With businesses of all shapes and sizes walking an economic tightrope, onlookers have claimed channel companies need to work harder than ever to secure business from jittery SMEs.
In his pre-Budget report last November, chancellor of the exchequer Alistair Darling predicted that the UK’s gross domestic product would fall by as much as 1.25 per cent in 2009.
Within a week, auditor BDO Stoy Hayward added to the gloom by predicting that business failures would spike by up to 50 per cent this year.
Construction and business services firms are set to be the hardest hit among the 32,300 companies predicted to go to the wall in 2009. In the climate of heightened fear and uncertainty, channel onlookers have reported that SMEs’ IT budgets are also receding.
Scott Nursten, managing director of reseller s2s, said that smaller companies are quicker to batten down the hatches when recession bites. “The customers we have in the SME space are definitely not spending much at the moment,” he said.
“It is more a case of them being nervous rather than being in any kind of trouble. The SME market has definitely shrunk back.”
Nursten claimed VARs had to be increasingly flexible and creative when courting smaller companies. “It is all about how you position products and services,” he said.
“The deals we have done recently have had rather intelligent financing plans behind them. We have to show how it is not affecting their total cost of ownership. But that is quite similar across the board; it is not just in terms of SMEs.”
Recent research from integrator Damovo found small businesses’ technology decisions are not entirely dictated by price. Operational efficiency was cited by more than three-quarters as a key driver in formulating their IT infrastructure.
Cost reduction was specified as an important decision-making factor by 62 per cent of SMEs. Two-thirds of medium-sized businesses claimed the convenience of implementation was also important. Forty-seven per cent expressed a strong desire to work with one supplier for all their technology implementation and consultancy needs.
Distributor Westcon’s chief operating officer Dean Douglas claimed SME-focused VARs have to ensure they are securing revenue from wrap-around services. “We are seeing a fallout and average order sizes have come down,” he said.
Ball in reseller court
“It is now incumbent on the reseller community to create the real value that each technology platform provides. We are helping our reseller community identify how they can justify spending on technology.”
Chief operating officer for Europe Simon Minett claimed that providing existing SME clients with maintenance and services is a way to protect precarious revenue streams and maintain lucrative relationships this year.
“In the SME space we see an extension of business with customers,” he said. “Services are always important. Annuity-style business provides valuable revenue streams.”
Communications vendor Alcatel-Lucent and reseller partner ProtoCall One recently published a white paper outlining how businesses can move their contact centre to a multi-channel model, incorporating voice, email, SMS and web chat.
Nigel Jones, business and market development manager for enterprise corporate solutions at Alcatel-Lucent, claimed smaller firms and start-ups are often more agile and open to new technological ideas.
“Some very small companies want the whole shooting match of web chat, email, SMS and voice,” he said. “Over the next couple of years there will be companies implementing this stuff from day one. A lot are proactive in the way they advertise back to their customers.”
Faraz Khan, managing director of ProtoCall One, said: “A number of smaller companies use IT and excellent customer services as a real differentiator.”
Gently does it
Jones said that implementing new technology gradually and taking away any headaches associated with implementation and upkeep is key to securing SME business this year.
“Early adopters tend to be larger companies, but we are trying to bring technology down to the mid-market and the SME space,” he said.
“Those companies may not have lots of IT capability, but we can try to package technology in a way that takes the complexity out of both deploying and managing it.”
Khan added that moving a smaller company’s contact centre towards a multi-channel model could be a case of adding incrementally to what they already had in place.
“It can be done in a step-by-step approach it does not have to be a case of ripping something out and replacing it,” he said.
But John Massey, managing director of telecoms VAR Actimax, said his business
is now primarily focused on charities and the public sector as commercial IT
“The type of customers we are selling to has changed,” he said.
“Companies are just not spending; the only business we are getting from them is network services, with people looking to save money against their existing suppliers.
“Everybody is trying to save money and make themselves more efficient,” he
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