Wednesday, September 12, 2007

"Big money in small business"

Vancouver-based Backbone magazine has a great article on the challenges facing technology vendors selling to the SMB market.

Author Gail Balfour sets the tone by noting that 97% of all firms in Canada are small- and medium-sized businesses. Vendors such as IBM, Dell, HP and Cisco covet the market, but as Balfour notes, for a long time “even the vendor pitches targeting SMBs amounted to little more than a product tweak and a revamped marketing message.”

But this is slowly changing, says Carmi Levy, senior vp, strategic consulting, with Toronto-based AR Communications. “You cannot underestimate the importance of the small- and medium-sized enterprise. Vendors are starting to realize that there’s real money in providing proper support to SMBs.”

Why so much interest in small business? As Levy notes, Internet technologies are making it easier for smaller companies to compete with big competitors, creating a growing market for tech applications. However, big companies have to learn how to service smaller firms.

Among the challenges noted by Chris Ellsay of Ottawa-based
* SMB customers demand 24/7 tech support, and on a much more intimate level than enterprise clients
* Often they don’t have a dedicated IT person or staff, and are sometimes not very tech savvy.
* SMBs are price sensitive.

Sellers can’t simply downsize a larger product offering and expect SMBs to buy it, says Levy. Vendors need to build packages of products and services from the ground up. Levy says typical SMB customers are driven by “consumer thinking” and emotional impact, not by the “harder-nosed” enterprise attitude.

One more point: Don't think your brand power is going to crack open the SMB vault and keep you there. Changing brands is much easier to do in small biz, says Jayanth Angl of Info-Tech Research Group in London, Ont. “If a [competing] company is going to give them a better solution, [SMBs] are in a much better position to make that shift, whereas in a very large enterprise that is just not as likely.”

That also means that one negative experience can push SMBs to change vendors. “They base the decision more on emotion,” writes Balfour, “and their smaller size allows them to migrate to a new product without much pain or downtime.”

For more on this subject, and how Dell and HP are responding to this market, see the original story at

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