How To Sell: SMEs - Cry Freedom

Part five. SMEs need to be persuaded of the business benefits if they are to take the leap and adopt convergence and mobility technologies, writes Paul Bray.

The archetypal SME has a small bank balance and big ideas. The business wants to mushroom on a budget of fourpence ha'penny, perform a full range of functions with a handful of staff, beat corporate rivals at their own game while never sacrificing the benefits of being small, and still have Sunday afternoons off.

Two sets of technologies promise to create an infrastructure that will enable all this: mobility and convergence.

Mobility offers significant advantages to SMEs, both in and outside the office, giving resellers plenty of selling points. Many SMEs expand rapidly, and often those that do not would like to, so any technology that panders to ambitions of growth is likely to meet with their approval.

Wireless local area networks (Lans), which can be moved to new premises and quickly installed in new or temporary offices without loss of investment and problematic cabling, are the classic example.

Many owner-managers already have experience of wireless Lans and broadband from using them at home and want the same flexibility in the office.

SMEs' working patterns also lend themselves to mobile technology. Owner-managers are notorious multi-taskers. The smaller the firm, the more jobs they combine, from sales and marketing to strategic planning, finance and human resources. Having no one else to press the flesh with key customers and business partners, they also spend a lot of time out of the office.

This means that they need access to a range of key applications, including email, customer relationship management (CRM), enterprise resource planning (ERP) and finance, from their laptops or PDAs and at home.

Mobile market on the move
The same is true of SME employees, a high proportion of whom spend much of their time on the road. Sales staff, service engineers, delivery drivers and others need up-to-date information. Making it available in the field not only makes them more efficient but relieves stress and helps reduce working hours.

Campbell Williams, head of strategic marketing at voice-over-IP (VoIP) vendor Mitel Networks, summarises the selling proposition of mobility.

"Resellers should stress that wireless and mobile can make SMEs more responsive to their customers, help them to expand, make their employees' lives easier, help them do more job roles at the same time, and give them more quality of life," he said.

Many SMEs are also well aware of what their corporate competitors are doing, and if they aren't, their resellers should be making them aware.

Michael Frisby, channel director at messaging and collaboration vendor Cobweb Solutions, said: "In our experience, small businesses are buying business-class email solutions that provide mobile access to make sure they can compete with larger competitors that are starting to deploy such solutions."

There seems to be no particular pattern to the SME wireless and mobile solutions market. Purchases are made by a mixture of first-time and experienced buyers from all business sectors, although high-tech, finance, retail, manufacturing, education and healthcare are among the most promising markets.

Sales are buoyant. Ray Redpath, marketing director at CRM vendor ProspectSoft, said: "The European SME mobile market is estimated to exceed £4bn by 2007, with future growth of more than 25 per cent a year."

Virtually all these sales will go through resellers, since few vendors bother to sell wireless or mobility solutions direct. The core products are basically the same as the ones corporates are buying.

SMEs are keen to hook up their laptops, tablet PCs, PDAs and mobile phones to their office networks, via the internet, GPRS and even 3G.

In the office, wireless Lan technology has become robust and cheap enough to be a viable solution for SMEs, giving resellers opportunities to sell base stations and PC cards, as well as ancillary technologies such as VoIP or Digital Enhanced Cordless Telecommunications phones.

On top of these will sit applications ranging from old faithfuls like mobile email to specialist products such as CRM.

Cathi Low, general manager for SME sales at distributor Computer 2000, said: "Vendors are getting better at delivering practical solutions for smaller businesses, and there are some great offers available on wireless and mobility packages from the likes of Fujitsu Siemens, Toshiba and Hewlett-Packard."

The range includes mobile data and wireless broadband offerings. While most SMEs are comfortable with the basics of PCs and mobile telephony, many remain pretty green when it comes to more advanced applications.

The onus is on resellers to show customers that a mobile solution may cost more upfront but will bring bigger business benefits and be more flexible and portable in the long run.

