The Math Behind Getting Fast Business Internet Access

November 24, 2014 Michael Smith

network cables and hub closeup with fiber optical

In the last 15 years, I’ve sat in front of thousands of IT Directors and Systems Administrators of companies and discussed whether or not they should spend more money for a faster Fiber Internet connection or a back-up Internet connection for their company.  They always want it but they almost always say its management that doesn’t want to pay any more than they’re currently spending.

Although I’ve heard this many times, I’m going to tell you a secret…  I’ve NEVER had the guts to tell you my 100% honest opinion, face-to-face, in fear that you will think I am “talking down to you.”  People take a lot of pride in their decision making and in a one-on-one scenario, a “stupid salesperson” like me can easily tick off an IT Director if I’m telling him/her how to make decisions.  In those moments, I am always willing to bite my tongue, keep the relationship strong and let the person do whatever they felt was right for their company.

But TODAY, I’m coming clean. I’m going to tell you what I think because it’s not aimed at one person, so you can’t take it personally.

As a business owner myself (who is cutting payroll checks), I can tell you this decision is ridiculously simple and it’s an easy math equation.

Fifteen years ago, when I was working as a salesperson for XO Communications, they taught us that in order to know if a client is a good fit for a T1 line vs. DSL, the $1,000 question (literally), was “Will your business lose money if your Internet connection goes down?”

Today, that is an absurd question.  Nearly every employee in your company uses your Internet connection, every minute of every day to do their job.  If your Internet connection is fast, they will do more work in less time.  If it is slow, they will do less work.  If it goes down, employees lose a ton, if not all of their efficiency.  I would argue that the Internet connectivity is tied with a computer for the MOST ESSENTIAL ITEM an employee needs to do their job properly.

So to figure out if you should pay for a faster Fiber, Business-Grade Internet connection or a back-up Wireless Connection, etc., you simply have to do some math.

How many employees do you have?  Let’s say 100 for easy math.  Let’s also assume that your current Internet connection is costing you $1,000/month and employees are complaining it’s too slow.  Rule of thumb is that you need to at least double your Internet speed to actually notice a difference, so let’s assume you’re considering upgrading to a $2,000/month connection for 3x the speed (to make absolute sure your employees have plenty of speed).

In reality, you are looking at the decision of whether or not you should pay $10/employee or $20/employee.  Would management be willing to increase the pay of each employee $10/month if it would result in more work getting done?  OF COURSE THEY WOULD. I can guarantee that if you explain it like that to your management team, they won’t blink an eye.  That is speaking their language.

On a similar note, you can also do the math in the other direction and see how much you are paying in lost efficiency from a slow Internet connection.  If your average payroll is $40k/year, you are paying $333,333/month in payroll.  If your employees are even 1% less efficient with a slow Internet connection, you are losing $3,333/month in efficiency, so you paying $1,000/month for a faster Internet connection will increase your profit ($3,333 – 1,000 = $2,333/month profit).

You can do the same math if you are looking for a back-up Internet connection, based on how much efficiency your company is losing per hour of Internet downtime.  Based on the same situation above, you would lose $1,923/hour of downtime if your employees cannot properly function without an Internet connection.  Not to mention opportunity cost of any business is lost resulting from the outage.

Much of business is basic math and many businesses fail because they are not looking at the math.  This is how I see it but I’m always surprised at how few companies see it this way.

Am I wrong?  What do you think about my opinion?

About the Authormikesmith
Mike Smith is the Founder and President of AeroCom and has been immersed in the business telecom and cloud industry since 1999. He has been the recipient of numerous industry awards and in 2011, he was honored as one of the top 40 business people in Orange County, CA., under 40 years old. Mike is passionate about simplifying the way IT buyers shop and select telecom and cloud solutions for their company. Follow Mike on LinkedInTwitter or SpiceWorks.

 

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