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Performance & Growth

Buy a PBX or Host in the Cloud?

Here are 8 questions to ask yourself before choosing to go the tradional or cloud route with your PBX system.

Rapelang Rabana

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What do you do when your business needs a phone system? Whether you are a small company that’s growing every month with more telephone lines strewn on the floor or an established business that is having problems with its current phone system, there comes a point when you need to think about what to do next.

The options of office phone systems available today have gotten even wider with the introduction of cloud-hosted PBX systems alongside the traditional on-site PBX systems. Knowing what to look for enables you to decide which solution works for you and your business. The following are some practical questions you need to ask yourself when considering a cloud hosted or on-site PBX system:

What is the cost of ownership?

Traditional On-site PBX: There is the capital outlay, which is not just the price the system, but also any installation costs. If you have multiple branches, there would be PBX required for each of your branches, not just your head office. Being the owner of the system also means there is on-going maintenance costs which depending on the complexity of the PBX can be expensive if only a select group of experts can maintain it. Ongoing maintenance costs occur it If the system as any problems, if you need to change any configurations, or if you need any upgrades.

Cloud-Hosted PBX: A cloud-hosted PBX service is a ‘software as a service’ which do not take the risks and costs of ownership of – these remain with the service provider who manages and maintains the PBX in the private data centre. The main on-site equipment required are VoIP enabled phones to connect to the hosted PBX over your internet line. Your internet connection may need to improve to cater for greater usage and a back-up access point like a 3G Router should your primary internet line go down is essential. The capital outlay would still be significantly less.

What is the cost of phone calls?

Traditional On-site PBX: You need a PBX to make calls, so these rates should be made clear upfront. Look carefully at the details. Is there a connection fee? Is there minimum amount payable on each call? Do you have to buy a bundle of minutes to get access to the lower rates and if you don’t use the bundle by the end of month, do you loose it? The telecoms regulations in South Africa are lowering the rates to call mobile phones every March for the next 2 years – will you get the benefit of those rate drops?

Cloud-Hosted PBX: VoIP is used to make calls in a hosted PBX, giving you access to highly competitive calling rates. VoIP calling rates are in general more aggressive than the rates from the incumbent operators. VoIP rates are also now more competitive than the rates you used to get on Least Cost Routing devices (LCR), which were the boxes with SIM cards to make calls to mobile phones.

How does the system scale as my business grows?

Traditional On-site PBX: There is a limit to the number of extensions the PBX can support. When your company grows beyond a certain size, like 10 or 20 or 50, you would need to buy a totally new PBX or pay for an upgrade. But you also need to think about scale if you have multiple branches. An on-site PBX is exactly that – its ‘on-site’ so everywhere you have a ‘site’ you will need a PBX system if you add a new office or branch too which incurs additional capital outlay.

Cloud-Hosted PBX: There is no limitation to adding more extensions as the service provider can manage their scale of operations without a physical limitation of a box. Because its irrelevant to a hosted PBX where each person is connecting, as you add more branches or offices, locally or internationally, they can all still connect to the same system.

What happens if I need more telephone numbers?

Traditional On-site PBX: Typically, each additional number must be ordered, which can take few weeks and incurs and monthly line rental fee for as long as you use the number.

Cloud-Hosted PBX: Additional numbers can be obtained for a small activation fee or at a significantly less rental as you do not need to pay for a physical line connection.

What happens if I don’t like and want to change?

Traditional On-site PBX: Contracts are typically for 24 months and can be even longer if you are tied to financing agreement to pay of the PBX over a few years, making getting out very difficult. With this kind of lock-in you are precluded for benefiting from new products and technologies that become available.

Cloud-Hosted PBX: Contract terms are month to month, as with most ‘software as a service’ products. So you are not tied down to system you don’t like or that ceases to meet your needs.

How flexible is the system to change settings to suit work patterns?

Traditional On-site PBX: Changing any configurations would require an understanding of PBX equipment and most businesses simply won’t maintain that expertise in house. This means you would need to call on your service provider to make changes even as small as changing an IVR or changing extensions.

Cloud-Hosted PBX: Hosted PBX’s expose their features and functions through a web interface, so you can log into your account online and opt to change settings like IVR’s and extensions without waiting on someone else.

