Pushing the SME message

Vendors and distributors are bombarding resellers with support programmes focused on the SME market, reports Simon Meredith.

Everyone, it seems, wants SME business these days. In recent months we have seen new schemes targeting this market launched by Hewlett-Packard (HP) and Cisco, while Microsoft, Fujitsu Siemens and 3Com also have support schemes in place. Distributors have joined them in pushing the SME message.

Computer 2000's Business Class initiative, Ingram Micro's Channel Connect programme and Ideal Hardware's Think SME, are perhaps the best known.

But are these campaigns of any real benefit? Resellers involved in them think they have only just begun to make an impact.

"They are starting to make a difference but there is still a long way to go," says Steve Wood, managing director of Parity ICT, based in the Wirrall. "They need to give us a proposal to take to the customer. We need multi-vendor solutions, and we need to be able to lead with advice, not with products."

Ian Brooks, managing director of Cardiff reseller IB Business Developments, also thinks more needs to be done.

"It is a big generalisation, but vendors are still getting it wrong most of the time. The channel is not a one-way street, but I rarely hear of any vendor asking the resellers what they want. Microsoft and HP are aware of the need for dialogue, but at the same time, it is not easy to keep thousands of resellers happy," he says.

HP's Centres of Excellence (CoE) programme in particular has attracted positive remarks. It evolved from the company's previous efforts to address this segment of the market.

"We've had an SME programme in place for the past four or five years and we've seen a consistent set of needs developing," says Mike Thomas, SME channel development manager at HP.

"SMEs need help in understanding how IT can be used to address business issues and they were not sure who to go to for that kind of advice. We felt that we needed to put a channel in place that could address such requirements."

HP has so far appointed 66 CoEs across the UK. The programme itself does not differ much from others in that it provides a number of benefits in exchange for sales commitment to HP. The real difference seems to be in the sense of belonging that CoEs instill into what Thomas describes as a "community" of resellers.

"We have very actively engaged with this community and they meet a whole HP team - not just the account manager - on a regular basis, and we encourage them to interact with each other as well. That does seem to be making a difference because it's the informal relationships that they value," he says.

HP holds quarterly gatherings for the CoEs and also runs its own Advisory Council, drawn from CoEs representing six regions, with each reseller taking its turn to give feedback and discuss plans. Thomas believes it is reassuring for them to know they are not alone but are part of a network with annual sales of about £300m and 2,000 employees.

Wood thinks CoEs have real potential. The breadth of HP's product range is a real help because resellers will tend to deal with the company more often than other hardware vendors, he says. Wood also finds that the quarterly meetings are useful.

"They get you up to speed and give you the chance to talk informally and give some direct feedback. The other aspect of the CoE scheme is that it has a national presence, and that could allow us to compete with the big boys."

Already CoEs are working together to serve the same customers, with branches in different parts of the country. Hugo Kirby, managing director of London reseller Trams, is also enthusiastic about the CoE scheme. "It's the one we get the most out of; they are genuinely behind it and are trying to put together solution sets that suit SMEs." he says.

Brooks is excited about the programme and the solutions sets. "They are listening and seem to have decided that it is not just a numbers game," he says. "There is a quality issue as well, and they have realised that an HP partner is unlikely to win business by selling boxes."

But Brooks thinks it is the simple fact that HP is listening to SME resellers that is making the difference. "It is not so much the 'community' but the inclusive approach. People are grateful just for being asked," he says.

Cisco's SME Connect scheme has attracted less publicity than CoEs but is also being received positively. "I would not normally put them into the SME camp, and they are really looking at the 50- to 250-seat market, but we work very well with Cisco and are keen to give the scheme our backing," says Kirby.

Cisco is including about 100 resellers in this programme, which aims to support sales and marketing efforts mainly by providing a set of resources through a specially designed web portal. This has been set up by Profitshop, an organisation that is bringing together content from different sources that advise SMEs, such as accountants and lawyers.

Parts of the scheme are still taking shape, but there are no stipulations in terms of the size of a participating dealer and no up-front commitment to sales targets. However, resellers do have to commit to selling Cisco's Smartnet and Smartspares support contracts and go though the appropriate training.

