Be prepared for the SME market
If smaller businesses are looking to outsource their IT services, resellers must research these new customers, writes Keith Humphreys
The SME market has always been regarded as an important end-user group. Although IT services have traditionally been the domain of their corporate cousins, research by analyst firm Forrester has shown that take-up of outsourced services is happening.
There are over 3.75 million SMEs in the UK, and as more liberalisation occurs in the local loop and SMEs gain access to a larger number of potential service providers, they will require many of the IT services available today.
The outsourcing demand among UK SMEs has included such subjects as software, networking and telecoms, web hosting, computing and IT, email and helpdesk functions. It is now expanding to include security solutions, remote access and mobility, broadband access and the one-stop-shop supply of products and services.
The Forrester survey is also interesting in terms of things that influence purchasing. It shows that price is not the major factor in determining what to buy. Price is less important than compatibility with existing systems, features and, surprisingly, the vendors’ expertise with smaller businesses.
This underlines the importance of Cisco’s decision to purchase Linksys as its SME focus, rather than try to force an “enterprise brand” on SMEs. Nortel got this right many years ago when it introduced NetGear, only to slip up by floating it off two years ago when getting cash became the holy grail.
To successfully target the SME market in the UK VARs need to assess SME wants and develop certain core competencies in order to access this market directly or indirectly. These include assessing the most lucrative verticals, assessing the most lucrative regions, the ability to differentiate services, and the ability to provide nationwide support.
Resellers have to remember that contracts will form the basis of the relationship between them and their SMEs. There are a few rules that must be adhered to when engaging in a contract with a potential SME.
Does the SME have a competent contract-negotiating champion? Does the reseller? Do the cultures between VAR and the potential client fit together? This is particularly important where small-scale outsourcing is concerned. What are the business objectives followed by the VAR and those of their potential SME clients? Which of these does the reseller need to work together to achieve? Is there a well-defined exit strategy should a lose-lose situation occur during contract deployment?
In terms of managing the contract, both parties need to be aware of, and address, the following key issues: intellectual proprietary – both confidentiality and protection; structure of relationship – the more homogeneous the better; responsibility for managing the contract; employee transfer – if applicable; asset ownership; exit strategy and ownership of licences or transferal of licences; service level agreements and related compensation; change of customer circumstances – such as acquisition.
To ensure that your contracts are successful and that relationships with clients are built around long-term objectives, vendors will need to ask more from clients. They need to actively participate in the relationship and take on board their share of the responsibility. If companies shirk at this, then they are unlikely to become a long-term client and it is up to you to decide whether you want their custom.
It certainly looks like targeting the financial services small businesses is the way to go – always head where the budgets are.