Can the system help me control and manage my costs?

Traditional On-site PBX: You can only control costs are made fully aware off. Getting a bill at the end of the month makes it impossible to be proactive about your telecoms expenditure. To block things like international calls, or cancelling a number you don’t need generally require making a call to the call centre and writing letters. If you need to breakdown your costs per staff member, or per department is generally impossible without getting an additional system.

Cloud-Hosted PBX: Access to real-time reporting to the costs you are incurring puts in control of your expenses. Cloud systems can even allow you to set a maximum expenditure budget for specific people if you need to contain costs. Through the online interface you can subscribe and unsubscribe for services on the fly.

What happens when I need an additional feature?

Traditional On-site PBX: A PBX box will have the same features it had when you first bought it and unless you purchase an additional module or upgrade, you would not be able to get more features as you need them. Generally, functions like call recording, telephone management system (TMS) that provides costs breakdowns per department, and SMS messaging are completely separate systems.

Cloud-Hosted PBX: The hosted PBX would typically have a comprehensive set of features that you would previously only get in the top end PBX that were too expensive for most businesses. Furthermore, the features and functions are developed on an ongoing basis and you would be automatically upgraded when a new service is rolled out without purchasing a new system.

As with any new concepts and ideas, there is that initial reluctance from many to use a cloud-hosted service. We like to ‘own’ things, but building expertise in and maintaining systems that could just as easily be sourced from the cloud will begin to make less and less sense as it diverts critical resources from core business areas. Why do you want to be in the business of phone systems in addition to your main business? Eric Schmidt, CEO of Google said “Conventional wisdom on cloud computing was that: these were toy systems, that were not going to be reliable, and that people would never store their information in the cloud. But that is all wrong… think about what is really going on here. Wouldn’t it better to have a qualified professional who is operating at absolute scale with a very strong incentive to keep you happy and trust them to do what they do? It actually works.”

Rapelang Rabana is the co-founder and CEO of SA based software development organisation, Yeigo. She oversaw the company’s integration into the TelFree Group of companies in 2008. Now as Global Head of R&D, she and her colleagues in Cape Town continue to ensure that the telecommunications pioneer remains at the forefront of alternative communications through highly innovative software applications across the telecommunications spectrum. Visit http://www.telfree.com and http://www.officeconnection.co.za for more information.

Performance & Growth

Why Growth Could Be The Worst Thing To Happen To Your Business

Focus on the next customer and the next level will take care of itself.

Paul Jarvis

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We’re constantly fed this idea that if our business isn’t growing, it’s failing. Fortunately, like anything in business, one rule doesn’t always apply.

This is where business advice and reputable studies differ. Rapid or unchecked growth can end up being the downfall of a business, instead of its guiding light. It’s not that growth is bad or should be avoided at all costs, it’s just that it should be questioned before proceeding.

Growing our businesses could be the worst decision we make for the longevity of them. Let’s look at five reasons why growth may not make sense for our companies.

1. Resilience

As Dean Becker, CEO of Adaptiv Learning Systems, told me, the amount of resilience a person has is the most important part of their ability to succeed – and accounts for more than even their training, education or experience.

Luckily, our ability to be resilient is not just an innate trait we’re either born with or not. Being resilient requires that we focus on and work towards developing three traits:

  1. Having a greater sense of purpose for why we’re doing what we’re doing, even if things go wrong or aren’t currently working out.
  2. Recognising that we cannot control everything, and recognising accepting reality for what it is – something we can steer but not fully be command of at all times.
  3. Developing an ability to adapt as things change, so we can pivot with differences in the market, in customer requests and shifts in technology.

Being resilient as a business is much harder for a large organisation because there are simply too many resources at play, too many moving parts and too many shareholders making decisions to move quickly enough to adapt.

Smaller businesses, at their core, have less resources, less moving parts and less decisions makers, and can therefore be nimble enough to move with changes that could negatively affect a company.

Related: 3 Strategies For Growing Your Online Business Fast

2. Autonomy

Companies of one are becoming more popular because people want more control and autonomy in their lives, especially when it comes to their careers. This is why so many people are choosing this path: staying small (or even working for ourselves) lets us control our own life and job.

