Feeds

SMEs slap hard cash on the IT table

But who wants to take it?

  • alert
  • submit to reddit

Reducing security risks from open source software

While IT spending at the top end of the market has stalled in the last four years as enterprises attempt to drive greater efficiencies out of the infrastructure they acquired in the late 1990s, SMEs have continued to invest in technology and related services at a steady rate.

The small and medium-sized enterprise sector has been largely ignored by the technology sector's big-hitting vendors. Software giants such as SAP and Siebel and IT services giants such as EDS and CSC are geared towards winning a relatively small number of high-value deals with Global 2,000 corporations.

IT spending from SME companies is on the rise. The largest area of investment is expected to be in IT services but spending on networking, security and storage technology is also expected to show strong growth.

Telecoms incumbent BT Group and PC giant Dell are repackaging their managed services in order to gain recurring revenue from their smaller clients, and to extend their relationship beyond basic product reselling.

IBM chief Sam Palmisano announced last year that Big Blue would invest $100m in new programs to attack the SME space, and introduced scaled-down versions of its DB2 database, WebSphere, Domino, and Tivoli products geared to enabling smaller companies to build more flexible computing environments.

BT Group has modularized its service offerings into pre-packaged components. The idea is that mid-market companies without the ability to invest in complicated contract negotiations and systems design can simply pick and choose the services they want.

BT was one of a number of major vendors in the late 1990s that failed with application service provider initiatives designed to rent enterprise-level applications to smaller companies using hosted access. SMEs did not warm to these advances as a result of concerns about pricing, security and reliability.

The IT supplier community targeting the SME sector remains hugely fragmented, particularly in areas such as IT services where local resellers and solutions VARs continue to play an important role.

Major vendors such as IBM, Dell and BT might have strong brand names and large client bases for their products among the SME sector, but selling broader range of services on top of these products will not be easy. The sales organizations at many big vendors are not geared towards selling large numbers of small deals with shorter cycles, and the packaging and pricing of their services will have to be made more flexible.

As part of its revamped strategy to target SMEs, IBM is working with its team of reseller partners to push its utility computing technology and services, and this may prove a sensible strategy. Many SME companies have strong relationships with their local VAR, and going after SME business in partnership with these companies could prove to be the best way for the big vendors to expand the client base.

Source: ComputerWire/Datamonitor

Related research: Datamonitor, "MarketWatch: Technology Annual Subscription"

Related stories

UK small.biz blows £1.5bn on useless software
Small firms to cash in on software bargain bonanza
Broadband ISPs must wise up to small.biz needs

Seven Steps to Software Security

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
Twitch rich as Google flicks $1bn hitch switch, claims snitch
Gameplay streaming biz and search king refuse to deny fresh gobble rumors
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.