Towards the end of last year, there was widespread uproar around the banning of Iceland’s tear-jerking advert which featured the cute ‘Rang-Tan’ cartoon character explaining to a young child how it’s rainforest home was being destroyed by palm oil harvesting humans.
The advert was banned on the grounds of political advertising, due to the fact that the video was originally created by the environmental activist group, Greenpeace. Despite being banned from television, the advert gained vast amounts of media coverage and had been viewed online over 30 million times within its first few weeks.
What is palm oil and what is the big deal?
Palm oil is similar to vegetable oils such as sunflower or rapeseed but is instead extracted from the fruit of oil palms. Oil palm trees are native to Africa, however, are now grown on farms primarily in Indonesia and Malaysia on the islands of Borneo and Sumatra, but also in Latin America and Africa since the trees grow well in the hot and humid rainforest type environments.
As the advert dramatically highlights, the palm oil industry is having a devastating effect on wildlife. The most notably affected animals are the highly endangered orangutans, Sumatran tigers, elephants and rhinos, who are being forced from their habitats in order to make space for palm oil plantations. A shocking 270,000 hectares of rainforest is cleared annually to support the growing demand for palm oil. Much of the farmland is created through illegal logging, despite many of the areas being ‘protected’ conservation areas. In order to prepare the ground for the plantation of oil palms the peat is burnt, letting off vast amounts of greenhouse gases, not to mention that these fires often spread out of control, working their way much further into the rainforest encroaching even more into the habitats of many animals.
So, why is palm oil so desirable?
It’s efficient and productive – palm oil trees yield as much as ten times more oil per unit of land against other oil producing plants such as soybean and rapeseed. Not only that but the trees require far less pesticide and fertiliser than other oil producing crops. Palm oil is also extremely cheap since there is no need to replant year on year and the trees require little to no care. The oil itself also has almost unlimited uses and goes into not only food products, but soaps and shampoos, cleaning products and detergents, cosmetics, candles and even biofuels. For this reason, the demand for the product has, in recent years, escalated dramatically.
The real issue is not really palm oil itself, but more the deforestation that is occurring due to its ever-increasing demand. However palm oil is not by any means the only cause of deforestation, or even close to being the biggest threat. There are just four main commodities held responsible for around 99% of global deforestation, and these are animal agriculture, soybean, palm oil and the timber trade. In fact, in relation to Borneo for example, deforestation has been occurring on an industrial scale since the early 1960s, not for palm oil, but for coal mining, furniture manufacture and hydroelectric dams to name but a few.
Poverty in these areas
In many of these areas, there is a significant lack of job opportunity and the poverty levels are relatively high. As a result of this, when an opportunity such as setting up a palm oil farm arises, many local people are drawn in by the potential earnings that could be achieved. These small farmers contribute increasingly to the areas’ booming palm oil industry. In addition to the wages, many of the local governments provide subsidies for farmers (smallholders). In Indonesia for example, this policy has helped some 1.5 million Indonesians develop nearly half of the country’s palm oil farmland. The increase in palm oil production in such areas has significantly improved the poverty rates, the livelihood and security of local small farmers.
Boycotting palm oil won’t work
Although the obvious decision would be to refuse to purchase any item that contains palm oil, boycotting the product completely could cause much more serious issues. As mentioned, palm oil is by far the most effective vegetable oil available, with much higher yields than its alternatives. Without the demand for palm oil, the risk is that businesses will use alternative oils such as rapeseed, sunflower, soy or coconut oils, which require much more land per unit of oil and their production requires more chemicals and emit far more greenhouse gases. It could be the case that once the demand for palm oil decreases, local farmers will then jump on the bandwagon of the next ‘flavour of the week’, resulting in further deforestation in order to meet the demands for similar yields of alternative oils.
