Putting together an SMB strategy

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This article appeared in the 15th October, 2007 issue of CRN magazine.

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Putting together an SMB strategy
The SMB space has traditionally been the lifeblood of the reseller community. It is the channel’s stable and the place resellers have always had home advantage.

IDC estimates there are 825,597 Australian SMBs, which represents 99.8 percent of all businesses. These businesses constitute 63 percent of revenue and 59 percent of employees nationwide.

To ignore or fail to utilise such a vast market would be tantamount to owning a bar next to the MCG and only selling non-alcoholic cocktails – a missed opportunity.

What is an SMB?
However, the definition of an SMB depends on who you ask. IDC classes an Australian SMB as having between one and 499 employees.

“IBM defines SMB as a 1,000 seats and under, Gartner says 500 and under and the Bureau of Statistics is under 99 seats,” said Lisa Youlden, IBM business manager at Ingram Micro. “We tend to treat the opportunity in terms of the amount of support the reseller needs.”

Angus Jones, marketing manager for servers and storage at HP, said the vendor classifies SMB as 100 users or less.

Yasien Adams, director of SMB reseller Vertebral Solutions, said, “Generally we consider SMB to be less than 250 users and our focus lies in that range.”

Vendor scramble
Channel deployment is closely aligned with vendor focus. You will struggle to find a top tier vendor who has not acknowledged the opportunity in SMB and joined the scramble to gain market share in the vast space.

Sam Gerner, director of operations for commercial sales in A/NZ at Cisco, said, “We see SMB as a major part of our growth. We have doubled our investment in our SMB team over the last 18 months.”

Andrew Baker, director of global business partners at IBM A/NZ, said, “IBM sees SMBs as the single most important market opportunity. We are pulling people and investment together to go for the SMB market primarily through our business partners.”

Baker said IBM provides training to partners on a quarterly basis in five sites across Australia, to ensure they have the skills to work in the SMB space.

“All companies, regardless of size, focus on cash flow. This is particularly true for SMBs, so one of the things we offer is our IBM Global Financing Business,” added Baker.

Greg Boyle, medium business marketing manager at Trend Micro, said most vendors and resellers have acknowledged that the SMB space is a growing segment of the market.

“We have grown by four staff this year in our SMB team and have also been growing channel support and direct demand generation, which we push through the channel.”

Boyle stressed that vendors cannot simply repackage an enterprise solution at a lower price and sell it to the SMB.

“Vendors need to tailor their solution, while resellers need to understand the business drivers of the market and how they can assist the business,” added Boyle.

Michael Reidy, general manager of SME at SAP A/NZ, said, “When it comes to technology, SMBs require something that is easy to use and has industrial capabilities for their specific industry. SMBs need to work with experienced channel partners that have expertise in their specific industry and understand their business needs.”

Reidy commented that due to the limited resources of SMBs, they often make their purchasing decisions based on proof of success, so testimonials from other SMBs influence their decisions.

“SMBs want to know that they are getting a return on their investment when they invest in technology,” he said.

“SAP is very focused on channel strategy. We don’t pretend to know every industry intricately, but we do strategically partner with resellers that specialise in specific industries that our customers operate in and these partners can service our SMB customers.”

Reidy said SMBs need specialised solutions tailored to their needs, so it is important for resellers to focus on a particular industry and be capable of servicing that industry well.

“I think that if a reseller can partner with a vendor that is committed to their businesses success, then together they can secure some strong customer relationships.”

SAP has developed SAP Business One and SAP All-In-One software suites for the SMB market and some of its channel partners are delivering these software packages to SMB customers.

“The SAP Business One Sales Academy is an SAP led initiative to attract, train and deploy SAP Business One qualified sales professionals into its ecosystem of Australian channel partners,” added Reidy.

Neville James, channels and marketing manager at Nortel A/NZ, said, “The SMB market is very important to Nortel.

“It’s a fast expanding market, with double digit growth.”

James explained there are a lot of SMBs looking for a one-stop shop and the really good SMB resellers are the ones cross-skilling their staff and employing one or two real application specialists.

“I can’t see the SMB market slowing down. Everything suggests the economy is going to grow over the coming year and the SMB market will be the engine for that – it’s certainly going to be our focus in the coming years,” he added.

