SMBs Basking in IT Industry Attention

 
 
By John Pallatto  |  Posted 2005-07-13
 
 
 
IT companies frequently talk as if the small and midsize business market they are all competing to serve is some newly discovered continent that is theirs to conquer.

But the fact is that companies like IBM, Hewlett-Packard, Sun Microsystems, Computer Associates, Microsoft, Oracle, SAP and a host of others have been selling hardware or software to SMBs for virtually as long as they have been in business. For more than 40 years IBM has been selling everything from Selectric typewriters to midrange computers the size of kitchen stoves to any SMB willing to pay for them.

These days they all put out press releases touting how much of the SMB market they command to impress the world with just how SMB-friendly they truly are.

What is really happening is that since the post-2001 IT recession, the industry has realized that most large enterprises have already modernized their computer systems and implemented high-end ERP (enterprise resource planning) suites and accounting, financial management, CRM (customer relationship management), sales automation and even manufacturing systems.

These companies are now spending money on incremental and strategic technology acquisitions aimed at solving specific business pain points or to fix headaches caused by their original ERP implementations.

The industry views SMBs as fertile ground not just because they make up a huge portion of the national economy. The SMB market is attractive because it hasnt been saturated with sales of ERP systems. This is mainly because it used to be SMBs and frequently the vendors themselves assumed that such big-ticket items were financially and technically out of their league. In many cases they were right.

Click here to read IBMs decision to market a version of its Informix Express relational database with automated installation features designed for small and midsize businesses.

But thats not true anymore: Enterprise IT vendors are now packaging and pricing their products to put them in reach of SMBs. They are also partnering with local and regional resellers and systems integrators to help SMBs select, configure and deploy enterprise information systems. Such support is a given because the majority of SMBs dont have the in-house IT resources normally required to deploy and maintain ERP applications.

The advent of hosted application services has also made it easier for SMBs to gain access to enterprise systems without making huge upfront investments in hardware and software. Its possible, perhaps even likely, that hosted services will become the preferred way for SMBs to deploy ERP systems.

Half the risk in deploying enterprise-scale software is the customization and application development thats usually required to get a major system up and running. Many a rich and prosperous corporation has seen its bottom line take a hit from ERP deployments that were badly planned, over budget, impossibly late and ultimately total failures that had to be replaced at huge expense.

SMBs shouldnt be expected to relearn the same painful lessons that large enterprises faced when they deployed their latest ERP systems. Plus, SMBs have more at stake because the failure of such a major IT project could conceivably send them into bankruptcy. That is why the IT industry has an obligation to reduce the risks to SMB customers if they are going to focus their sales efforts in this market.

Software companies have been trying to make their products easier to deploy with less of the customization and software development required to get a new system up and running. But it still takes months to set up the latest hosted application services. The industry still has a long way to go before it can offer true turnkey ERP systems that an SMB could install with a few CD-ROMs.

The migration of enterprise-scale applications into the SBM market will stall if customers cannot be confident that they will get a high-power system that works as promised at a price that they can afford to pay.

And software and hardware vendors cant take a "one size fits all" approach to the SMB market by slapping together a few basic application and server packages and letting the customers fend for themselves.

Click here to read why SMBs can be overwhelmed by the sheer selection of enterprise applications the software industry is marketing to them.

If anything, the SMB market is even more diverse and complicated than the large-enterprise market. If an SMB is willing to spend significant money for an enterprise-grade information system, the organization should get one that is actually tailored for its needs and market requirements.

SMB customers have a right to expect the IT industry to understand their needs as well as it understands the needs of the large enterprise customers.

John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at john_pallatto@ziffdavis.com.

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