Sustainable Palm Oil
The Roundtable of Sustainable Palm Oil (RSPO) is the leading organisation spearheading environmentally and socially responsible palm oil. Just 20% of all palm oil produced is certified by RSPO. It seems there is very little incentive for producers to seek this certification due to the fact that recent discussions focus on boycotting palm oil completely rather than supporting RSPO certified farms. As a further result of this, many large food and cosmetics brands that have invested in certified palm oil do not promote this fact, presumably in fear of being boycotted as a result of the negativity surrounding the use of the oil in any form, whether deemed to be sustainable or not. This all being said, how sustainable is the palm oil certified by RSPO?
“Sustainable” Palm Oil?
Despite some suggesting that the way forward is boycotting unsustainable palm oil and supporting those business’ who have obtained certification, the RSPO certificate and the label of ‘sustainable palm oil’ can in some ways be deemed meaningless. It seems that there are very few requirements in place to justify the RSPO certification. Many ‘sustainable’ palm oil producers are unable to indicate exactly where all of their oil is produced. The rules for obtaining an RSPO certificate can also be misleading. Certificates can and have been awarded to companies based on the sustainability of single farms, with disregard for the business’ other plantations. In many instances, sustainable and non-sustainable palm oil from a number of different plantations have been mixed and pumped into products that contain the RSPO certificates. This means that unsustainable oils with the RSPO label are often sold before the plantations are actually examined by The Roundtable of Sustainable Palm Oil.
Consuming Less & Education
It seems to be of the growing opinion that unless authorities can regulate truly sustainable palm oil, the only real answer to help stop deforestation and the extinction of wildlife is to consume less and educating others. Without giving up our jobs and volunteering as teachers abroad, there is little we can do as individuals to educate. However, educating the indigenous people of the palm oil farm areas on the negative effects that this reckless farming is having on the environment is just the first step. It is also important that we inform our colleagues, friends and family, which leads us on to the next point. It is down to us as consumers to consume less. The issue really comes down to the simple notion of supply and demand. If we want to prevent more deforestation, we must reduce the number of products we purchase. We must consume less, in general, not just those products containing palm oil. In terms of cosmetics, only purchase what you absolutely need to, and use up the products you already have. Bulk buying may be cheaper but do any of us really need ‘4 for the price of 3’ moisturisers, shampoos or body wash? Where you can, buy fresh whole food and, if possible, buy locally produced products.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!
My First eWorld – September 2017
Six months and here we are again, eWorld September 2017. I am sure that for the rest of the team at Market Dojo it felt like a bout of Deja Vu having gone for the past 6 years but for myself, this happened to be my first trade show since starting here earlier this month.
Luckily, this time around we stayed in a hotel the evening before so missed the 4am start which I believe is the traditional Market Dojo eWorld routine.
So starting the day feeling fresh at sunrise, we headed down to the QEII Centre in Westminster to set up for the day. I worked my marketing magic to make the stand look pretty great (if I do say so myself) on time for delegates arrival at 8am.
We had the privilege of being situated next to two of our close partners standsProvalido and Per Angusta.
The brilliant Claire Boffey who organises the popular event biannually, ensured all the sponsors had free bacon rolls to prepare us for the big day ahead. Unfortunately, for vegetarians like me, this meant sampling lots of chocolates from various stands which gave me the perfect opportunity to gain an insight into other competitors and procurement solutions on the market.
I think for ‘newbies’ like myself, it was interesting to see the range of people which attend the event. Not everyone is there for new opportunity it seemed, which surprised me (just there for CIPS points!) however the ones which were, showed just how applicable Market Dojo is to the market, as many procurement teams are so stuck in old ways and could benefit massively from using a tool to eSource.
The talk given by Interserve, our client for over a year now, grabbed everyone’s attention. The representatives on the day, Kevin Davies and Mandeep Chana, Spoke about changing behaviour through technology, such a popular choice of topic that the room had to be upgraded to a larger space (We hope this had nothing to do with the “free biscuits” title given in the pamphlet!)
Interserve gave an honest talk about their experience of implementing an eProcurement solution, explaining their hardships along the way with software, communication and processes. However choosing the right supplier was fundamental to their success, yep that’s right… us (MARKET DOJO) and Per Angusta.
