Microsoft, PeopleSoft, Oracle, even SAP, once the darlings of the Fortune 100 set, are retooling their offerings and refocusing their sales efforts on small and medium-sized businesses (SMB). Why? Because as large corporations continue to retrench, it turns out SMBs, as a group, are financially sound and hungry for leading-edge technology solutions.
The latest statistics from market research firm AMI Partners show just how radically this market is changing. Creative professionals who understand these changes will be in a position to profit from this surprisingly sophisticated crowd.
Small Business, Big Opportunity
Here are major SMB findings from the AMI Partner’s survey and our assessment of opportunities for creative pros.
1. SMBs are outperforming larger corporations in IT spending.Across all different IT hardware, software, and services spending areas SMBs will grow by seven percent in 2003, compared with consensus estimates ranging from below zero to four percent for larger enterprises. Moreover, there is a general sense in corporate boardrooms these days that recent IT investments in areas such as Enterprise Resource Planning and storage networks have yet to impact the bottom line. SMBs, by contrast, are not traditionally constrained by either of these two factors.
Creative Pro Opportunity: Don’t assume that there isn’t money to be spent on services, particularly solutions that span the enterprise, such as Web automation, content delivery and repurposing, and publishing workflow.
2. CRM emerges as the first enterprise software application to be widely embraced by SMBs. There is growing evidence of a distinct need and accelerating deployment of Customer Relationship Management (CRM) applications — as gleaned from AMI’s Global surveys. For instance, the average Medium Business (100-999 total employees) interacts with almost 2,000 distinct customers a month, and typical Small Business (1-99 total employees) is in contact with over 400 customers. Many SMBs feel the time has come to overhaul their simple, often homegrown Sales Force Automation (SFA) applications and CRM solutions.
Creative Pro Opportunity: Offer services for database-intensive one-to-one marketing, variable data printing.
3. VPNs are becoming a “white hot” area for SBs as well as MBs. Businesses vary widely in their reasons for adopting a virtual private network (VPN). Medium Businesses (MBs) that typically have half a dozen or more locations see VPNs as an inexpensive alternative that can effectively replace components of their traditional wide area networks (WANs). Small Businesses (SBs), of which only 10-20 percent have additional locations, are finally waking up to the possibility that they can have inexpensive, secure IP connections with home-based employees, key suppliers/clients, and other “occasional” work related locations. The number of VPNs deployed among SMBs is expected to double over the coming 12 months.
Creative Pro Opportunity: Position yourself as a long-term vendor and integrate your operations over the client’s VPN.
4. High-speed broadband access and connectivity solutions are becoming critical and affordable. Large numbers of SMBs are replacing their ISDN and dial-up lines in favor of faster, more efficient high-speed broadband access connectivity solutions. The micro-SBs (23 million internet-accessing non-home-based businesses with less than 10 employees) are switching from dial-up to fixed-line broadband. In companies with greater numbers of employees and branch offices, DSL is being used as access technology to interlink into the head office T-1 backbone. Several factors have contributed to the growth of high-speed connectivity deployment, including growing recognition by SMBs about the importance of broadband as an enhancer to productivity gains and efficiencies.
Creative Pro Opportunity: Expand your efforts to market to, and service, remote clients, knowing that you can utilize high-speed communications for workflow, collaboration, and transfer of rich-media and other fat files.
5. SMBs are finally discovering the merits of having their software applications hosted — like their Web sites. The hosted business model — the internet-age equivalent of batch processing and software rentals of the 1960s and 1970s — is becoming increasingly attractive for SMBs. The factors fueling this trend are the continued decline of hosting prices, faster Internet connections, and the enhanced breadth of available hosted applications. AMI has found that website hosting serves as a stepping stone for the hosting of applications that range from data storage and back-up, to remote IT service and support, HR administration, finance, and accounting. AMI estimates that the number of businesses utilizing hosted applications could potentially grow by 60 percent in the next 12 months.
Creative Pro Opportunity: Market yourself as a hosted Web or content developer and build systems to interact with the customer accordingly.
6. E-revenues give way to the pursuit of “e-enabled” revenues. SMBs are beginning to come to terms with the true potential and requirements of e-commerce. Fewer businesses are claiming to have, or planning to have, e-commerce sites. Nevertheless, spending on Web site development and upgrades was expected to grow by another 34 percent in 2003. Even more telling, the number of businesses with credit-card-transaction enabled websites will grow by 70 percent in the coming year.
Creative Pro Opportunity: Web development, particularly with an emphasis on back-end database and e-commerce integration.
7. Affordable network storage solutions begin to penetrate the core of the SMB market. Fueled by deployment of data-intensive applications, continually falling prices of network storage solutions, and advances in scalable, infrastructure-friendly IP-based Storage Area Network solutions, network storage utilization among SMBs is expected to increase at an exponential rate. Although network storage will compete with hosted storage solutions, the end result of this ever-pressing need is expected to be a healthy 35 percent growth of the SMB storage market in 2003, underscored by a 60 percent growth in the number of businesses adopting network storage solutions.
Creative Pro Opportunity: Develop skills in Digital Asset Management and other storage-based solutions.
The Sleeping Giant
The SMB makeover underscores once again the powerful economic force of this group. In the US, alone, America’s 22.9 million small businesses employ more than half of all private sector employees, pay 44.5 percent of total U.S. private payroll, and generate 60 to 80 percent of net new jobs annually, according the U.S. Small Business Administration.
Diverse as it may be, that’s a market worth courting.
Read more by Eric J. Adams.
This article was last modified on January 6, 2023
This article was first published on November 10, 2003
Commenting is easier and faster when you're logged in!