Smaller companies also set up Results-Only Work Environments (ROWEs), in which employees don’t have set schedules, all meetings are optional, and it’s entirely up to employees how they spend their time working. They can choose to work from home, they can work from 2:00 AM to 6:00 AM if it suits them, and they can sculpt their job however they want, as long as the results benefit the company as a whole. Cali Ressler and Jody Thompson have defined and then studied ROWE implementations for more than a decade, and they found that in these kinds of autonomous environments, productivity goes up, employee satisfaction goes up, and turnover goes down.

3. Speed

Companies like Basecamp have a four-day workweek during the summer (no work on Fridays) because it helps them prioritise what’s important to work on and what they can let go of. The key for their employees is to figure out how to work smarter to accomplish tasks with the time they’ve got, not just harder. Smaller companies are afforded the same opportunity. We can question our systems, processes and structure to become more efficient and to achieve more with the same number of employees and in less time.

Speed is not merely about working faster. It’s about figuring out the best way to accomplish a task with new and efficient methods. This is the concept at work in the ROWE method: Employees no longer have to work a set amount of time, but are rewarded when they finish their tasks faster. By being smarter at getting more work done faster, we can create a more flexible schedule that fits work into our life in better ways.

Another aspect of speed in a company that questions growth is the ability to pivot quickly when a customer base or market change. As a solo worker or small company, this can be much easier to do, because we have less infrastructure to cut through.

4. Simplicity

Typically, as companies gain success or traction, they grow by taking on additional complexities. These complexities can often detract from a business’s original or primary focus, resulting in more costs and the investment of more time and money.

For a company at any size, simple rules, meaning simple processes and simple solutions typically win. Adding complexity is almost always well intentioned, especially at large corporations, where, as complicated processes are added to other complicated processes and systems, accomplishing any task requires more and more work on the job and not toward finishing the task itself. It can be a slippery slope. One step is added to a process without increasing its complexity too much, but then, after a few years of adding steps here and there, a task that once took a handful of steps now requires sign-off by six department heads, a legal review and a dozen or more meetings with stakeholders.

5. Durability

The current business paradigm teaches us that to make a lot of money or to achieve lasting success, we need to scale our businesses – as if larger businesses are less prone to fail or to become unprofitable. Before our imagined businesses are even off the ground, we need to create them with the sole purpose of growth – and possibly eventual sale for a huge profit. This paradigm, however, isn’t rooted in truth, nor does it hold up against critical investigation.

Although contrary to most popular business advice, growth as a main goal or performance metric can actually be quite dangerous to the long-term operation of a business. In 2012, researchers from the Startup Genome Project looked at data from more than 3,200 high growth startups and found that more than 70 percent scaled prematurely through rapid growth and ended up failing – closing shop, selling off the business for cheap or having massive layoffs – because of it. The findings in this study where echoed in a similar study done by the Kauffman Foundation, where they found that 5 to 8 years after starting, more than two-thirds of high growth companies had to shut down due to the same reasons as the first study.

Related: How to Grow a Small Business into a Big Business

With these reasons in place, it may make sense to not grow and instead focus on where our business can do things better – instead of just in a bigger way. Let’s start to consider the idea that perhaps the byproduct of business success isn’t always growth and scale, maybe it’s just being able to have the freedom to make decisions that are best suited for the longevity of our business, the happiness of our customers and what makes the most sense to improving our bottom line.

Staying small doesn’t have to be a stepping-stone to something else, or the result of a business failure – rather, it can be an end goal or a smart long-term strategy. For businesses that question growth using the Company of One mindset, instead of assuming growth is always beneficial, we can think about what we can do to make our businesses better instead of just bigger.

This article was originally posted here on Entrepreneur.com.

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Performance & Growth

Local Study Reveals Formalized Boards Drive Growth

Sirdar Group study outlines the key elements of high performance boards in South Africa driving SME growth.

Nadine Todd

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One of the key differentiators between high-growth companies and listed businesses, and SMEs that do not grow beyond a certain ceiling, is whether or not the business has a formalized board structure in place.

Sirdar Group, Africa’s leading educator, appointer and guide to high-performance boards of privately-held companies and family businesses, has long held the belief that in order to truly scale, businesses need high-performance boards.

A new study conducted by Sirdar Group has focused on the value that high-performance boards offer companies in a bid to encourage SMEs and family-run businesses to follow best-practice in order to realise their growth potential.

