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The SMB hype cycle

'Here we go again'

Confidence to invest therefore comes from two main sources - obvious market acceptance of whatever is being proposed (at a brand, product and/or solution category level) or a clear ability for the supplier, typically a reseller or dealer, to provide solid and predictable services.

On the whole, SMB-focused resellers and dealers in the channel fall into line with this mindset. Most know from experience that trying to drive unfamiliar ideas, products and technologies into their customer base before general market acceptance can be very challenging from a commercial perspective. The average cost of sale is high as a result of both the low initial conversion rates and the extra skills/effort needed to educate and evangelise during the sales cycle.

There is then the disincentive that if they do invest in educating the market, there is a limited time to reap the rewards before competitors step in to capitalise on all of their good work.

This underlines the stark contrast in motivation between vendors and the channel, with the latter certainly not sharing the former’s sense of passion and urgency to push out new solutions in advance of the market beginning to pull.

SMB-savvy vendors appreciate these channel concerns and realities, and further realise that the proposition to the channel is at least as important as the proposition to the end customer. When you look at their channel development programmes, they encompass elements that take full account of the need for motivation, training and various types of support, including marketing.

There is an underlying assumption that it takes patience, persistence and long-term investment to build the critical mass required for sustainable success with new offerings. Cisco's well thought out and supportive approach to working with partners to create the SMB market for unified communications over the coming years is a good example of this.

The less savvy vendors are relatively easy to spot. They are the ones who expect to sign up armies of resellers for their new downsized or repackaged product with a view to getting rich quickly in SMB through brute force. This is a recipe for failure and a source of potential grief for customers who run the risk of ending up with half-baked solutions based on crude repackaging of enterprise level applications backed up with half-hearted support arrangements.

That's why, as a customer, it is always worth spending some time qualifying the level of commitment the vendor has to servicing the needs of smaller businesses, especially for more strategic purchases. If whoever is fronting the sale cannot give convincing answers to questions on implementation and support for a company like yours, then beware.

Meanwhile, we must not forget that most IT procurements in the small business space are actually quite dull and boring as SMEs purchase commodity or low complexity kit and software on a piecemeal basis as part of the routine maintenance and everyday growth of IT systems - a PC here, a server there.

So, let's not fall into the trap of focusing on the latest bleeding-edge ideas and "strategic" procurements. In the real world, SMEs are collectively spending huge sums every hour on things resellers and dealers know how to sell and support. The opportunity for vendors is therefore significant, but only if they approach the market in the right way.

Copyright © 2006, IT-Analysis.com

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