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Devil's Advocate: What the big guns don't get about SMEs
Not all small organisations are created equal...

By Martin Brampton

Published: Tuesday 01 February 2005

Why do the big IT vendors appear to be having little success with smaller organisations? Martin Brampton has a few ideas...

Periodically, the large IT vendors announce to the world they are going to make new inroads into the SME or SMB markets. They even say their future prosperity depends on it. Usually, nothing much happens, until the next such announcement. Why is this?

The vendor enthusiasm for new markets is easily understood. What is harder is to figure out is what is going on in the smaller enterprise. It might seem like splitting hairs but I believe it is helpful to get our definitions clear first. Sometimes SME (small to mid-sized enterprise) and SMB (small to mid-sized business) are treated as synonymous but it is more illuminating to distinguish between them. We can do it by looking at a couple of real issues.

Software products created for the large corporate sector frequently depend for their success on acceptance by the large consultancies. The argument is not usually put so bluntly but the consultancies are constantly looking for new products that will generate substantial consultancy revenues. A couple of obvious examples are ERP and CRM.

For a number of years, the deployment of ERP systems was marked by vast projects, usually involving massive spend on consultancy services. In many cases, the result was a viable modern system in full operation. Sometimes, the result was a complete mess with huge write-offs and a lot of recriminations. Much the same has happened with CRM.

This is not to say that large corporates cannot obtain value from the major consultancies. But there is a dividing line between those organisations that feel ready to engage heavily with the consultancies. It looks to coincide roughly with the dividing line between large corporates and SMEs.

Significant steps have been made in the packaging of complex technology. You can now buy wireless networking devices that take little more skill to implement than a good sound system. Advanced storage servers are available that can be easily plugged into a network with minimal configuration.

Developments of this kind put a lot of power in the hands of those I would define as SMB. They are the small and very small companies that have no more than one IT person, or maybe even just someone who is enthusiastic about IT. They cannot achieve the depth of experience of an SME, which is larger and equipped with an IT team and a manager. That does not necessarily prevent SMBs taking advantage of sophisticated technology provided it is packaged appropriately.

Dividing the market in this way indicates how vendors must approach the market if they are really to achieve sales in the SME/SMB sector. The SME market generally has access to deeper IT skills and will look for products that can be flexibly adapted to local circumstances. But it will not tolerate products that require very large inputs of specialist effort.

By contrast, the SMB market will look for products that meet a need with minimal adaptation. Typical weaknesses in this sector confirm the diagnosis. Security is often cited as the major problem. Unfortunately security features are rarely built into products in a way that can be deployed without specialist skills and knowledge.

A clear conclusion is that for vendors it is not merely a marketing issue. Attempting to push the same products into the SME/SMB market is often not viable. Different products are needed, as are different styles of support services. Many organisations in these sectors are avid consumers of technology. The market is there but only those vendors that are prepared to adapt to its different requirements will make headway.