Every IT provider wants a piece of the small and medium-sized business (SMB) sector these days. But the ever-changing nature of this highly competitive market means that resellers which are serious about success must perform a balancing act between their own capabilities and what customers actually want.
Small and medium-sized businesses (SMBs) remain the lifeblood of many vendors and channel players, especially in the Middle East where the SMB sector is typically thought to account for as much as 60% of overall IT spend.
Indeed, research cited by accounting software vendor Sage in 2009 suggests the value of the regional SMB market is now close to US$10 billion a year and could come to represent up to 80% of businesses by 2011.
The pertinence of this budding market sector means it is also heavily fought over by vendors and their partners alike, especially as SMBs are renowned for buying through both the consumer and commercial channels to satisfy their IT appetites.
As technology becomes increasingly important to the way in which SMBs operate, the resellers in the Middle East face the challenge of adapting their sales strategies and keeping up with the offerings that are needed to properly cater to such entities.
There are some specific points that the channel needs to bear in mind when targeting SMBs, suggests Prajit Arakkal, director of SMB and distribution sales for emerging markets at security software vendor Symantec.“In many ways, small businesses are similar to their large enterprise counterparts,” he said. “They invest a tremendous amount of time, money and resources to make their businesses successful. Like them, they need to ensure business continuity even in the wake of a disaster. However, they are working with fewer resources and every dollar and hour counts.”
Symantec, like many other brands, has already gone down the route of developing exclusive programmes to drive SMB sales. Last year it launched a ‘small business specialisation’, which offers dedicated tools and support to resellers that are qualified at silver level or above on its partner programme. Benefits include a volume rebate of up to 3% and access to marketing development funds for small business products.
Networking behemoth Cisco is also doing its part to give resellers every chance of succeeding in the SMB market. It has developed a series of SMB sales initiatives, one of which is the ‘Select’ certification programme. In the UAE alone it has more than 500 VARs covering the SMB segment and 120 of them are certified on the programme.
Claire Jones, SMB regional sales manager for the UAE at Cisco, says investments are largely being channelled into partners, technology and support. “These three pillars of Cisco’s small business strategy will help companies with fewer than 100 employees gain a competitive advantage and enable the channel partners that serve them to build profitable, sustainable small business practices,” she explained.
A year ago Cisco even created a ‘small business council’, underscoring its belief that it can realise US$10 billion in revenues from the global small business market, particularly now that it operates combined channel programmes for its Cisco and Linksys product lines.
Perhaps one reason why the appetite for SMB growth remains so strong among vendors is the resilience that the sector has shown during the downturn. Although SMBs have been under the same pressures as any other tier of the market, there is a perception that they haven’t been hit as badly as the large corporate organisations.Youssef El Arif, national account manager at PC accessories and connectivity vendor Belkin, agrees. “We don’t really feel that the SMB performance was greatly affected by the global credit crunch,” he reflected. “ICT channels are moving full steam ahead and with Belkin introducing a number of new innovative products last year, there were quite a few offerings in the market place for SMBs to get their teeth into.”
Not everybody shares the view that the SMB market weathered the storm, however. Jamal Maraqa, managing director at Apple products and accessories reseller Pro Technology, insists the SMB sector was “one of the most affected”. This was reflected in the number of companies that reduced their IT budgets or delayed projects, he says: “Because many of them don’t follow long-term plans and attempt to do business on a day-to-day basis based on the information available at the time, those parties appeared to be scared about what the future was hiding.”
Whatever the consensus on the SMB sector’s ability to navigate the downturn, there is widespread hope among the channel that 2010 will mark the return to a more stable and predictable buying environment.
The big question, then, is how the channel actually goes about addressing the SMB market and giving it the specialist attention it warrants. Just what does an SMB want from their preferred supplier or IT provider?
For Hewlett-Packard — one of the largest IT suppliers to the SMB space — there are four factors that are important to SMB customers aside from the price: specialisation, training, service capabilities and product availability.
KV Narayanan, distribution manager for HP’s Middle East business, insists service opportunities are in abundance because they represent an asset that SMBs build at the time of purchase but which depreciate over a timeframe of three years.“During this period they would want to ensure that their investment is safeguarded in terms of any troubleshooting that they will have to do or any upgrading, so services become a very critical tool,” he explained. “Service warranty is another very important aspect. Today we have certain products which give you extended warranty with the HP Care Pack services, and we see the SMB looking at these elements along with the product offerings and cost of ownership.”
Symantec’s Arakkal believes it is important for resellers to understand that when they are serving SMB customers, it is fundamental to cultivate the relationship beyond just a transactional level.
“SMBs have specific needs and require a special focus from resellers equipped with the skillset to address and solve the pain points of SMB customers,” explained Arakkal. “Gaining confidence from end-customers and being perceived as ‘trusted advisors’ is the challenge for most resellers operating in the SMB space,” he added.
Cisco carried out research two years ago that explored the priorities of SMBs. While some of the views may have altered slightly given the economic turmoil that has happened in between, it still provides a fascinating insight into the psyche of small businesses.
For a start, the research revealed that the top three IT priorities of small businesses were equipment upgrades, web presence and data storage — a clear indication of the ongoing need for robust infrastructure and the desire to create a compelling customer interface.
In addition, SMBs rated price, product quality, quality of service and support, ease of installation and ease of use as the top five attributes that drove their decision to make a technology purchase.The majority of small businesses surveyed by Cisco also said they regarded brand reputation as more important than low prices, a revealing disclosure for any reseller that might be wondering how important it is to align with manufacturers that hold some sort of brand sway with SMB users.
Cisco’s Jones takes it a step further and points out that there is a clear distinction between the needs of SMBs and those of more conventional enterprise customers. SMBs care about things such as value, reliability and accessible support, she says, while enterprises place more emphasis on features, technology and deep technical support.
“We see a very good long-term opportunity as these companies embrace the internet in their businesses,” revealed Jones. “History also shows that small businesses innovate at a higher rate and recover from periods of economic downturn faster than their larger counterparts,” she said.
It seems certain that the channel can expect vendors to develop more activities aimed at helping partners address the SMB segment this year — and that is exactly what is called for, according to Maraqa at Pro Technology.
“We are always asking vendors to provide offers and packages that are targeting the SMB as you cannot deal with it as you do with large enterprises or even the consumer,” he commented. “The products should be presented in a proper way, whether the vendor is coming from a consumer background or large enterprise background, and the messages should be clear and suitable to them. Training resellers and systems integrators on how to address this sector of the market is also important, especially as these issues are usually a source of much confusion.”
HP partners can certainly anticipate more assistance when it comes to landing new SMB accounts, with the PC and printing vendor promising access to dedicated sales resources and staff. “One of the major focus areas of our Preferred Partner Programme is the SMB,” revealed Narayanan. “Through this programme we are able to drive specialisation and solution-selling or the virtualisation concepts that are coming into this space.”
The last word goes to Belkin’s El Arif, who accepts that success in the SMB sector boils down to how capable vendors are of galvanising their channel partners. “Vendors are ultimately responsible for further assisting in the profitability of their retailers and distributors by not only producing innovative products that meet customers’ needs, but by creating campaigns to educate customers and initiate and influence buying habits.”For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.