Carl Bates, founder and CEO of Sirdar Group unpacks the key lessons from the study, and how SMEs can use these to drive growth.

1. What value do independent directors bring to boards? Why is this particularly important for privately-held companies and family businesses?

Ensuring you have an independent board member on your board is tantamount to ensuring your company makes use of an independent auditor. It’s imperative to have an independent perspective of the current performance, strategic direction and operational strategies of the business, not one that could be swayed by power, being a family member, job status or seniority on the board.

Let’s define what independent means in this scenario. An independent board member is not a director, shareholder, or employee, nor do they have any capital invested in the business. They are essentially paid consultants that are intellectually involved in the success and growth of the business.

Based on our recent survey, statistically it is shown that boards that comprise of at least one independent board member outperform those that do not have any. It therefore goes without saying that the more independent board members on a board, the higher the impact the board will have on the company performance.

When asked about the various directors and the value they add to the board, Independent Board Members were the least likely to be removed as the contribution they add is vital. Along with higher performance, the survey showed that boards with Independent Board members are more likely to implement a performance evaluation process, which is strongly recommended in most African governance codes.

2. Boards with independent directors are more likely to result in improved business results. Why is this the case?

Boards with independent directors tend to be those who have embraced the value of a third-party independent perspective. Whether they be family-owned or privately-held, they recognize the fact that they hold a shareholding in the company does not mean they have all the answers.

In turn, independent directors tend to have engaged in understanding what a high-performance board is, more so than where the only directors are also shareholders (and therefore not independent). Independent directors therefore understand the value of self-evaluation and taking time to consider how the board is actually performing.

The old adage ‘you manage what you measure’ comes to mind here. If a board is not measuring its own performance, what is its driver to improve? An annual board evaluation ensures this focus on a board being, as we would say at the Sirdar Group, ‘exceptionally critical’ of its own performance.

3. Do strong performing boards lead to businesses that perform well? Why?

Both the research and our own anecdotal evidence suggests that businesses with high-performance boards performance better. Internationally, the research also reinforces this. First, it is about understanding that a high-performance board is not one that is driven by compliance to codes and standards, it is one driven by ensuring increased performance for shareholders and other stakeholders. An effective methodology enables this to happen.

The reason businesses with a high-performance board perform better, in our view, is because they are being truly challenged by an independent party about the performance of the company. People who are removed enough to stay objective, yet involved enough to understand the business and its true indicators of performance, can add huge value to high-level strategic discussions and decisions.

4. Why did you conduct research into non-listed African board practices, particularly relating to privately-held company and family business board fees?

Remuneration and performance of boards of directors has been the subject of extensive conceptualisation and empirical research over many years. Internationally, most of this research has dealt with European and American-based companies. Alternatively, and particularly in Africa, it has focused on listed companies and public entities. We decided to fill this gap. Specifically, we want to support the achievement of meaningful economic impact by companies across the continent by supporting their ability to have truly high-performance boards. This research is one aspect of enabling this to happen.

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Performance & Growth

How Matt Brown Quadrupled His Business By Becoming A Niche Player

Matt Brown turned down a high-six figure deal the week he made the decision to become a niche player in his industry. Here’s why you need to learn to say no if you really want to grow.

Nadine Todd

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Vital stats

  • Player: Matt Brown
  • Company: Digital Kungfu
  • What they do: Storytelling production company for tech businesses
  • Launched: 2015
  • Visit: digitalkungfu.co.za

In today’s highly competitive B2B landscape, growing market share requires a business to be a low-cost provider, the differentiated option, or operating in a niche market.

For many businesses, low-cost is not an option, either because it’s difficult to maintain value while driving price down, or because if you’re selling on price, you will always lose to a provider who comes in at a lower price point. It’s a race to the bottom.

You therefore need to differentiate or dominate a niche. Matt Brown, founder of Digital Kungfu, a storytelling production company, has focused on doing both. The business is focusing exclusively on helping tech companies with their marketing needs. The week Matt and his team made this decision, they needed to turn down a high six-figure deal with a company that didn’t align with their chosen niche target market. It was a painful decision, but it’s paid off. Within six months Digital Kungfu had quadrupled in size.