There are also links to the British Chambers of Commerce, the Institute of Directors and the Department of Trade and Industry's Technology Means Business (TMB) scheme.

Nick Watson, director of channels and alliances for UK and Ireland at Cisco, says the programme is designed to help the firm learn what SMEs need. "We already do a lot of business without really knowing what they want. We believe that by working with resellers and with Profitshop we can work out how to really bring value to SMEs," he says.

Other vendors run SME-focused campaigns as part of wider reseller programmes.

3Com, for example, runs promotions such as the Challenge 3Com initiative under its Focus scheme. Resellers can take competitive bids to 3Com and the company will do what it can to help them win the business and make extra margin.

James White, partner account sales manager at the company, says the aim is to provide resellers with the support and resources they need, but without compelling them to make massive financial commitments.

Other vendors have a hands-off approach. Nortel, for example, regards its role as providing the very best technology, and feels it is the channel's job to focus the solution on SMEs' needs.

"We need to make sure that they have the key technologies to sell. It does not matter to the end-user what name is on the box; the end-user is buying the local reseller," says James Sanderson, enterprise marketing manager at Nortel. "We can't be all things to all people and we rely on the reseller to turn the box into a solution."

Microsoft's approach is similar in the sense that the focus is on product areas. But it is making a big effort to actively engage with SME resellers.

The company has no separate accreditation for SME resellers - although some resellers have been calling for this - but it does have a team devoted to developing business in the sector. Most of its efforts are for campaigns to develop sales in key product areas. The vendor is now running campaigns on Small Business Server 2000 and desktop security.

Microsoft is seen, along with HP, to be doing the most to help SME resellers through its channel programmes. Kirby says: "Microsoft hasn't been highly visible in the past but it is showing some real interest now and we are getting marketing funds and support."

Brooks also feels that Microsoft has sharpened up its act on SME support, but Microsoft, like other vendors, is still learning. Wood says that even in the past few weeks, its approach has changed. "Microsoft has come to us and asked, 'OK, what do you need to sell more?' I said SMEs need someone to provide simple advice about how to get their system stable and in a position to adopt more sophisticated technologies."

Resellers are looking for ways in which they can help SMEs get more out of the ad hoc IT solutions they have collected over the years and to move forward with them. This is why a multi-vendor approach is needed and why resellers need to be supported in delivering advice, not only products, to SMEs.

One scheme that aims to support this kind of approach is TMB, the vendor-independent scheme backed by the Department of Trade and Industry. It aims to establish a UK-wide network of accredited and trusted independent SME-focused IT advisors.

When it was launched, TMB accredited only individuals who were qualified to give advice about IT to small businesses. However, the TMB Approved Centre accreditation was launched recently, specifically to encourage resellers to get more involved.

About 20 resellers have already achieved this status. By the end of next year more than 250 centres should have been established and a further 250 individual advisers in addition to the 300 that are already qualified.

HP is actively encouraging its CoE resellers to become TMB Approved and Cisco is also supporting the programme.

This should add momentum to the scheme and help TMB centres to become much more widely recognised as truly vendor-independent IT experts. Neil Southern, director of TMB at the Chartered Management Institute (CMI), believes the benefits of TMB membership will accumulate as the scheme develops.

"In the early stages it enhances the image of the organisation and associates them with the values of trust and low-pressure selling that TMB espouses. TMB companies will do that little bit more to ensure they understand your problem," he says.

Southern says resellers that have gone through the process have also found it a useful way of developing staff and refining their approach to customers.

Wood claims that TMB has also started to work for Parity ICT, especially now that the company accreditation has arrived. "It allows SMEs to enter into a relationship with us with more confidence. When you tell customers about it you can see them relax. I would like to see the TMB logo and name recognised by SMEs," he says.

Brooks also hopes that more recognition will result from the company accreditation. "Something like TMB is needed because if every vendor came up with its own accreditation it would be chaos. But it now needs everyone to take a step forward and start to promote the scheme," he says.

Distributors should be well positioned to draw together solutions, but few seem to be making real progress with regard to SME initiatives. Computer 2000's Business Class scheme is the only one mentioned by resellers when prompted. p>One of its most successful aspects is the company's twice-yearly training weekends, which are very popular, attracting about 120 delegates to sessions run by 12 vendors.

