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What about SMBs? Opportunities ahead

This article appears in the issue May 2007, [Vol 16, Issue 5]

IT spending for the small- to medium-sized business (SMB) sector should grow by more than 8 percent this year, but not all vendors are poised to serve the market. At least that’s the view of Ray Boggs, VP of SMB research for IDC, in a new report.

He points to a healthier worldwide economy as one of the forces behind the SMB market, making it ripe for IT investment. Further, he says, vendors are assembling programs and products specifically for SMBs, and manufacturing is targeting more partners with experience in the sector.


So, things would appear to be aligning themselves nicely to serve the market. Not so fast, Boggs says, because plenty of vendors have yet to implement the specific strategies to serve SMBs. Boggs says, “There’s a natural tendency for vendors to ‘de-feature’ expensive stuff and make it cheap so as not to cannibalize their enterprise business.” Further, Boggs says, vendors are making a mistake by over simplifying their SMB offerings. Often, the opposite it true; the technology needs to be smarter, IDC says.

Despite the improving global economy, energy costs are high, which will force SMBs to find different, more efficient ways of doing business—less travel and increased use of communication tools such as e-mail, telephone and video conferencing, Boggs reports. On the other hand, energy costs could chew up profits that could be spent on IT. Nevertheless, SMBs can take advantage of the drop in networking and broadband costs, and that could well lead to investments in security and storage.

One would think that the trend of using software-as-a-service (SaaS) would be an ideal opportunity for SMBs, but Boggs’ report found that to be far from the case. “From a high-concept, theoretical perspective, there was a remarkable lack of interest (in SaaS). That falls within the SMB tradition of, ‘I want to own it, pay for it and abuse the daylights out of it,’” he says. In fact, when
respondents were asked about the SaaS model, only two percent said they got their software in that way. Boggs’ advice for SaaS providers and resellers? “You don’t want to force the customer into a religious conversion. You need to show them the problem and how they can solve it efficiently and affordably.” 


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