Our prize draw for a free month licence for Market Dojo was drawn from a hat by Pierre from Per Angusta and Pete from our sales team. Our lucky winner this time, was Kunal Khanderia from Hilton Hotels.
As the day appeared to come to a close, we had some of our best conversations with people who were really keen to learn more about the world of eSourcing and also some of our other products such as category analysis. This went down very well with a glass of white wine to finish a fun first day at eWorld.
Finally! (nearly finished I promise) before heading off back to Gloucestershire, we went for my cuisine of choice, Italian at Colosseo just a 5 minute walk from the QEII centre for some real food (by that, I obviously mean pasta) before another day back at the office!
If you didn’t get the chance to come to the event or missed us for any reason and think Market Dojo could have been of interest to you, don’t hesitate to get in touch for more information or try out our free sandpit tool here!
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!The 3 Stages of Face-to-Face Negotiation
In many cases where a reverse auction can be used, we recommend that you (the buyer) reserve what is known as buyer’s choice. This means that, although the outcome of the auction is important, it is not necessarily the only factor you will consider when awarding the business.
One option you have, that we see many of our clients do, is bring the top three suppliers in to further discuss the tender opportunity. But what do you do then?
We’ve put together a guide on Face-to-Face negotiation strategy to help assist you with this. You can download the full guide for free by signing up to Market Dojo here, then clicking this link.
This can also be applied should you choose not to run an auction and go straight to the f2f stage of negotiation.
A negotiation can be broken down into three main phases:
Preparation, Discussion & Review
The discussion phase consists of three elements:
This is where you declare your objectives and opening positions. This should obviously be a position from which you are prepared to move and thus should be a relatively high, yet sensible, list of demands.
Here you will gently probe each of the negotiation issues, gaining an overall understanding of the position, without making any commitments.
This is the critical point. At the end of this phase you will either have the makings of a final agreement or negotiations will breakdown.
It is also a good time to understand what went well ,what didn’t, and what could be done next time to improve.
The guide itself was put together by the Market Dojo team, combining their 20+ years of procurement experience to bring you a true value-adding document to ramp up your negotiation skills.
For the full strategy behind face-to-face negotiations, simply register (as a host, for free) here first, then click the link to begin the download:
Face-to-face Negotiation Strategy
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!How to Save €1500 in 37 Minutes on your Next Car Purchase
This is a guest post by Vlado Prosenik from Efekto Pro. Efekto Pro are our consultancy partner in Slovenia. They help customers make purchases more efficiently.
A few months ago, I realized that it was time to replace my car. I was treating it very well; feeding it with the best fuel and oils, getting it serviced regularly, changing it’s tyres when needed, etc. It was returning my kindness with safe routes, comfort, excellent radio sound, and it was not greedy at all. We were good friends. I thought it would be upset to be sold to a new owner. However, as soon as the first potential buyer showed the money, my friend forgot about me.
Quite sad, my friend left me just because of money. I had to find a new car. Since it served me well, I wanted a new one from the same litter. Since I unfortunately hadn’t won the lottery that week (even now, I cannot understand how I didn’t win!), I started searching for the most economical way to purchase a new car.
I checked the range of vehicles to suit my needs, demands and preferences. I found six such cars. I tested all six, obtained bids and negotiated the price for all of them. Some sellers were friendly, others were professional, some were arrogant, some funny, and some were misleading. Nevertheless, all the cars were beautiful, powerful and clean. For each of them I found both positives and negatives. However, all would give me safety whilst driving and all would bring me to a desired destination at the same time. Provided there is a road to get there, of course.
I found a favourite quickly. The preferable order of the other five was also defined quite soon in my head. I was negotiating the price of my favourite very hard. I even used help of some acquaintances to come up with the best price. At a certain stage, even acquaintances were not able to help me with lowering the price. I said to myself: “That’s it.” “Unless … “ “No, stop dreaming, who will participate in an auction for one car, come on, be serious.” “However, it is not a sin if you try!”