Colin Holloway, UK marketing manager at PDA vendor palmOne, said: "The biggest challenge resellers have in selling to SMEs is getting the practical return on investment [ROI] benefits across to them. SMEs need to understand how end-to-end solutions - for example, salesforce automation and mobile email - can significantly cut costs."

David Smith, SME business manager at HP, added: "There's still much confusion in the marketplace. Customers will have many questions about the differences between technologies, for example tablets, notebooks, Blackberries, smartphones and so on.

"There is particular confusion about the telco offerings, such as 3G and GPRS. Recently we've seen a great deal of hype, particularly in some images on TV adverts. It's crucial that resellers reset expectations. If they can do this they can have a very real competitive advantage."

Flexible friends
Lacking in-depth ICT expertise - and often, in the case of smaller firms, any full-time ICT staff - SMEs need resellers not just to provide the technology but to explain the business reasons for having it. They should also appreciate that those business needs are not static, and that mobile technology is often an enabler of business change.

David Freedman, head of IT at sales consultancy Huthwaite International, said: "SMEs need quality of service, clarity of billing, a sound relationship with the reseller, coverage, and the ability to add data services as each new service becomes available and appropriate. This is far better than making a big commitment to new technology at the outset of the contract."

Freedman added that resellers need to establish strong relationships with primary vendors of airtime, handsets, services and applications so that they can be as flexible as possible in the solutions they offer.

Wireless technologies command higher margins, but margins are already under pressure. "Considerable home deployment and some limited knowledge have led to an expectation of lower costs, so there's significant cost and margin pressure on standard wireless," explained Ian Kilpatrick, chairman of distributor Wick Hill.

For resellers, added-value extras can bridge the gap, from integration, customisation, support and user training to more esoteric services such as site surveys or devising usage and employment policies relating to mobility.

Williams outlines a typical added-value scenario. "A reseller which sells a wireless Lan has the opportunity to provide the mobile devices, whereas desktop PCs may have been bought elsewhere," he said.

"Then it can look to sell voice over the wireless Lan. Once the business is convinced of the value of mobility within the building, it will be much easier to convert it to mobile solutions through a service provider.

"Finally, the SME may require software integration skills for, say, a new stock control programme using mobile devices."

If SMEs are not quite as paranoid as corporate companies about security, sometimes this is due more to ignorance than to rational thought. Many business owner-managers set up wireless Lans exactly like their home networks.

"Security is a major issue even to SMEs, but the level of security that comes from a shrink-wrapped product is really left to them," explained Neal Tilley, UK enterprise marketing director at telecoms vendor Alcatel.

"Plug-and-play technologies can mask the potential pitfalls, so resellers need to show clearly how their solution can cost-effectively protect the SME."

Convergence now provides much of the enabling technology for wireless and mobile. "Wireless solutions are adding voice and mobile computers are adding IP telephony soft-phones," said Williams.

"The mobile virtual private network [VPN] solutions of the future will provide totally converged voice, data and business applications from any location, using any device."

The general benefits of converging voice and data on a single network are well rehearsed. They include the cost savings and administrative simplicity from having one network infrastructure instead of two; the ability to piggy-back phone traffic for free onto leased lines or VPNs between sites; and the opportunity for combined data and voice applications such as screen-popping and unified messaging.

But Williams argued that the umbrella term 'SME' covers two types of company with different needs. Small firms need an easy way of cutting costs and improving their communications.

A single-box solution can provide voice telephony, voicemail, Lan and connectivity to high-speed wide area network (Wan) services, all managed from a single point through a simple browser interface, easily scalable as the business grows.

"Resellers should stress that, for only a slightly higher cost than upgrading their telephone system, small firms gain a new data infrastructure, and all this is easier to manage than the previous separate systems," explained Williams.

