Profile: Jerry Thompson, BT Business will make more from software than broadband

Within two years BT Business will be making more from selling software services than monthly broadband connection fees. In fact, its figures suggest it could be making three to four times as much per user by selling software as the connection it runs across.

That is the bold prediction of Jerry Thompson, Director of Products and Online at BT Business who believes that ISPs are going to have to start making money from what is consumed down their pipes rather than just provide ever-increasing speed and capacity for somebody else to profit from.

Today he is announcing an accountancy software package, from Xero, which BT Business customers will be able to add to their broadband package for £19 per month. It joins a handful of Software as a Service (SaaS) or ‘cloud’ packages, including the very well known Salesforce and Sugar CRM services which BT Business is now making available to its customers.

“You only have to do the maths, with broadband packages starting as low as £12 per month these software services are going to generate more revenue for BT Business than the broadband connections themselves in a year, possibly two,” he says.

“We’re not there yet, but we’re really not that far off and we actually think that the average revenue per user for software could be three to four times the cost of their broadband connection. It tends to the small and medium businesses that are taking up the value added services more than larger companies. I think they appreciate the way that software in the cloud means they get a service which is set up and ready for them to use straight away and updates are automatic. Crucially, it’s designed to be intuitive to use, you don’t have to be technical. SMEs find that really attractive.”

From connection to service

Born in Malta (due to his father being in the military) and then raised in Dorset, Thompson spent many years working for IBM in America before returning to Dorset to work for BT for the past 12 years, pushing IT services to its business customers.

Since moving to BT the widespread availability of broadband has allowed small businesses to flourish as well as empower workers from any size of company to work from home, paving the way for the communications company to move in to becoming a channel partner for business software hosted in the cloud. These packages used to involve a hefty upfront expense and often needed to be installed by experts and then staff would have a steep learning curve to get used to a package’s features. Hence many SMEs just have not bothered in the past but are now more likely to be interested in renting access to powerful software for a monthly fee.

“We know there’s a huge gap in the market for SMEs that’s opened up by software services that are hosted on the net,” Thompson adds.

“Take the accountancy package we’re launching. Most SMEs rely on word documents and a few spreadsheets but for £19 a month they can now have a proper system that links invoices to accounts receivable so companies can manage their cash flow professionally. That’s obviously a huge issue at the moment.

“While experts have normally heard of Salesforce or Sugar, most companies have not and they’re really surprised at how they can manage customer relationships over the web. One of our most popular packages is a simple digital signature package which gives companies assurance that a document has been signed by them as well as the intended recipient so it’s legally binding.”

New business case for speed

While Thompson believes the recent BT Business announcement that customers can renew their contracts and receive a free upgrade to ADSL2 (up to 24Mb), he understands the frustration of businesses that cannot get such fast connections – in fact, the upgrade on offer is only available for 40% of its 1m business broadband customers.

“I understand peoples’ feelings about broadband as I’ve lived in places in Dorset that have great broadband as well as those which are slower,” he says.

“All I can say is the technology is constantly improving and we’re working hard to get at least 2Mb to the vast majority of locations. It makes me reflect on some of the feedback we got just a few years ago when people thought there was little point going above half a meg, they couldn’t see what it would be used for. Now, though, we’re rolling out 24Mb, so we’ve come a long way within just the past few years.”

In fact, it is now in BT’s interest to roll out fast net connections to as many potential business customers as possible, Thompson points out, because the more companies get used to faster, reliable broadband, the more likely they are to buy additional software services from BT Business. With the ISP expecting to make three to four times more per customer through these services than the connection itself, there is a newly-found compelling business case for BT Business to roll out ADSL2 that goes way beyond providing customers with increased speed alone.

Tags: ADSL2+, BT, BT Business, cloud, Jerry Thompson, SaaS, Salesforce, SME, Sugar, Xero