The Benefits of Broadband, Part 5: E-Business

May 2002, By Ben Macklin and Steve Butler

According to the “Net Impact Study” conducted by
the University of California-Berkley, the Brookings Institution and Momentum Resources
Group, the deployment of e-business solutions has yielded cumulative cost savings of $155
billion to US organizations. This is expected to produce $373 billion in cost savings by
2005 and more than $500 billion in cost savings by 2010. The savings are in addition to
the revenue increases which e-business solutions provide.

While few would argue over the considerable benefits of
employing e-business solutions, one significant restriction in realizing these benefits is
being able to afford access to a high-speed network. Traditionally, small- to medium-sized
enterprises (SMEs) wanting dedicated bandwidth have used T1 lines, but this expense is too
great for many small businesses. The arrival of digital subscriber line (DSL) technology
now makes broadband more affordable for many, but according to Cahners In-Stat Group, only
about one-half of small businesses in the US have access to broadband in 2001. This
contrasts with nearly 90% for larger enterprises.

The correlation between broadband and business productivity
is well illustrated in a recent study by the Yankee Group. In its October 2001 study of
500 small businesses with DSL access, the research firm reports that 68% of respondents
believe they have already seen a positive return on investment thanks to the use of
broadband connections, while 56% say that DSL access is indispensable to their business.

Specifically, the survey shows 76% of respondents indicate
broadband improves their productivity and 70% say it has improved their customer service.
The results of the study clearly identify that a small business with broadband has far
more flexibility and opportunity to take advantage of such things as telecommuting,
e-learning and outsourcing of applications so they can concentrate on the core elements of
their business and reduce overheads.

The greater adoption of broadband by businesses of all
sizes could have significant effects across a number of sectors, including the application
service provider (ASP) sector, which has been struggling for so long.

In their pursuit of new customers, leading enterprise
software vendors such as Oracle, SAP and Microsoft have all been targeting the small- to
mid-size business market with their hosted e-business solutions for a few years now.
Broadband internet access is a critical pre-condition for those firms that want to sign up
for hosted software solutions, and with SME broadband access growing in 2002, this should
in turn set the stage for increased sales of hosted solutions to this market.

Ben Macklin is the author of the new The Benefits of
Broadband Report. Previous articles by Macklin in the “Benefits of Broadband”
series include: “The Costs” “Telecommuting” “E-Learning”

There are over 900 records in the eMarketer eStat Database for the term “broadband.”

Ben Macklin is a Senior Analyst for eMarketer and the
author of the Interactive TV: Reality & Opportunity Report, North America Online
Report, Telecommunications Spending Report, the North American Wireless Report and The
Broadband Report. E-mail him at [email protected]
with comments, suggestions and questions.

eMarketer Senior Analyst Steve Butler wrote the the
E-Commerce Trade and B2B Exchanges Report, the IT Spending Report and The CRM Report.
E-mail him at [email protected] with
comments, suggestions and questions.