Walk the talk

The inability of larger players to effectively tackle most of the SMB market means there’s plenty of opportunity for smaller resellers. ARN chats to a couple about their strategies for success.

Running a small business has never been easy; it needs time, emotional, financial and physical commitment that many find overwhelming. The hours are long, the pace of progress is often frustrating and the results can be mixed.

Small businesses of less than 20 people constitute the largest employer group, according to the Australian Bureau of Statistics (providing about 3.6 million jobs) and represent 30 per cent of the country's economic activity. There are 1.88 million small businesses (including sole operators) spread across the nation and 80 per cent of these are connected to the Internet.

In fact, IT plays a central role in running many of these small businesses (and is sometimes the source of frustration). But while traditionally focused on hardware to solve their ills, there's a nascent interest in services.

"I think, and I have seen it in terms of spending, a small business environment is really spending a lot on hardware," IDC research manager IT spending, Jean-Marc Annonier, said. "A little bit on software as well but the services component is very small compared to the mid-market and enterprise spaces.

"It's mostly because nothing is properly designed for them in terms of services. The challenge they are facing is that they do have some business and IT requirements to deliver by using their IT platforms but, at the same time, they are left with hardware and software and they don't get much advice from the IT vendor community."

While there are some businesses doing a good job, SMBs need a lot of help and are just not getting it, Annonier said. As part of this, he pointed to materials issued by vendors that show charts and graphs highlighting different specifi cations and features.

"The business owners just don't care about this, all they want is the service and for somebody to actually do this for them," he said. "But at this stage unless you have a good managed service provider [MSP] you are not getting that sort of service in a small business environment.

"We are at the beginning of the next stage in deploying IT services within the small business environment. The big guys are not interested at all and, although there are a few good franchise models, the whole coverage is not happening yet. I think there's a lot of progress to be made there."

To get a fully managed service model that includes offerings like those touted for cloud computing there is a long way to go in Australia, especially considering the limitations imposed by the national broadband network.

"We don't have it yet, that is why this strong debate is raging," Annonier said. "We are behind. We are behind Europe; we are way behind Korea in terms of speed. So unless you get the proper network to deploy those services then you are stuck with a distributed computing model. You need to have a server on site; you need to have the applications."

Many observers suggest this state of affairs is a primary factor holding small businesses back through time wasting and capital outlay.

"I think a large number of SMBs are doing a good job of managing their IT to some extent, but I've seen some cases where it's a miracle they have things running," Annonier said.

Although the big boys don't often play the SMB game, there are countless small IT resellers and service providers that are taking the field. As these companies face the same challenges other small businesses do, it gives them an opportunity to lead by example, or walk the talk.

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Learning curve

South Australia-based IT reseller, Calvert Technologies, has been around for 13 years. Focusing predominantly on networking infrastructure for the business to business space, it's currently experiencing a growth phase and has added a couple of extra staff to its team. Despite the current economic climate, business is good.

"The number one thing driving that [growth] is that I'm learning more; I'm learning more about things I didn't know before and how to do things better," managing director, Dean Calvert, said. "One of the ways I learn more is to get out there in the community. I go to conferences; I talk to other business owners."

In contrast to some other resellers, who are often uncomfortable discussing business with competing small businesses, Calvert advocates getting out there and talking to people at partner summits, conferences and even general business seminars.

"Everybody has pretty much got the same secrets. If they're honest with themselves, they'll realise that what they're doing is pretty much the same as what Joe Blow is doing down the other end of the road," Calvert said. "I've been a big advocate of getting out there and talking to others."

He is also a supporter of the 'walking your own talk' approach and uses the products he sells. For example, the Calvert team has been using a wiki built with Microsoft SharePoint to collaborate before taking the concept to customers.

"I don't like putting anything into a customer site that we haven't had our hands dirty with," he said.

Calvert acknowledges many of the challenges he faces are the same as his clients, so it's important to practise what he preaches.

"It's not unique to IT but cash flow certainly becomes a problem," he said. "Finding and keeping the right people, and measuring their progress, are also challenges."

Like many small business owners, Calvert said he doesn't have sufficient time to spend on staff management. As a result, he's taken on a technical services coordinator to help improve the situation.

He's also put in place a business, finance and IT plan - something many small businesses neglect to do. In fact, Calvert noted many businesses put their IT plans ahead of business outcomes to their own detriment. For example, purchasing cheap printers as demand arises rather than planning for the future and considering consumable costs.

In addition to advising greater planning, Calvert recommends small IT resellers focus on their core competencies, partner with counterparts to access more clients and consider developing a managed services approach.

"We've invested in the tools and back-end infrastructure to be able to provide managed services to our customers," he said. "This is a fair investment but you need to look at where the business is going in the long term and get the right tools in there."

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National Presence

Business is booming for Sydney-based systems integrator, Total Computer Technology (TCT). Over the last six months, the company's engineer headcount has doubled to 10 and expansion into the Melbourne and Brisbane markets is being considered.

"We've had five record months out of six," managing director, Robert Brown, said. "We tend to do things differently. Our marketing is different, we do telemarketing, and we're actively out there pursing opportunities. Most of our growth has come from new business [customers]."

Brown claims reinforcing the NSW business, combined with expansion into other east coast cities, is essential to avoid the TCT business shrinking.

"It's important to have national coverage," he noted. "We have good relationships with people now but it's important to have your own bodies on the ground. They take better ownership and ownership is the key."

TCT, founded in 1997, takes a solutions-based approach to the market and focuses on building close relationships with customers to obtain the sought-after 'trusted advisor' mantle.

"We work with our clients on a strategic plan. We don't just turn up and sell something today and walk away," Brown said. "We have a roadmap for the next two years with most of our clients and that helps us budget for them, and also for us. We can plan our engineering time and avoid the surprises of having to spend X amount of dollars."

While facing the same cash flow and recruitment issues as other small businesses, Brown prefers to take a proactive approach, which includes employing engineers in advance of forecast growth periods. The company also subscribes to the walk the talk philosophy.

"At the first level we run most products in-house and do the testing here," Brown said.

TCT uses the Clearswift Web and email filtering technology it sells to clients within its own operations, for example. The company upgrades software on its own array of computers to see how the changes work before handing them over to clients. According to Brown, this helps TCT achieve the trusted advisor position.

"I think it comes back to using the technology you recommend," he said.

In fact, some clients visit the TCT office to check out how technologies work; a practice encouraged by the company.

"That gives people confidence that you're not just talking the talk. There's a comfort level associated with seeing that we use these technologies ourselves."

Growing Strong

In spite of inflationary pressures and a general economic malaise seeping out of the US, there are many examples of small IT resellers in Australia that are flourishing. Both Calvert Technologies and TCT show that although running a small business is tough, doing the right things within your own organisation provides a better platform from which to help clients with their IT and business goals.

Indeed, as small IT resellers face the same challenges as other small businesses, and big players continue to neglect the SMB space, there's an opportunity to walk the talk and snap up plenty of new business.