The IT industry needs to recognise the power of SMBs

Small- to medium-sized businesses (SMBs) make up the rump of British business. Some 99% of UK companies employ fewer than 250 people and together they account for the largest proportion of gross national product. Unfortunately for them, they have tended to get something of a bum deal when it comes to technology.

Small- to medium-sized businesses (SMBs) make up the rump of British business. Some 99% of UK companies employ fewer than 250 people and together they account for the largest proportion of gross national product. Unfortunately for them, they have tended to get something of a bum deal when it comes to technology.

Manufacturers and resellers have long courted big corporates, leaving everyone else to struggle through a welter of information on competing products and technologies pretty much unaided.

Unused to handling the many and varied demands of small business and spooked by having to deal with technology virgins rather than dedicated IT specialists, they have offered SMBs scaled down versions of kit popular with the big boys, sold them unsuitable or overcomplicated systems that they lacked the expertise to maintain, or left them to their own devices. In addition to this, after sales service has become an oxymoron when it comes to SMBs, as many feel they are treated like second-class citizens.

The result, unsurprisingly, is that SMBs feel let down by the IT industry and a significant proportion of them have failed to exploit technological advances that could help them to improve their business performance.

That said, there's money to be made from them and lots of it, given the right approach. Total European investment in IT is predicted to rise from £43bn in 2002 to £62bn this year, according to Datamonitor.

Recent research commissioned by Cisco highlighted many of the same areas of concern thrown up by previous studies. The survey of 400 British SMBs employing 10 to 250 people confirmed that 42% feel left in the lurch after buying technology thanks to insufficient after sales support or training. The second largest issue, which affected 41% of SMBs, was having enterprise scale technology imposed on them rather than being offered products that were tailored to their size.

"The thing that concerned us was that SMBs didn't have a trusted advisor that they could turn to when they are looking to purchase information technology and communications technology," says Steve Frost, market manager for Cisco SMB solutions in the UK and Ireland.

"The ideal combination is a local presence -¬¬ and most small businesses need someone that is on the doorstep - with the back-up of a big brand to provide the knowledge and support, and therefore that comfort factor and peace of mind. It typically hasn't been available to small companies to any wide degree and where it has, they haven't necessarily been aware of it.

"There hasn't really been the education and awareness of the options for a small business, so where do they turn? Who do they go to?," Frost continues. "The solutions haven't been there. It is down to the industry to provide that combination of local presence and national or global brand and to create tailored solutions for SMBs and then to tell them about it."

Frost refuses to point the finger of blame for this situation in any particular direction, but reading between the lines it would appear that both manufacturers and their channel partners are at fault.

He observes, "Clearly another role of ours is to re-educate channel partners to see the opportunity [for SMBs] as well. The survey unearthed some concerns and it is our role to make sure that we can address those fair and square.

"We feel that the efforts we are making to train and support local IT and communications technology partners will help to at least to give these small- to medium-sized customers somewhere to turn when they want to make buying decisions."
One of the other concerns highlighted by the research is that more than one in 10 small business leaders rely on gut feeling rather than a structured, informed approach to IT investment.

"The survey showed gut feeling was one of the main steps in the buying process, which clearly isn't the right way to go," Frost says.

"Rather than going through a formal process of selecting the best product, the best support, the best service, it is very often just an instinctive reaction based on a personal recommendation from a friend or business colleague, which obviously isn't always the best recommendation.

"They haven't really been shown a better way to make these purchases," he continues. "It is almost a consumer mentality: you want to make a purchase but you don't have the buying power or pulling power of a large organisation, so you tend to default to looking on the internet or even looking in the Yellow Pages for a local company. That means there is an element of pot luck in that decision process."

What's more, SMBs buy in a very disjointed way. They buy products rather than solutions and in some instances elements rather than products. Frost explains, "They say 'I need a PBX' and they'll go to a local reseller who may have been chosen on personal recommendation and [buy the] PBX in stock.

"They need a Lan so they go to a local IT reseller for it. I don't think they will be aware of whether the product is best of breed or just lowest price. That stems from the fact that most SMBs are not aware that there may be other options, better options. Rather than buying a PBX, a Lan and a router, why not buy a single solution that does the whole thing?"

Making SMBs aware of what's on offer then is a priority, but that involves a whole new set of challenges for manufacturers and resellers used to dealing with IT professionals. According to the research, 36% of small businesses don't have an IT manager, and IT management is left to either the business owner (17%), the managing director (15%) or the finance department (12%).

These people are time poor with limited attention spans for geek speak and a fair degree of cynicism when it comes to being sold to. They don't want flashy presentations, lengthy written proposals or a series of meetings - they don't have time - and they are suspicious of firms that have been previously corporate-focussed and have suddenly seen the SMB light and now want to devote themselves to the little guy.

"The best way to approach companies that really don't get this is to show them examples of companies that are succeeding and [how their investment in technology is] making an impact on the bottom line, whether it is cost savings or increased sales," Frost says.

"The industry needs to take a more consultative approach, looking at a business requirement and matching a solution to it. If we have been through a process of understanding [an SMB's] customers, its supply chain and so on, we can then create a solution with a proven business case and often a proven payback - hard benefits that can be quantified on the balance sheet."

Cisco has amassed case studies and success stories from SMBs in various sectors. "There's great value in being able to see fellow businesses - be it companies of the same size or in the same sector - having done something. It mitigates the risk; it proves that it is a safe thing to do. You show an early adopter that's succeeded and as you move into mass market other businesses follow and gain the same benefits," Frost says.

"The case study and reference approach is very successful."

To back up that approach the company also has a set of online tools to "lead [SMBs] through a road map and show them the business benefits with their own organisation".

The Cisco survey wasn't all doom and gloom - far from it. A large number of small businesses are investing in high performance advanced technologies. Some 92% have bought into high-speed broadband internet connection, 52% have invested in information storage and 29% have embraced Voice over IP (VoIP).

Asked how they'd spend a £20,000 windfall, 37% said servers, 34% wanted PCs for staff, and 25% voted for VoIP. Only 10% said they'd spend it on office space and furniture and just 2% said company cars.

In addition the survey demonstrated a high degree of confidence in IT among SMBs. For instance, 77% said it improved customer service, 76% cited improved productivity and 45% saw technology as enabling them to compete on a level playing field with competitors.

"We see an opportunity. New technology - VoIP, IP communications - has been adopted by large corporates en masse over the last two or three years and we're now taking that same story about additional productivity and cost savings to SMBs. The technologies are now mature and the right size for SMBs so there is absolutely no reason why they shouldn't be deploying it and enjoying the benefits," Frost says.

"It is time now to start looking at the positives and benefits of IP technology; to go beyond the basics and look at how it can benefit SMBs and their customers."

The more SMBs can be encouraged to exploit technological advances the better it is for the British economy. The challenge remains convincing them that manufacturers and resellers genuinely understand the idiosyncratic nature of small business and the demands that puts upon them and their technology requirements.

Read more on IT for small and medium-sized enterprises (SME)

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