Small Firms Loom Large

By Scot Petersen  |  Posted 2006-05-25

Small enterprises beware, the tech giants are after you. Having companies such as IBM interested in your small enterprise is at once flattering and intimidating. But its also an opportunity for your company to have more choice, more bargaining power and better technology at a lower price—if IT managers play their cards right.

Its easy to know what a large enterprise looks like. You know it when you see it. But try to define what constitutes a small or midmarket enterprise, and you will get as many answers as there are customers.

Whether the threshold measurement is revenue or employees, the way that IT vendors pigeonhole their customers—ranking them as large enterprises or midmarket companies—may be quite different from the way in which those very customers see themselves. This disconnect in perception can lead to a more serious disconnect: Vendors may misjudge customer needs for hardware, software and services, pitching them the wrong package at the wrong price.

However they are defined, enterprises-that-are-not-large are being wooed by the tech giants as never before. Vendors such as IBM, Oracle, Microsoft, Accenture and Sun Microsystems are going after enterprises-that-are-not-large in search of revenue not to be had from the relatively stagnant large-enterprise market.

Perhaps the most actively focused on the small enterprise is the industrys largest vendor, IBM, which has done well to increase its profit in recent quarters but is finding it hard to generate new revenue among the largest buyers. Thus, IBM is tailoring a plethora of offerings for small enterprises, including a recently unveiled line of blade servers and a pair of small mainframes.

We applaud these down-market efforts but caution vendors to have a solid plan in place and tailor products and services specifically for the needs of the small enterprise. Many vendors dont have much of a plan for small and midsize businesses and instead offer "light" or stripped-down versions of their high-end products.

In addition, superficial distinctions among the sizes of enterprises also expose the lack of scalability in many vendors products. Rather than draw an arbitrary line between which products are for large businesses and which are for small businesses, vendors should engineer products that can scale up or down to meet the needs of different customers.

Theres much at stake for the large technology vendors here. In going after smaller customers, they must not forget their own large customers. They need to execute on all fronts and not neglect innovation, support and the large enterprises special needs.

Theres much at stake for small enterprise customers as well. If they are disciplined, they wont waste time with a vendor that doesnt approach them on their own terms with the appropriate packaging and pricing. Small enterprises need IT systems that do not require a room full of consultants to install and run. They need to take the systems out of the box, turn them on and have them work.

Tell us what you think at eWeeks Editorial Board consists of Jason Brooks, Larry Dignan, Stan Gibson, David Morgenstern and Scot Petersen.

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