Small and medium businesses (SMBs) in 2004 might be inclined to declare that it’s good to be the king.
The king of IT customers, that is. There’s a sudden awareness by many vendors and service providers that there exists a huge untapped market of business customers in Canada, made up of companies and organizations with less than 500 employees. A market that has been typically ignored by enterprise IT players, particularly when it comes to services. SMB is a particularly compelling opportunity for those that have subsisted on the big-dollar engagements of large business.
But these days it seems a whole lot tougher to compete for dollars in the large-business space, where vendors more often look to shift spending dollars rather than grow new business.
So SMB is the new frontier. Most major IT vendors have targeted the SMB customer as a primary focuses for business growth as they seek to pull out of the IT doldrums.
A number of IT vendors have already mapped out plans of attack for SMB. Both Hewlett-Packard and Sun Microsystems late last year unveiled product and partner strategies for SMB success, focusing on integrated, simple-to-deploy business/IT solutions. Others for whom SMB is new ground are likewise following.
Networking giant Cisco Systems during its February Partner Summit in Hawaii declared in no uncertain terms its intention be among the leading players here. Cisco CEO John Chambers is betting that the SMB space is a key to driving his company back to its lofty heights, saying that it is the SMB rather than large enterprise that will move the industry to better days. Smaller businesses are the more frequent IT buyers, says Chambers.
Cisco is setting the wheels in motion to parlay its large-enterprise dominance into the SMB space. Expect to see a whole lot of activity.
From a marketing standpoint, you’ll hearing a lot more branding noise from Cisco in three key SMB business segments: those with between 250 and 999 employees, those with between 100 and 249 employees and those companies with less than 100 employees. Cisco intends to develop and sell products that address the specific communication needs of these respective customer segments and with a focus on value achieved through improved business productivity — enabled, of course, by Cisco’s network infrastructure equipment.
It was revealed that the consumer Linksys brand, a connectivity product set purchased by Cisco last year, would be used to penetrate the small business and SOHO (small office/home office) markets. Cisco says it will invest in generating greater retail demand for Linksys products in Canada and other regions, on the heels of success already achieved by similar efforts done in the United States.
To bridge the gap between SOHO and SMB, the functional features of some Cisco-branded products will be extended further down to the SMB space, so that there will exist a clear transition path from lower-function Linksys gear to high-function Cisco products, specifically targeting those SMBs that need the capability.
Success in SMB means price performance and simplicity, and from Cisco’s perspective this will be delivered in “solutions,” which combine applications/processes with infrastructure hardware in form factors that can be more easily configured and managed by less technically savvy customers.
It was revealed that the duo of Cisco and Microsoft are intent on helping SMB customers “understand and absorb new technologies.” These are being delivered in “bundled” integrated solutions, the first of which will include: Cisco’s small business IP communications solution integrated with Microsoft’s CRM solutions and sold as a total package.
To help ensure the SMB customer feels a regal as those large enterprise folks, Cisco is also looking to cultivate a community of SMB-specialized resellers. Cisco plans to share its “intellectual capital” with these partners through programs such as Partner Consultive Support, which provides proven tools and deployment kits developed through and leveraged from Cisco’s previous successful engagements. Cisco will develop a set of best practices in partner developed solutions and services focused on voice, wireless, security, optical and storage. The expected end result is a community of highly skilled IT solution providers specialized in serving SMB.
The work ahead in building meaningful SMB products and solutions, as well as this adept partner community, is a monumental task. The question was asked: will Cisco be in the SMB for the long haul or will the company bail out if short-term success isn’t realized? Cisco is, after all, a company largely focused on larger enterprise customers. Paul Mountford, the company’s worldwide vice-president of channels, emphatically declared SMB a long-term effort and that Cisco plans to stick around.
SMB is largely untapped, particularly from an IT services perspective. The rules of engagement in the large enterprise, where big volumes of gear and even larger value-add delivered in rich customized services, do not apply in the SMB. In the latter space, deals are typically much smaller, but the base of potential buyers is much, much larger. Success in SMB demands different selling strategies, where it simply isn’t practical to spend as much time and effort on individual deals.
However, SMB customers still demand a level of individual care and seek vendors who understand their business requirements.
The stated objective of Cisco and other IT vendors is to figure it all out. From the perspective of SMB customers — a group that accounts for more than 99% of business in Canada — such effort should result in some royal treatment.
