Sophisticated technology systems can often be too expensive for the SME market, but there are many alternative strategies smaller companies can employ, says Yvette Essen.
For wealthy companies, the adage "money makes the world go round" may have an element of truth - huge corporate firms know that money buys options, particularly in terms of developing technology.
In the past, CGNU has held multi-million-pound contracts with IBM Solutions to run software and websites. Other companies, such as Brokersoft, have provided advanced programmes giving up-to-date insurance quotes.
These more extravagant solutions are often too expensive for small to medium enterprises (SMEs). But they know that remaining outside the internet playing field can place them at a serious disadvantage. What can they do to remain in the game?
Atrium, a smaller Lloyd's managing agency, has worked out a compromise. The syndicate (609) offers total loss only (TLO) reinsurance through its website tlo-online.com. Clients can approach the underwriter directly, without the use of a broker, and receive a quote within hours.
Richard Young, underwriting assistant for Atrium, says: "Our website has only been going for a year and it has surpassed our expectations.
"The responses are faster, there is a certainty that the underwriter gets the information and our accounting procedures are simplified."
To keep the website cost-effective, Atrium has tried to keep it simple and functional, without complicated graphics.
Holman Insurance Brokers is another smaller enterprise that has had to evaluate the importance of the internet for its business.
Managing director Andrew Holman says: "We are very interested in web technology but we don't envisage selling a lot through the internet, so our corporate website is just to let clients see contact information.
"Instead, we have developed a web-based administration scheme between us, brokers, insurers and loss adjusters. Companies can tap into a secure safe system where we will take care of all their details like debiting."
Asset Underwriting is taking a similar approach. It has dipped into its funds to install an efficient internal system. The Novus package is designed for the insurance and reinsurance industry and enables the company to work more efficiently.
Business development director James Trusselle says: "We paid a huge portion of our capital for a programme. There were cheaper ones, but we considered it an investment.
"You've got to offer quick responses and services to the market. Many companies would find it very hard to survive otherwise."
However, technology comes at a cost. Morning Data, that installed the back-office system charges £10,000 to install a basic version of Novus, plus £16,000 for a year's maintenance and development.
A growing number of internet organisations, though, are now catering for smaller brokers, intermediaries and insurance companies.
Technology firm Cincom has seen business from the SME market double in the past year. Director of professional services Najib Hasnain says: "It is definitely a niche area. SMEs are finding it a struggle to maintain margins because there is so much competition."
He says there are a number of ways they can survive in the market - without breaking the piggy bank. One such method is through "data warehousing", where a customer's current and historical details are stored and made available by the touch of a button.
"You can use this information to identify trends for buying, particularly when it comes to marketing products," says Hasnain.
Another good method of targeting customers is by the use of electronic customer relations management (ECRM), which enables a company to identify profitable customers.
Installing an intranet is another option. An internal website helps link up the front and back-offices, says Hasnain. "No paper is required and the integration of sales people, product developers and suppliers is also beneficial."
Fighting the battle
Communications agency BV Group believes there are other cost-effective ways to attract new business. E-marketing is one solution. A company can buy advertising space on a newsletter that is emailed out regularly to potential clients.
Derek Nicholson, head of interactive at BV Group, says: "By doing this, it is possible to gain kudos of the company you are advertising with. Sponsorship can cost from as little as £1,000.
"Alternatively buy a list of email addresses of targeted people with particular characteristics. If the software is in place, it can cost from £500 and the list can be used again."
The smaller and medium companies at the end of the market may find themselves on an unlevelled battleground. But there are ways to survive and ammunition needn't be costly.