The SMB IT Vendor Relationship Dilemma: Page 2

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SMBs also suffer from not having industry publications and other vertical resources available to them in most cases. SMB IT managers may use general resources from the IT field such as technology publications and online magazines to investigate what others in their peer group are doing, but targeted materials designed specifically for their technology needs are rare if not non-existent.

Enterprise customers typically purchase products strategically. This purchasing may be driven by a desire for datacenter consolidation, power reduction, features, easing administrative burdens, market pricing advantages and more. Careful cost analysis will often cause them to buy opportunistically and a tightly coupled vendor relationship helps to enable this.

SMBs, on the contrary, are typically tactical (demand-driven). They purchase new products when the old are no longer serviceable, no longer meeting demand, no longer supported or when additional capacity is needed. They will seldom buy when market pressures make purchasing most advantageous but will do so quite suddenly with relatively little research leading up to the point of spending.

The SMB market is very likely to be keenly aware of the bottom line of any purchase. This seems obvious but in the enterprise space there is normally much more room for a technical specialist to ask for features that carry extra cost because they simply feel confident that they will be beneficial.

Enterprises are often more likely to trust the hunches of their technical staff and to pay for "soft benefits" that are not easily quantifiable. With SMBs, if a feature does not meet a clear requirement or provide a rather certain return on investment then they will typically opt for the lower priced option.

IT Pricing

Enterprise customers typically negotiate a blanket discount rate that applies to everything they purchase from their vendor. Getting pricing on new products or price comparing many products is easy. Very easy. Pricing for the enterprise is quite transparent, making it very simple to do cost analysis on one solution over another.

In the SMB market, prices are generally negotiated on a purchase-by-purchase basis. Because of this SMB IT departments usually have only a very general idea of the price differences between two different solutions - especially if those products come from two different vendors.

Gathering enough data to do a large cost analysis study is both time prohibitive and ineffectual. SMB IT managers cannot simply go to a single web site and look up many different discounted prices and do a quick comparison of many different products, which puts them a strategic disadvantage over their enterprise counterparts.

SMBs Playing Catch Up

These differences presents a key question: how are vendors and SMB customers going to overcome their natural barriers?

There is no simple answer. Both vendors and small business IT managers need to be aware of how vendors and their customers behave and think so that they can begin moving toward each other in a meaningful way. But this is only the first step.

Vendors need to have dedicated small and medium business representatives who specialize in the needs of this market. These need to be professionals who have truly studied the market and understand how very small and moderately small businesses behave, what products are generally in use, what their architectures normally look like and more.

Vendors often think that SMB IT managers spend their day thinking about ERP, CRM, rapid disaster recovery planning and datacenter consolidation problems as do enterprise CIOs. But, in fact, most are concerned with desktop management, virtualization, basic security and maybe even purchasing their very first server!

Vendors need empathy with the small business market in order to service it well. Even vendors with amazing products that are perfect for this market often fail to inform their potential customers on when these products may make sense for them or may lack the ability to support them in the optimal configurations.

Most important, vendors need to find a way to join the conversation (as put forth in "The Cluetrain Manifesto"). In the enterprise space the conversation takes place inside the organization as well as in peer groups and conferences. It is everywhere and finding it is simple. Small businesses struggle with joining the conversation themselves - mostly because they cannot always find it. But it is there.

A perfect example of where this conversation is beginning to emerge is in online technology social media platforms like the Spiceworks Community. This online community includes hundreds of thousands of small and medium business IT professionals and managers. They’re engaged in ongoing discussions on everything from low level technical problems and architecture concerns to product selection and vendor relationship management.

A few progressive vendors have joined the community and are interfacing with their customers and potential customers in a mode that, in many ways, mimics the behavior found in the enterprise. Suddenly vendors and customers have an opportunity for personal interaction and open dialogue.

Through this conversation between vendors and customers there is a real opportunity for vendors to learn about the needs and desires of their customers, interact with customer peers, share resources and, most importantly, simply have an open discussion where concerns and needs can be exposed and addressed.

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Tags: Microsoft, IBM, SMB, Dell, HP

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