Office in a box
Medium-sized enterprises with several sites need to reduce communications costs between locations, and compete with the sophisticated CRM applications of their corporate competitors. 'Free' telephony between sites on the back of a data network, plus the ability to add CRM, unified messaging and desktop video conferencing are strong selling points.

"To medium-sized enterprises, resellers should stress the ROI associated with Wan cost reduction and Lan cost of ownership," said Williams.

"These solutions will allow them to compete on equal terms with corporates by delivering customisable, responsive customer service."

As with mobility and wireless, convergence solutions are bought by SMEs in almost any sector. Small firms tend to buy single, office-in-a-box solutions providing all their voice and data connectivity, and usually wait until their voice and data networks need upgrading.

Multi-site businesses are kitting themselves out with VoIP gateways for Wan trunking, IP-PBXs, multimedia solutions for contact centres, messaging, conferencing and collaboration, and new carrier services for high-speed office connections and teleworking.

True to type, most SMEs are looking for a single supplier that can offer business and product advice and provide a complete solution, all at the most economic prices. Resellers must therefore be prepared to offer data, voice and carrier services, and avoid the appearance of charging extra for, well, extras.

"Value-add features must carry no extra implied cost," explained Tilley. "For example, including soft-phone licences as a bonus is a sure-fire way of increasing business effectiveness, but a direct increase in cost will push SMEs away. Bundled product wrapped around services, and competitive pricing with a personal service included, is the only real way to win business and fight off the commodity solutions."

Cost remains an issue for many SMEs. Simon Brough, sales manager at distributor Crane Telecommunications, said: "IP systems will come down in price but there are still costs involved in upgrading the Lan infrastructure.

"Resellers must focus on the fact that, if customers invest now in the latest voice technologies, they will reap the financial benefits long into the future."

Telephony is so important to even the smallest businesses that they are not prepared to take chances. "SMEs need reassuring that their data network will be able to reliably support their voice network," explained Roger Jones, IP telephony business development director at comms vendor Avaya.

"This is the biggest hurdle to overcome. Resellers will need to convince customers of their expertise in both the voice and data markets."

Convergence has always been a two-edged sword for IT resellers. On the positive side, it opens up the possibility of entering a fresh market, plus selling fresh products and services to existing customers.

But it also brings them into conflict with a voice channel just as intent on eating the IT reseller's lunch. The IT channel needs to watch out, according to Chris de Silva, managing director of comms vendor Philips Business Communications.

"Only a few specialist data resellers recognise the implications of voice products, and few have the expertise to provide solutions SMEs can actually buy," he said.

"While many data resellers may claim to have a voice product portfolio, very few are actively pursuing sales. Meanwhile, the specialist voice resellers are quietly stealing a march.

"Recognising the need to rapidly build up data expertise, particularly in areas such as security, they're broadening their product and consultancy portfolios."

Of the two markets, wireless/mobility appears to be the better bet for IT resellers. It provides a good business fit with the way SMEs want to work and the challenges they face, and is still enough of a niche to be profitable. Convergence, while it has demonstrable business benefits and looks like the future, currently involves a degree of sailing against the wind.

CONTACTS

Alcatel (0870) 903 3600
www.alcatel.co.uk

Avaya (0800) 698 3619
www.avaya.co.uk

BT Indirect Channels (0800) 085 0264
www.bt.com/partnersonline

Cobweb Solutions (0870) 073 1731
www.cobwebsolutions.com

Computer 2000 (0870) 060 3344
www.computer2000.co.uk

Crane (01444) 872 500
www.cranetel.co.uk

Hewlett-Packard (01344) 360 000
www.hp.com/uk

Huthwaite International (01709) 710 081
www.huthwaite.co.uk

Mitel Networks (0870) 909 2020
www.mitel.com

PalmOne (0118) 974 2700
www.palmone.co.uk

Philips (01223) 468 000
www.sopho.philips.co.uk

ProspectSoft (01494) 895 555
www.prospectsoft.com

Wick Hill (01483) 227 600
www.wickhill.com