How to approach the little guy

The small enterprise market is seen by many vendors as small money but this is clearly not the case FOR ABOUT SIX years, information technology research firm Gartner has been looking at the way technology companies target small and medium-sized enterprises (SMEs). The results are interesting. Gartner analyst Mika Yamamoto Krammer last month published a paper on the problems technology vendors faced when targeting this group. The technology giants are not all equal in the way they approach the SME market. Some such as Microsoft and IBM have been at it for a long time, others are just beginning to realise it is a market. 'Significant cultural shifts are taking place among companies, such as IBM, Microsoft and SAP, to address the needs of this constituency, resulting in notable progress in the SMB [small to medium-sized businesses] market. Others, such as Cisco, HP and Sun, are still defining their SMB strategies and offerings,' Ms Krammer said. In the past, most vendors have seen two clearly defined markets - large firms that spend millions on IT and personal computer buyers. The SMEs have been somewhat lost. Most technology companies have not targeted them and, according to Gartner, are not even aware of how to approach them. But it is a big market. When SMEs buy hardware and software, they do it differently. Ms Krammer said: 'Commoditised items such as PCs and servers are purchased differently and require different support frameworks than, for example, networking. Business application software cannot be successfully sold. [You need to apply] infrastructure software best practices and channels.' It can be difficult for salesmen to concentrate on SMEs because an individual deal is not going to be as lucrative to him or his company. Some vendors, Cisco, for example, have managed to achieve a better balance. 'Of course, high-touch service cannot be offered to every client, but a balance must be struck. Maintaining too many routes to market produces diminishing returns. Cisco realised this several years ago when it cut its partner base in half but grew revenue,' she said. When engineers and other technical people are not involved in handling customers, the vendor runs the risk of allowing the marketing people to control the relationship and that is rarely a good idea. Small businesses may not have the same clout as large ones but they are perfectly aware of when they are being taken care of and when they are mere targets for marketing campaigns. If that happens, it can be difficult to manage the expectations of the customer. 'Often, the details behind deployment services and assistance, and post-purchase support are not well established, leaving channel partners and end-users with expectations that are not met and frustration. This type of plan is often the brainchild of marketing executives and rarely involves the necessary engineering and product development parties to really make it work,' she said. Ms Krammer said it could be dangerous for vendors to promise too much, especially when they knew they could not deliver. It is a common enough practice to tell customers about future products to keep their business, but it is not a good idea to promise products or services that will probably not see the light of day. 'Setting realistic expectations and delighting customers and channel partners by meeting these expectations should be priorities. A childhood lesson still applies: Don't make a promise you can't or won't keep,' she said. Large companies often see 'bleeding edge' technology as a way to get ahead of the competition. They know they will be spending a lot of money on IT, so they attempt to spend it on technologies that are likely to give them an advantage over the competition. Smaller companies usually do not think this way. '[Because of] the conservative nature of the typical SME. it is extremely difficult to sell new concepts. The product might be perfectly designed and priced but, until there is a sufficient ecosystem to support it, the majority of SMEs will not invest. This is a principal contributing factor to the delay in bleeding-edge technology adoption within this constituency,' she said. Many Hong Kong companies use only the most basic computing systems, often with little networking. They rarely have someone who is dedicated to handling IT. For the most part, they will buy hardware or software when they think they need it. Many seem to think they are saving money by not getting professional help. Often, however, they pay for it in the long term. Sadly the IT vendors do not help much. They often want a lot of money for services the small businessman does not fully understand. The result is that vendors miss out on a large market they could be selling to and technology adoption by SMEs is slow. Mistakes vendors make in the SME market Believing that: 'If we build it, they will come'. Driving too hard for sales volume. Creating partnerships based solely on marketing. Lacking conviction in the go-to-market approach. Over-promising and under-delivering. Failing to create an identity and relationship in the market. Being too product focused against investing in the ecosystem. Source: Gartner