Reverse auction! If I can run reverse auctions for my clients, why could I not run a reverse auction for my car?!
The decision was made. I ran a weighted auction, meaning the winning supplier was chosen for more than providing the cheapest price. If I had set the only criteria of price, I would most likely have not been satisfied with the winning car.
Here are the statistics from the auction:
|Participants registered on Market Dojo||18|
|Participants that accepted invitation||14|
|Qualification bids placed||11|
|Number of participants actively bidding||6|
|Total bids placed during auction||34|
|Auction duration||37 mins|
A participant who I had not contacted personally submitted the winning bid. The next day I went to meet the winning bidder and to sign the contract. They were very professional and friendly. I saved about 1500 EUR according to the best offer I have managed to negotiate before the auction. I had received the car more than one month before the promised deadline. And after a few months of driving the new car, we are getting better and better friends.
It is also interesting that quite a few unsuccessful vendors called me after the auction. They were asking which car I bought, and if they can offer the service. Not one negative comment I have received regarding the selection process. Mostly they commented that they could not give a better price and that it was good to have an opportunity to see their rank during the auction.
If I managed to run a reverse auction to purchase a car, for my own personal use (as erratic and tedious as that process can be), then surely there is great opportunity for reverse auctions to bring savings in areas where the competition between providers is developed. You just have to take it the right way!
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EFEKTO PRO d.o.o.
To help you get the most savings from your eAuctions, one of our partners, Dave Henshall, has written an article providing all the information you need to create an effective lotting strategy.
Lotting is the activity of grouping items efficiently and effectively to maximise participation in reverse auctions. How you structure your lots can have a huge effect on the overall savings achieved due to how easy/hard it is to bid in an event.
The article provides a wide breadth of information covering:
1. An Introduction to lots and lotting
2. Why Lotting is Important
3. How to Develop Your Lotting Strategy
4. Lotting strategy Summary
You can find this article in full on Purchasing Practice here.
Another public procurement price analysis article has made national headlines this week, found here on BBC News.
The Home Office conducted a study into police procurement trends across 20 common items including batons, uniforms and helmets.
I haven’t read the Home Office study in detail, but these kind of reports can err on the side of rudimentary:
Humberside bought police helmets for more than £43 each while most other forces acquired them for under £30.
This can indicate a savings potential and is undoubtedly a good place to start your evaluation for cost reduction opportunities.
However when you simply compare two purchase prices, rarely, if ever, does the analysis also delve into key contractual differences such as payment terms, rebates, catalogue pricing discounts, minimum order quantities, annual purchase volumes, inclusion of delivery costs, what delivery service levels, product warranties etc.
Then you have the question on whether the specifications are the same. Perhaps Humberside has identified a more costly product that leads to a 20% better safety record from head injuries. Might that not justify the additional cost?
There is a long perceived view that rationalisation and aggregation leads to cost reduction. For example, in the same article Policing minister Mike Penning was quoted:
“For too long the police have approached the market in a fragmented way, buying equipment in small amounts and to varying specifications.
“It makes no sense for forces to buy separately when money can be saved if they act together.”
Bigger procurement is not always better procurement
Interestingly Spend Matters UK recently re-circulated an older post of theirs outling how bigger procurement is not always better procurement. Please do have a read as it provides excellent insight that we won’t duplicate here.
What we’ve seen is that many of our clients run reverse auctions on aggregated volumes, rather than spot-purchases. They are very successful in doing so. That said, even very low value auctions of a few thousand pounds have lead to 30%+ savings, so bigger isn’t always better in our view too.
Large spend values attract large suppliers with the notion being procurement teams can exercise their leverage and use economies of scale to secure better pricing.
Lower spend values attract smaller suppliers and generally there are a lot more of them in the marketplace, which can equate to increased competition and better savings.
Perhaps the price differences seen with the police, assuming they are not associated with contractual or specification issues, are less to do with failure to aggregate demand and more to do with ineffective negotiations for their own requirements?