Nigel Judd, general manager marketing at the company, says the next stage is to extend the scheme to lead generation and to work with vendors to develop solutions that SME resellers can sell.

"We need vendors to work together to present a solution and the vendors, whether they have a specific programme or not, and we need to make sure SMEs are engaged with them on the business benefits of the technology. Then we can help bring those vendors together and work with them to present a solution and highlight the benefits to the customer," he says.

In the summer Ingram appointed Dianne Monaghan as head of SME and Var sales to lead the company's Channel Connection sales team, which is responsible for addressing the needs of SME resellers. Computer 2000 (C2000) and Ingram both have very broad product lines. Therefore they have the reach to appeal to SME resellers.

Gordon Milner, sales director at Ideal Hardware, says while the firm is eager to work with as many SME resellers as it can, it makes more sense for Ideal to work with vendor partners on their schemes than to have its own.

"If you are not careful you end up spending a lot of money without really understanding what it is you have achieved," he says. "We connect to the vendor programmes where they exist and we are keen to increase the breadth of resellers we work with."

Ideal is eager to recruit SME resellers and is running a campaign aimed at them. "Business moves so quickly now that SME companies invest to address pressing business needs and all investments are viewed as being long-term. The SME sector has specific needs and we are working hard to help our reseller partners address them," says Milner.

The current campaign involves lead generation and the production of a white paper examining specific opportunities.

Reseller views of distributor schemes are reserved. Talking about Computer 2000's efforts, Wood says: "It has some advantages but it has not quite hit the spot yet."

Resellers also believe they have to play their part. Tony Price, sales director at WStore, believes that resellers need to provide more feedback for vendors. "Manufacturers spend a lot of money in these campaigns and they need to get some ROI. We are one of probably only a handful of resellers that can deal with leads and properly feed back the information."

The paucity of feedback and follow-up is a common gripe among vendors that run lead-generation campaigns. However, the closer engagement of many resellers with vendors on SME business is probably improving the situation.

If vendors can learn to listen, and move their emphasis away from the numbers and place it instead on quality of service and on solutions that appeal to SMEs, the market may yet grow as predicted.

SUMMARY

• Vendors are starting to realise that SME-focused schemes cannot live or die purely on product sales measurements.
• Schemes such as Hewlett-Packard's Centres of Excellence could make a difference for SME resellers, but there still needs to be more of a multi-vendor approach.
• Approved Centre status in the Technology Means Business programme should raise awareness of independent advisors in IT.
• Resellers want vendors to listen more to their views and to provide multi-vendor solutions.
• Resellers need to ensure they provide feedback to vendors.

SMALL MAKES IT BIG

At the start of 2001, at least 95 per cent of all UK businesses were SMEs (that is, they had fewer than 250 employees).

Of the entire business population of 3.7 million companies, just under 28,000 were 'medium-sized' (between 50 and 249 staff), and fewer than 7,000 were 'large' (250 or more people).

Every other business - 99 per cent of the total - is 'small' (fewer than 50 people). About 2.6 million companies are sole-proprietor businesses or partnerships.

Employment and spending patterns are very different, however. Small businesses account for 43 per cent of non-government employment and 31 per cent of turnover. The 7,000 large companies employ 45 per cent of non-government workers and generate 55 per cent of turnover.

Therefore the 28,000 medium-sized companies have 12 per cent of the people and represent 14 per cent of turnover.

According to the Department of Trade and Industry's International Benchmarking Study 2001, 77 per cent of SME employees are already connected to the web, compared with 94 per cent of corporate workers. The Small Business Service Omnibus Survey in autumn 2001 found that 81 per cent of SMEs use PCs, 66 per cent use email, 42 per cent have a website and 10 per cent sell on the web.

However, 19 per cent don't use IT at all.

CONTACTS
3Com (01422) 438 000

Cisco (020) 8824 1000

Computer 2000 (0870) 060 3344

Hewlett-Packard (01344) 360 000

IBBD (02920) 640 022

Ideal Hardware (020) 8286 5000

Ingram Micro (01908) 260 422

Nortel (01628) 432 000

Parity ICT (0151) 0151 343 0200

Trams (020) 7544 1200

TMB (01536) 207 490

Wstore (08700) 113 310