SME storage

SMEs must face the same pressures and challenges as their larger competitors, Paul Bray finds

One of the problems confronting owner-managers of SMEs is that they must face the same pressures and challenges as their larger competitors without the same budget or expertise with which to tackle them.

Nowhere is this fact more apparent than in storage. Data volumes are climbing sharply across all sectors, an issue often compounded in SMEs by rapid growth in the business itself. Compliance and data protection rules apply as much to SMEs as to corporates, and security, integrity and accessibility are becoming vital issues to firms of all sizes.

Yet many SMEs do not have any IT professionals on the staff, and if they do these are likely to be generalists, not storage experts. So when storage distributor Zycko commissioned research into the SME market, it was not surprised to find that firms were confused and disorientated.

According to Zycko, three-quarters of those questioned felt swamped by growing data volumes and almost half were confused by the complexity of technology solutions available and often unable to differentiate between them. Nine out of 10 felt pushed into buying additional storage by a growing pressure to guard against potential disasters or business failures. And three-quarters claimed to fall back on established brand names, risking proprietary lock-in and punitive costs, because of a lack of in-house skills and independent advice.

“The research suggested that a lack of in-house resource was rendering it difficult for SMEs to plan ahead for storage provision,” said David Galton-Fenzi, Zycko’s group sales director. “Eighty-six per cent of SMEs claimed to be stalling purchases until they’re forced into panic buying to address immediate business needs.”

Steve Tongish, EMEA director of marketing at storage vendor Plasmon, said: “SMEs do have a tendency to be more piecemeal in their buying habits, which is one reason why it’s so difficult for the channel to develop successful, structured end-user programmes. Typical criteria include value for money, ease of installation and low maintenance.”

This haphazard approach is regrettable but understandable, said Ajay Lukha, EMEA general manager at storage vendor StorCase Technology: “Because SMEs tend to lack the resources necessary to develop coherent storage strategies for their coming needs, they usually buy when the need becomes apparent, such as when purchasing or implementing a new application. Existing storage space is rarely efficiently accounted for and/or recycled appropriately.”

As if these difficulties weren’t enough, SMEs are having to come to terms with the increasing importance of data and how it is made available.

“Capacity, rather than management, has traditionally been the driving force behind the SME storage market, with firms forced to scale up their storage capabilities by ever increasing volumes of data,” explained Neil Evans, regional sales director, UK channels at storage vendor Hitachi Data Systems.

“But times have changed and many SMEs are in a Catch 22 situation. The data they create and receive is crucial to the success of their business, yet the cost of storing and managing it is having a direct adverse effect on business performance. Simply adding extra capacity isn’t a viable medium-to-long-term option; they need to make their storage investments contribute to improved business performance, not detract from it.”

Lax procedures only allow the data mountain to build. “SMEs have a lot less discipline and fewer policies about data, so they’re more open to abuse from users keeping data for a whole variety of non-business functions,” said Tony Cotterill, chief executive of intelligent storage management software vendor BridgeHead. Added to this, many SMEs are simply scared to delete data in case they need it later.

The irony, said Tongish, is that: “In most cases SMEs’ problems are quite manageable and there are product solutions available, but often there’s nobody within the organisation with the knowledge or time to sort things out. This is a shame since there are significant savings to be realised that can also have a major impact on the ability of the company to affordably expand its IT infrastructure as it grows. A well thought-out IT storage strategy enables the organisational flexibility that’s often the key competitive advantage for SMEs.”

What SMEs need, then, is independent, specialist advice and 92 per cent of the SMEs surveyed for Zycko said as much. This is precisely where the reseller comes in.

“Each business is different and must be treated as such, and resellers need a consultative approach,” said Steve Watson, storage product manager at Hewlett-Packard. “A tailored solution will always fit the business better.”

“The secret to adding value and successful selling is to understand what the customer wants to use the storage for,” explained Galton-Fenzi. “Key uses tend to focus on the improvement of workflow, operational needs and sales and marketing systems that are all based on financial and business drivers.

“The multitude of drivers, potential uses and growth are the main reasons storage presents the channel with such a fantastic opportunity. Rather than selling a box, selling a storage system is about understanding and offering answers to existing and future business needs. These customers need experienced consultants, rather than simple salesmen.”

