The SMB IT Vendor Relationship Dilemma

IT vendors have far less rapport with SMBs than with enterprise clients – putting small business at a distinct disadvantage. It’s up to the vendors to change this and reap the gain.
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When most people compare enterprise IT and the small business IT markets they generally think about size and scale. Enterprise environments are huge and small business IT often consists of just one or a few IT professionals holding a company together.

But the differences between these environments are much deeper than just size. Thinking of the small and medium business market as being small-scaled enterprises is a great way to misunderstand this market.

There are fundamental behavioral differences between these organizational types. It’s these behavioral differences that most accurately reflect the contrast between SMBs and large enterprise from an IT perspective.

One of the places in which this difference in behavior is most visible is in vendor relationships. In the enterprise space vendors act very much as a partner with the corporate IT department.

Often vendors will have dedicated representatives who spend some (or possibly all) of their time at the customer site and are available to answer questions, make contact with support, provide input and guidance. In exchange the vendor has nearly constant access to the "ears" of IT and management in order to inform them and to sway their opinion in favor of said vendor's products.

This relationship causes "the conversation" between the vendor and the "market" – as described in the groundbreaking 1999 tome "The Cluetrain Manifesto" – to take place in-person, in real-time in a way that is very effective.

When the company wants product information it simply contacts its vendor representative and that rep will provide samples, get documentation, give a presentation, organize training sessions, obtain roadmaps and more. If the products do not meet the company's needs the feedback is immediate and meaningful. The relationship is symbiotic and everyone gains from the tight communication channel.

The small business market sees none of this. The scale on which the SMB IT department operates does not allow a vendor to dedicate a sales resource, let alone a technical resource, to a single client. This one, simple difference breaks the communication channel, leaving SMB IT departments in a far different position than their enterprise counterparts.

Any conversation held between an SMB IT manager and a vendor is an ad-hoc, temporary conversation. Vendors don't see their clients as individuals but as a pool of consumers, more akin to the standard, personal consumer market.

The differences in interaction are not solely from the vendor's perspective. In the enterprise the IT department typically has resources with time to dedicate to interacting with vendor representatives. Technical support roles such as server administrators may work directly with sales and engineering resources for support issues and purchasing recommendations. Architectural professionals may use vendor representatives to assist in capacity planning, system design or to establish performance metrics.

In the SMB these dedicated internal players do not exist. The available IT resources are often overworked and spread too thinly between many different tasks.

Enterprise departments often manage to even allow regular, "in the trenches" technical staff to attend sales luncheons and other vendor-sponsored events only loosely tied to their job functions. In the SMB space this is all but unheard of.

IT Purchasing Decisions

Enterprises generally view their purchasing process in terms of services. These may include warranty services, datacenter management, software customization, hardware leases, software customization, etc. The small business market generally sees purchasing in terms of products - either hardware or software.

Small businesses think in terms of buying desktops, monitors, servers, software licenses, etc. The transactions are very simple. They purchase the same whether buying directly from their vendor, from the channel or from the local store.

Enterprises think of a server in terms of its monthly support cost and total lifespan, while SMBs simply see a price tag. This does not mean that SMBs never purchases services - only that they do so typically in a very up-front, set price sort of way. And they typically purchase far fewer services than do enterprise IT departments.

Enterprise IT environments have the distinct advantage of large-scale peer interaction, both internally and externally. IT professionals working in large environments are constantly learning about new products and technologies from their counterparts within their own organization – as well as from peers in competing organizations in their market verticals.

This gives enterprise staff an advantage in working with their vendors. They see how these vendors interact with their peers and get feedback on how other vendors in competing areas work with their clients. This creates a competitive market for vendors based on their level of service to their clients.

In small and medium business there is very little insight into these relationships at other, similar companies. SMBs naturally do not get interaction with a direct peer group. At best, they can hope for peer support groups for organizations of similar size, but even that is extremely rare. Vendor relationships with the SMB market are very much isolated from peer review and market pressures.

SMB IT professionals seldom get a chance to attend industry events like their enterprise counterparts either. This provides fewer opportunities for SMBs to learn about vendors with whom they don’t already have a relationship. This is very beneficial to big vendors like HP, Dell, IBM and Microsoft who need no introduction to any IT professional. But smaller vendors, new vendors and niche vendors will often find it hard to make SMBs aware of their existence – let alone find an opportunity to discuss their products directly with them.


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Tags: Microsoft, IBM, SMB, Dell, HP


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