SMBs want better than "dumbed-down" solutions

For a long time it has been an under serviced technology market, but SMBs are where the next great set of opportunities lie for IT vendors and suppliers - but as the battle for the so-called mid-market heats up, the days of simply providing "dumbed-down" enterprise solutions are over.

Today, vendors looking to grab a meaningful share of mid-market and SMB spend will have to understand the specific needs of this market segment and provide relevant solutions, says Patricia Martins, manager of SAP Africa's SMB division.

"SMBs want what big businesses want - an affordable, simple and powerful solution that meets their specific business needs," says Martins.

"They need applications that are quick to implement, easy to use and that build on existing infrastructure. They want a trusted advisor that focuses on delivering a real value. And they want it priced right and functional out of the box."

The IDC defines SMBs as independent enterprises with total assets of less than R30m, turnover less than R50m and less than 100 employees.

Still, it's a market with immense opportunities. It is estimated that SMBs will contribute some 35% of South Africa's GDP within the next 10 to 15 years, and depending on which analysts you ask, the SMB technology market will grow between 25% and 35% per year until 2006.

Major IT vendors have already spotted the potential revenue stream, and companies like SAP, IBM, Microsoft and Sun Microsystems are frantically retooling enterprise hardware and software offerings to meet what they see as mid-market needs.

Will the move work? Martins says SMBs are often caught in a technology trap, and it's a vicious cycle. By spending too little on technology, they are unable to derive the maximum benefit from the use of IT solutions. So their growth tends to be slower, which means they are unable to invest in the new technology which could put them on the fast track.

"Delivering integrated functionality is the only way to go," says Martins. "An SMB company will never have the IT or professional services dollars to achieve this, so the only way to accomplish this vision is through an out-of-the-box, integrated package."

A huge challenge facing the tier one enterprise application vendors is the dominance of Microsoft in small and medium-sized companies. Most smaller firms use Microsoft's applications for their basic business needs, and Microsoft has recently extended its reach into that market with acquisitions that include Great Plains and Navision.

Martins says there is room for many vendors. She estimates that some 90% of local mid-market companies have yet to buy CRM and financial software.

"Cost of ownership is a critical concern in the small and mid-market," said Martins. "Producing an end-to-end solution that is cost-effective is critical in serving the SMB market. Many of these companies are on the cusp of breaking through into global markets and have sophisticated requirements that need to be addressed."