Some vendors are actively seeking out resellers with consultancy skills. “Sony’s specialist resellers differentiate themselves by having the skills to consult the end-user, which is one of the qualities we look for when seeking channel partnerships,” said Will Trotman, senior product manager, at storage vendor Sony Europe.

But many resellers have yet to realise the importance of consultancy, said Lukha. “SMEs find themselves at the mercy of ‘door knocking’ consultants and resellers who actually tend to have lower levels of understanding about typical SME issues. They don’t understand that SMEs don’t buy like larger organisations so the approach has to be different.

“While many resellers sell branded storage solutions, very few salespeople consider real organisational issues as an in-house administrator would. SMEs are very often left to their own devices to identify their storage needs and figure out what kind of solution best fits them,” he said.

Empathy is the best solution, added Lukha. “Resellers who provide technically competent advice and think like a budget conscious SME will best succeed. The SME, for example, may have old drives it wants to re-use and need an unpopulated disk array, but brands tend to force customers to buy their own expensive drives,” he said.

Ultimately resellers may find their hands forced by customer demand, believes Russ Johnson, general manager for international operations at storage solution suite vendor Adaptec. “Resellers need to place more emphasis on the high level business issues that the technology will allow the customer to solve when they’re speaking to SMEs than when they’re talking to larger enterprises. This will significantly increase their chances of closing the sale,” Johnson said.

Any reseller with the technical resource and a value-added consultative approach to selling can enter the SME storage market, providing it is committed to a learning curve and prepared to partner and invest time and money, said Galton-Fenzi.

“If VARs aren’t talking to their customers about storage you can be certain that someone else is, and once a competitor wins the storage business there’s every possibility that they’ll extend their support to voice, data and applications,” he added.

Making the switch is not always plain sailing. “Resellers face the problem of keeping up with the rapid changes and development in storage technologies,” said Paul Hicking-botham, solutions manager at storage distributor Hammer. “And they need to develop specialist skills in particular vertical markets in order to provide the value-add essential as part of the channel sale.”

Despite his enthusiasm, even Galton-Fenzi admitted that: “It can often take a reseller longer to decide on and become proficient with new technologies than the end-user. There are a number of reasons, including existing vendor relationships and the associated politics, investment and new knowledge and skills required.”

Proper training is a must, said Ashley Robinson, EMEA channel marketing director at storage vendor Network Appliance. “All storage resellers should aim to have

SNIA [Storage Networking Industry Association] accreditation for their storage specialists,” Robinson said.

But all of the reseller’s hard work can be well worthwhile. SMEs, especially larger ones, may spend significant sums on storage.

“IBM SME clients are annually investing an average of £30-60,000 on storage systems, but some projects may be well in excess of £100,000, so the revenue opportunities are great,” said an IBM representative.

“Resellers can expect consistent repeat business from clients as they develop their relationship to a position of trusted advisor. While business is cyclical, we see clients heavily investing in new projects every two to three years, so the revenue opportunities are attractive for the foreseeable future,” he added.

Evans said: “The revenues on service and support are equal to, if not greater than, the initial product.”

Unfortunately box-shifters will tend to make negligible margins, said Cotterill. But, he added, “All our resellers are looking to put together a solution that’s service, software and hardware in a package that’s unique to them, so they can offer something that isn’t sold on every street corner, allowing them to make margins in the direction of 20 to 25 per cent.”

Resellers with a bit of know-how can create their own opportunities for repeat sales. “After getting the customer to realistically assess how often they’re going to require more capacity, resellers should draw up a suggested p lan of purchase,” said Adrian Groeneveld, senior product marketing manager at enterprise network storage vendor Pillar Data. “For instance, if the customer is taking on board new staff, suggest that storage space be reviewed after six months.”

As with much of the SME market, selling storage to SMEs may require some quite large adjustments in the way resellers work, but many, when successful, will find that the rewards more than repay the effort.

C Channel links 2142970, 2139407

Contacts

Adaptec (01276) 854500

www.adaptec.co.uk

BridgeHead (01372) 221950

www.bridgeheadsoftware.com

Computer Associates (01753) 241970

www.ca.com

Hammer (01256) 841000

www.hammerplc.com

Hitachi (01753) 618000

www.hds.com