Nortel recently expanded its relationship with LAN Systems, making the firm its SMB focused distribution partner.

Distributor involvement
Leigh Howard, national sales manager at LAN Systems, said at the time, “Nortel and LAN Systems have enjoyed a long and successful business relationship over the years. Our SMB resellers have always looked to us to provide leadership in the technology solutions they use to grow their businesses.”

Youlden at distributor Ingram Micro said of the space, “We are seeing strong growth in the SMB sector, people are seeing the value of transiting into new technology and SMBs are seeing IT investment as important.

“I think the exciting thing is that the growth is consistent and we have the space covered at Ingram. I think the growth will continue, we are not just seeing peaks and troughs.”

Youlden said SMBs are looking for a trusted brand, ease of implementation, and scalability to support growth.

“The advice I would give to a reseller is hard to generalise, but building relationships with key vendors who support the market is essential. SMB is where the growth is and IBM is heavily moving into this space, alongside other vendors, even the ones who had previously been operating at the higher end,” added Youlden.

Reseller focus
Chris Jenney, group general manager for SMB at Commander, said, “The Australian small business market is being increasingly targeted by IT and communications providers with a wide range of technology, products and services. Every day there seems to be a new technology or product on offer. This is very confusing to small businesses.”

Jenney commented that in the past small businesses had a simple decision between which phone system, which fixed wire provider, which mobile provider, which internet provider and which local IT company they should use.

“Now there are thousands of potential technologies, products, services and options from a vast range of different providers; ranging from telcos, ISPs, retailers, resellers, dealers, IT vendors, online suppliers, office equipment suppliers, service organisations and system integrators,” he said.

For a small business, investing in technology is a big risk, according to Jenney.

“When they invest in technology how do they ensure they do not spend too much on it? How do they ensure that they get real business benefit from it?

“For most small businesses, they would prefer to focus on their core business and not have to become an expert on choosing, setting up and managing all this technology. This is the real challenge for small business,” he said.

Commander operates a national network of 40 franchises called Commander Centres, which are small local businesses providing technology to other small businesses across Australia. A Commander Centre is a local advisor helping local business through technology choices. They provide consultancy on the best technology and provide the ongoing service and support to small businesses in their territory.

Jenney recommended that resellers looking to operate in the SMB market should keep it simple.

“It is very easy to look at technology from a vendor or reseller point of view instead of a small business view. Most small business needs help through the complex technology choices, they need trusted local advisors,” he added.

Yasien Adams at Vertebral Solutions, said, “What we deliver is everything an SMB would require. As far as their IT arm is concerned, they rely on us totally. We provide the ongoing support and the whole management side.

“We have a partnership with Telstra to provide high-speed, business-grade broadband, Sophos to protect against threats, ISPhone for SIP trucking and the VoIP side, and our new Cisco partnership to deliver a specific products covering Unified Communications. We also have partnerships with Microsoft, IBM and HP.”

Adams said people have known about VoIP for a while, but SMBs were not ready. They are aware of the real benefits, but do not know how to deploy it.

“On the telephony services side and how people spend in that area, it is a 50/50 split between VoIP and traditional telephony. In five years time, it will be 80 percent VoIP enabled, making it a half a billon dollar industry,” Adams remarked.

“The main thing resellers need to do when selling to SMBs is consider that small businesses need to be able to trust you, so don’t push customers too hard. Try and keep it simple so they understand, and highlight the benefits to the business.”

This Planet is a Sybase-certified reseller with a strong customer base in the small business market in Australia and New Zealand – currently about 50.

“The SMB space is the market we choose to play in,” said Deborah Williams, chief executive officer of This Planet. “Typically you find the corporate end is cluttered with everyone going for the gold baubles at the top of the tree. The SMB market is growing with new entries all the time. They are such passionate and energetic people set of people to work with.”

Williams said This Planet’s customers have built their business and need software that understands their business and enables them to grow their business without adding new staff on the administration side.

The opportunity in the SMB marketplace has been acknowledged by every corner of the channel. The key to success is ensuring that resellers, who are the ‘feet on the street’ for the SMB space, have the technology and skills on hand to milk the SMB cash cow.
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