Entrepreneur chatted to Matt about making the decision to become a niche player, knowing when to say no, and the art of developing differentiated products.

1. What is the business case for focusing on a niche instead of a broader – but bigger – market?

You can’t be everything to everyone. If you try, you’ll just end up being invisible anyway. Take the Cloud services space for example. There are thousands of software resellers offering similar (or even the same) products to SMEs. Everyone is flooding the market with competing messages, trying to show their target audience the value of their product or service, and why customers should buy from them instead of their competitors.

The only way to combat this flood of information that your customers are receiving – and to differentiate yourself – is through positioning. Positioning is all about framing your scarcity and dictating your value.

People want to know that you understand their pain. It builds trust. Focusing on one sector helps you to become laser-focused on the problems that players in that sector face. When you become a niche provider, you’re immersed in your customer’s industry, needs, problems and solutions. You understand their problem best, and they accredit you with the solution.

2. Why does saying no to some things open new opportunities in others?

For three years Digital Kungfu was positioned as a storytelling production company for any client who wanted help telling their brand or product stories to their customers. When we looked at our client base though, we realised that over 90% of our portfolio was technology companies.

There was clearly something we were doing that aligned with technology clients, but we hadn’t made the decision to focus exclusively on this sector, which meant we were still trying to be everything to everybody. Our messaging and product offerings weren’t clear as a result.

The realisation that we were predominantly focused on tech companies made us step back and evaluate why. What made us different in this space? We started asking the companies we worked with and discovered that it was our agile approach to delivering branded content solutions that was really resonating with them. Our storytelling, branded content and agile marketing approach aligns extremely well with the way tech companies work. We’re fast, we’re affordable and we’re effective. In the technology space, speed is everything. Once I understood that, it made sense to focus all of our energy on this one sector. Yes, it means saying no to a lot of other sectors, but it also opens the opportunity to dominate this sector.

We made the decision that if we can’t own a market or an idea, we won’t do it. By focusing on tech clients, we’re becoming intimately involved in their business challenges, needs, language and how the sector as a whole works. That expertise is driving better solutions and engagement from our side, which only serves to add greater value to our clients.

3. You had to turn down a six-figure deal once you made this decision. How did you do it?

It wasn’t easy. Saying no to money when that is what your business does is incredibly difficult. Within a week of making the decision to niche down, we had to turn down a high six-figure deal with South Africa’s largest SME investment fund. We knew that if we didn’t make that choice however, that we would never be able to focus on our chosen niche. We wanted to go after a much bigger pie, and that begins with the right focus. It’s not what you say yes to that makes your business grow – in many cases it’s what you say no to.

4. Was there any lesson or advice that influenced the decision to become a niche player?

The book Play Bigger by Christopher Lockhead has been instrumental in shaping the way we approach category design thinking for our technology clients. I realised that we were utilising this methodology for our clients, but we weren’t following it ourselves at Digital Kungfu.

The theory behind category design is that companies that own their categories (the Category Kings), don’t sell better than their competitors – they sell different by introducing the world to a new category of product or service.

Uber, Amazon Web Services (AWS) and Salesforce all did this. They own the markets that they play in because they marketed a different problem that the market didn’t know it had yet and when they did, they were accredited with the solution to the problem. They then gobbled up all the economics in their category, instead of feeding off the scraps of available market potential. To put this in perspective, Uber is valued at $120 billion, an eight times high valuation than their nearest competitor, Lyft which is valued at $15 billion.

I was already a big believer in this methodology; we just needed to implement it in our own business model and strategy. By focusing exclusively on a category, defining its problems and delivering a solution that is tailor-made for technology companies specifically, we are aiming to own the economics in our market.

I’ve received validation for our strategy from Christopher himself, who I interviewed on the Matt Brown Show. He literally wrote the book (Niche Down) about how to become legendary by being different. Most of us are tricked into believing that achieving personal and professional success means fitting in. What it really takes is the courage to stand out.

Choosing to become a niche player can be daunting – particularly if you’re an entrepreneurial business that has always said yes to everything – but when you become the niche player, you also become the expert in your category, and that will drive growth.

Inside B2B Lead Generation 2019 is a white paper and interactive webinar researched and produced by Digital Kungfu, a purpose-built lead generation company for tech businesses.

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