point with the compensation rate for knowledge workers in each of the countries and verticals surveyed.
When one considers that the respondents further estimated that an average of 20% of all employees within their companies similarly experience these pain points, the cost of the status quo for an SMB would amount to $5,246 per year per employee, assuming that 100% of the time reported addressing these issues is unproductive. Thus, for example, a SMB with 100 employees could be leaking a staggering $524,569 annually as a result of inefficiencies in communication.
Addressing Communications Inefficiencies is a High Priority for SMBs Survey respondents were asked about the priority for their companies to have improved communication solutions that would address each of the pain points. Respondents were asked to consider a 1 to 5 scale, with 1 representing “Not at All a Priority” and 5 representing “Extremely High Priority”.
Overall, 41% of respondents stated that having a system to reduce the time spent addressing all of these pain points is a very or extremely high priority for their businesses. Figure 3 illustrates that even in countries where the time spent per week addressing these pain points and the resultant cost of the status quo are relatively low, the priority for a solution is high.
For example, SMBs in Russia and Brazil reported spending the least amount of time addressing these pain points and have the lowest cost of the status quo. The priority to address these pain points, however, is reported at or above the global average.
Time spent per week addressing communications issues varies by vertical from about 14 hours in Finance to almost 20 hours in Healthcare and Manufacturing. This variation can be attributed, in part, to the fact that certain verticals are characterized by highly transactional businesses. The transactional nature of a businesses drives up the frequency and severity of communications needs.
For example, Wholesale/Retail Trade, a vertical characterized by a high volume of low value transactions, reports above average frequency and severity of pain points. Conversely, Finance and Professional Business Services report lower than average frequency and severity of pain points, as they are better characterized by a lower volume of higher-value transactions.
While the time spent addressing pain points and the cost of the status quo vary by vertical, the priority to address these communications inefficiencies is, with few exceptions, very high and tightly grouped around the global average of 41%.
As the number of employees in an SMB increases, the company is more likely to assign a greater priority to resolving communications inefficiencies. There is a clear inflection point at 20 employees. The priority assigned by SMBs with over 20 employees is more than 43% higher than that by companies with fewer employees.
This correlation stands to reason as the utility of communications solutions increases exponentially with the number of users in the network. Causally, the time spent per week by knowledge workers in companies with over 20 employees is more than 50% higher than that of companies with less than 20 employees.
This is an excerpt from a white paper; for the full version click here.
SIS International Research
- New York, New York
- SIS International Research, founded in 1984, is a leading full-service Market Research and Market Intelligence firm.