IDC: How to capture SME business
- 09 June, 1999 13:05
It might be becoming something of a clich, but the adage "small business means big bucks" gained a vote of support from an IDC report released last week.
The IT industry is still, however, largely ignorant of what small businesses want and how the industry can make money from those needs.
Commenting on the performance of IT suppliers in the small business arena, Gianco Melcarne, a market analyst with IDC Australia, claims "nearly 40 per cent of respondents were seriously dissatisfied".
That equals a lot of missed opportunities for resellers, with 41 per cent of small businesses expecting to increase overall IT spending this year by up to 22 per cent.
"We investigated what SMEs look for in suppliers and discovered that quality of service, technical expertise, speed of delivery, transfer of knowledge and skills, and low prices are what they expect. Suppliers are meeting cost expectations and have a good knowledge of a business's needs but in the areas that small businesses rated as more important suppliers are falling down," Melcarne said.
However, resellers ARN spoke to deny the survey results accurately reflected working in the small business market. "To some degree resellers get what they pay for," said Ryan Parker, general manager computer division for Queensland reseller Future Group. "The industry has identified that SMEs want everything cheap, including services. At the moment we are still tackling how we can provide SMEs with services and still make a profit ourselves."
Ryan Nelson, sales manager for Perth reseller JH Computers, agreed that small businesses can be exacting. "SMEs demand a lot more attention than any of our other clients - when they get a bill for $30Ð$50,000 they want a lot to show for it. Yet some of the gripes small businesses have are their own responsibility. They come to us with problems they can't define and expect us to fix them," Nelson said.
Melcarne, however, disagreed that price is the deciding factor for a small business's choice of supplier. "The message was clear that quality of service was more important than price. As long as the service is good, small businesses don't mind paying."
Nelson suggests that both small businesses and resellers should accept some culpability in the current scenario. "A lot of small businesses have been ripped off by small resellers who bring in clones. By not putting in tier-one equipment there is no fallback to suppliers and customers get left out in the cold. A good reseller will provide lever-age back to the vendor." Nelson suggests that small businesses should research potential resellers and IT suppliers before trusting them. "Go for value, not pure cost," he recommended.
Despite the unique and often arduous process of looking after a small business, Nelson recognised the opportunities available.
"In the end it is generally worth the effort because small business makes up about 20 per cent of our business. Admittedly though, we have walked away from a customer before because we recognised that they would be too difficult," Nelson said.
According to Melcarne, the report identified two areas of opportunity for resellers in the small business market. "Firstly, a high percentage of small businesses are still implementing intranets and extranets and will need help with their infrastructure.
"Secondly, businesses that have already created their infrastructure and are in the process of implementing advanced solutions will need help from suppliers in areas such as customer relationship management and e-business," Melcarne said.