One step forward, two steps back
One adverse side-effect to bundling up contracts into an aggregated demand is that it diminishes competition.
Taking say £200m of spend that is today fragmented across many hundreds of suppliers and bundling it into a single contract prohibits SMEs from retaining business. As a result some may perish whilst others downsize. The large company that wins the contract swells significantly to cope with the demand whilst other large businesses (if there are any) stay as they are or also downsize from losing their portion of the fragmented spend.
Fast forward a year and the market only has one real candidate who can cater for the demand – the incumbent. This becomes a very poor market to negotiate in.
And so the cycle continues whereby it is decided to fragment the contract into smaller packages to increase competition, except this time there isn’t as much liquidity. So we’re back where we started except with worse market conditions.
Innovation triumphs over imitation
As we’ve just noted, consolidated contracts diminish competition. With less competition, there is less imperative to differentiate. There will be fewer SMEs in the market and they are typically regarded as the key source of innovation with their agility and drive to increase market share. Local police authorities will have their hands tied and won’t be able to engage with the SMEs and so those remaining will have little incentive to innovate.
Furthermore, the other suggested strategy in the BBC article was to standardise the products. This again reduces innovation, as the product spec. would be based on what already exists, not would could be. Once that spec. is agreed, the market is closed out to new ideas. This contradicts with the relatively recentreforms to the EU Procurement Directives.
So what should we do?
We should be focusing on driving the market forward and negotiating effectively within that market. A fragmented market can be your best friend, not your enemy. Procure on best value, not just best price. Don’t focus on Purchase Price Variance but on lifetime costs. Improve through innovation.
We could go on but there’s a risk we’re sounding like a Baz Luhrmann song!
Hopefully we make ourselves clear but more importantly, what do you think about this suggested police procurement strategy?
“relating to or denoting a method of pricing a service or product in which a fixed profit factor is added to the costs.”
You could argue that every item or service sold is cost plus. In other words you need to make a profit to stay in business so that everything purchased has to have a margin added to the final sale value, which will be more than the sum of their parts.
The area of cost plus that I would address is where the client has agreed to buy products or services from a supplier and the final price for those products bought is not known. This unknown value will be created from a cost plus relationship to ensure a profit is maintained.
However, if the client continues to pay, where is the incentive for the seller to ensure they are procuring the goods or services at the market price? Surely the client should be ‘on the ball’ and focus on year on year cost reductions although many times complex and varied builds on a contract prevent this. ‘Should cost’ exercises would be a useful tool in a perfect world if we all had the time but isn’t that why you are together with a trusted supplier? Surely the supplier would focus on procurement costs so their sales exercises would be more competitive? You would think so, but what if the market is not so competitive.
In fact, does the cost plus model mainly arise in non-competitive markets dominated by larger players? If this is the case you could draw the conclusion that procurement is not being driven in the right direction due to a number of unbalanced forces (cost plus, lack of competition, lack of customer focus). This bad practice could easily spiral downwards. However will increased globalism be enough to shake up these suppliers or will the customers drive better value? Either way it often seems that procurement in these type of industries can be an after thought that is of little importance. Viva la procurement revolution.
This Saturday (21st March 2015) is a very important day in the world of rugby. Not only are the final three games of the 6 Nations impending, the ball is literally in anyone’s court as the title of champion could go to one of three contenders- England, Wales or Ireland. After England smashes France in the final game (kick off 5pm), we shall be crowned victor (fingers crossed!), and I shall celebrate with a pint of cider in the pub across the road!
We British are notorious for our love of sport, as pointed out by a French intern at Market Dojo a few years ago, who wrote a blog post for us, singing the praises of the British culture in one paragraph then calling us ‘rosbeefs’ in the next! (Just kidding Camélia. We know you love England really.)
Having spent the past month becoming au fait with all things eSourcing and eAuction (like my use of the French language there?), I can’t help but draw parallels between sport and eAuctions. The thrill of watching your home team scoring a try at the deciding game of the 6 nations and the excitement of viewing a reverse auction in real time as suppliers bid on your product/service of requirement- in both results, you become a winner.
