Microsoft and Sage Software, two leaders in the segment, said many giants have tried to come down market before, but their attempts to rework their enterprise products and channel program to fit small business needs just havent worked.
"If you look at the likes of Oracle or SAP or IBM, their ambition is to come down market because they are running out of opportunity at the higher end of market," said Michael Park, corporate vice president of U.S. SMB at Microsoft. "So they are taking their big concrete and trying to whittle down to a smaller scale."
Oracle this week announced two new initiatives to improve its relationship with VARs who serve the "small" part of the SMB space. First, the company said it would allow these companies to resell a subset of its products without first joining its partner program and incurring the fees that go along with that. Second, it is offering one-click ordering for that subset of products to streamline the purchase process.
"I dont see a strategy here. I see some tactics to try to get into the small end of space," said Park. "What I read from that is that their direct selling efforts and partner program have been ineffective in the SMB space. What they are doing now is to find more effective mechanisms to get more of Oracle footprint into the smaller end of market."
Recasting enterprise products isnt the way to win over small businesses, according to Taylor MacDonald, chief channel and strategy officer for Sage Software, the North American business of United Kingdom-based The Sage Group. Sage offers many software titles geared specifically for the SMB space, including Peachtree for accounting and ACT for customer relationship management.
"Theres a fallacy about small businesses—that they are like big businesses only smaller," said MacDonald, who joined Sage nearly 10 years ago. Previously he was owner of the companys largest solution provider partner. "Most small businesses stay small. Its a tough nut to crack if you are a company that is used to serving the Fortune 500."
Oracles recent moves dont surprise the channel veteran.
"Its a tactic," he said. "They think there is some low hanging fruit that they can pick off. The SMB marketplace has been littered with large companies that come down market. But they dont bring the right mix of products and services at the right price delivered by the right types of people."
Small businesses are looking for a combination of things from their dealers, and they are not what you might expect, Taylor said. They are looking for qualities such as empathy for the challenges of small businesses, domain expertise, an understanding of their business model and the right price points.
Microsofts Park also has a formula for success in the SMB space.
"To be successful in SMB you have to have great products aimed at the customers in the space, and you have to have great partners to drive solutions to these customers," he said. "When you are talking about mid-market, these guys have the same business requirements as enterprise but they dont have hundreds of IT staff and thousands of dollars to spend. They have to be much more practical in their decision making."