Will small businesses be a step too far for industrialised IT services?

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In my meeting with Computacenter's managing director, Simon Walsh, last week he told me that the small of SME was not worth supplying. He described these as companies with less than 750 staff.

He said he could not find a business model to serve them.

So strongly did he believe in this he stopped serving them completely.

The SME sector is very fragmented and service provider overheads rack up trying to service lots of customers with vastly different requirements. No one size fits all.

But 750 users seems a bit high to give up on. Surely if you can build an industrialised service in the cloud you could make good revenue and profit from it. If industrialised services are going to account for 30% of the market by 2015 I would have thought some sub 750 employee companies would take them up.

Some service providers are actively targeting the SME. Although when they say SME they could mean anything from a one man band to a large household name.

Today Computacenter, which reported revenue of about £2.5bn in Europe last year, has a model that goes like this:

1 - Small businesses are not targeted at all.

"If you are a small company you probably have a couple of jack of all trade IT staff and you do not want to get rid of them." So the savings on staff costs are non existent.

2 - Medium sized businesses are offered full service outsourcing.

Large service providers are moving into the mid sized business sector because the massive full service outsourcing contracts are drying up. But he says companies like Computacenter have an advantage here. "The big suppliers are credible in this space but if you talk to any customer they say they are a small fish in a big pool when working with big suppliers."

3 - Large enterprises are offered individual services or point products within a multi-sourced environment

With the reduction of mega deals and the increasing use of multi-sourcing this makes sense.

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This page contains a single entry by Karl Flinders published on October 5, 2010 7:20 AM.

Oracle and HP Bed Hopping - A Modern Tragedy was the previous entry in this blog.

Could HP appointments mean less focus on services? is the next entry in this blog.

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