As the final gets underway, Ireland, Wales and England all have a chance at becoming victor- this really is anyone’s game to win. The same also applies to the eAuction process were all of the players (suppliers) enter the event with equal chances of winning the tender, determined by how they perform in the auction.
You can be a hero whether it’s scoring the winning goal at an all-important match, achieving the best result for your company and hosting a successful auction (or even as a supplier, winning a huge tender through an open and transparent auction process).
Hopefully England will be able to pull it out of the bag and give England that win we deserve this weekend. If they don’t, I’ll embrace my Irish heritage and cheer for them next year instead!
Competition works! But only if customers want it.
The Slovenian Consumers’ Association (ZPS) has demonstrated that a fresh approach can save money. In cooperation with external partners ZPS conducted an auction for the purchase of electricity and natural gas for households. The result was an average 21% reduction in electricity prices and a 15% reduction in the price of natural gas. 24,000 households joined the “change and save” campaign and will benefit from significant reduction in their energy bills, with the same service level they are used to.
Reverse auctions have become available to both businesses and individuals.
10 tips for creating savings with the reverse auctions:
Auctions by the EFEKTO PRO perform for our clients usually bring savings of between 10 and 40%.
Photo courtesey of tawalker
The one feature of Market Dojo that gets me most excited is the Sandpit area, where we invite you to come and experiment with Market Dojo. Everyone likes the option to try something before they buy it. It helps you feel secure and confident in your purchasing decision. It just makes sense!
A key part of our philosophy is transparency, and we already deliver this in other areas (e.g. pricing). So, we wanted to expand that to show everyone what our product can do, before they reach for their credit card.
For those lovely people that have already made the leap to become fully fledged customers, the Sandpit now offers the valuable opportunity to test different strategies before running an event, and to keep these tests separate to the results of real negotiations.
The Sandpit is a great asset for both these groups. It’s available to all our users, it’s really easy to get started using our intuitive user interface and we offer helpful guides providing additional advice. We’ve even made a video to show how it works!
Once you have your feet in the Sandpit, you can test all the features available in a regular event, including RFQ, Questionnaires, different negotiation strategies, and reporting. You can quickly switch between acting as a Host and acting as a Participant (so you see exactly what your suppliers would see).
So, if you wondered what Market Dojo is all about, but haven’t tried us yet, give our Sandpit a go. It’s free to sign up, there is no obligation. We’re really excited about it, and would love to know what you think.
Come on in and have a play!Big thanks to University of Gloucestershire Digital Film Production students!
We would like to say a massive thanks to Tea, Liz, Sanni and their lecturer Ben, all from the Digital Film Production course from University of Gloucestershire , for their time and skills in producing an excellent video for us.
For those who haven’t seen it, you can find it on our YouTube channel here: Barney – your average co-worker!
The team came up with several great concepts before bounding on with our preference of the story of Barney, your average co-worker, who is bored, frustrated and generally disillusioned with life in the purchasing office, with all the manual processes and wasted time.
However, upon a fleeting introduction to Market Dojo, he latches on to how it can transform his working life by allowing him to carry out his purchasing activities more easily and more efficiently via a web-based tool.
He quickly shares the benefits with his colleagues who are enormously grateful, resulting in him getting the recognition from his boss that he truly deserves.
It was an absolute pleasure working with the team and fantastic to celebrate the completion of the video with an enjoyable lunch out. We are really pleased with the results and look forward to hopefully working with them again.
Last month we surpassed the milestone of our first year in business. Understandably we were delighted, as we read previously that up to four-fifths of start-ups fail in their first 12 months. Yet we feel we are truly on our way to becoming an established player in this market, with a client list that is expanding rapidly. However, when we look back at how we started Market Dojo, there is one aspect that stands out when assessing what helped us reach this goal, and that is the use of cloud technology.
For those who are not familiar with cloud technology, and to admit such a thing is akin to never having watched a Star Wars film or never to have heard a Beatles song, our take on it is the use of software or an application over the web on a ‘pay per use’ or monthly basis which you can use straight away with clear benefits. Think Facebook, LinkedIn, Twitter or YouTube. No installation, no set-up costs, and in many cases no fee. If you like just think of it as the dotcom boom version 2.0, only this time it is here to stay!
When you consider any business, you will find it will most likely have office infrastructure to some extent. Such infrastructure might include a phone system, an e-mail system, a fax system, an accountancy system, a CRM system, a calendar sharing system, a data storage system, a web-hosting system, or even a customer support system. Clearly there can be a lot of systems and many of these are non-core to your business, meaning time and money spent in these areas would be detrimental to other areas of your business.
I can only imagine how much it might have cost us 15 years ago to cater for all these systems. We would probably require a receptionist for the phones, a PA to manage the CRM, an on-site accountant, a very large printed calendar, an even larger filing cabinet and a staffed front-desk for our customer support. We would then need a rather large room to host all this.
This takes me to why we are so grateful for the cloud. At Market Dojo we have embraced the best of today’s technology to turn us into a professional company, as ultimately that is what we wish to extend to our clients.
Our phone system is Skype, where you rent a phone number by the month and only pay for your usage, most of which is free. This includes video conferencing, file sharing and instant messaging for everyone in our company and gives us a global presence by allowing us to rent or cease renting international phone numbers when we like. Whilst Skype is not strictly cloud, as you do install software, you can log in across the world from any computer that has it or that you can download it to, so in many respects it is very similar.
Our CRM is Zoho. We only pay per user per month. It integrates with our other applications, including Skype, which means no repetition. Within our own software development we have the approach of “Don’t Repeat Yourself” (DRY) which any business would be wise to apply to administrative tasks as well. Zoho also caters for the customer support system on the same basis.
Data storage and sharing, calendar sharing and e-mail is all with Google Apps, which is completely free and is as robust as the google.com website, even though everything is still in beta!
Our accountancy software is Clearbooks. Again, pay per month per user. We can even add our accountant to it so that they never even need to set foot in the office, as we can upload all our receipts and invoices to Google Docs.
We don’t have any need for a fax system, but if we did there are plenty of cloud systems out there that charge per use.
And finally our web-hosting is all with an external hosting provider, secure and backed-up daily, paid monthly of course and with zero set-up costs.
The advantages that cloud technology has brought to us are simply enormous. The most obvious one is cost. If I were a sole trader, I would be able to set up and manage all of this for less than £600 a year. I would need no training and no upfront capital expenditure. To ‘house’ all of this technology, all I would require is a computer, in fact no, a smartphone. It would take me all of about 3 hours to set up and I would be happily catered for until I was running a global empire, at which point some apps might start to creak at the edges.
The main risk that companies quote for not examining the cloud as a serious solution can be easily mitigated. Data security is a major and very understandable concern. However, with such a broad choice of hosting providers on the market, you can always source a provider that offers the necessary level of data protection, whether for personal use or for the Ministry of Defence. You can also find cloud-based data back-up providers!
Another major objection is reliability. Today though, the internet is probably less likely to fail than your internal LAN and with an increasing number of companies providing networks that are dual-hosted, these risks are diminishing. In fact, you can actually end up with a more reliable solution than your own internal network. For your servers, do you have back-up generators, CCTV, a fire suppression system, 24/7 security patrols, CESG accreditation, dual-hosting and multiple internet providers? This is certainly what we look for in our hosting provider.
When you compare the old approach to starting a business and the new with all the technology that is now available to us, the two are worlds apart. You don’t need capital expenditure for office infrastructure, nor the staff to manage it, nor the space to house it. You don’t need a hardware refresh, nor have costly upgrades as you grow or as old technology becomes redundant. There is a valid question over whether you need an office at all. And best of all, you only pay for what you use.
Just like you do with us!