Services in the Age of SMBsBy Mike Jude | Posted 2008-05-06 Email Print
Vendors may not be equipped to handle services for SMBs, but VARs sure can.
One outcome of the dot-com bubble was that it widely propagated technology that, when used correctly, gave small and midsize businesses the same capability as an enterprise to address and dominate a market niche.
These SMBs likely will define the essential model for business in the 21st century and increasingly form the bulk of the market for technology products and services. Many vendors understand this and are planning for the day when they derive most of their revenue from this market.
However, delivering goods and services to the SMB space is not the same as delivering goods and services to the enterprise space. The SMB market is very diffuse, literally comprised of millions of entities. It also is heterogeneous, with businesses ranging from one or two people to several hundreds. While these facts complicate the delivery of goods and services, they especially complicate the delivery of services.
Service, it turns out, is pretty easy when you have a few large enterprise level accounts. This allows you to essentially build "one-off" solutions and manage them effectively as independent service offerings. For SMBs though, services must be easily offered to many customers with an appropriate level of customization and security.
Security, in fact, may be the most important issue. As intellectual property creation becomes the currency of small business, safeguarding it becomes an absolute for any service offered to the SMB space.
Additionally, since SMBs are focused on the creation of intellectual property, they usually don’t have much horsepower left to build extensive plans for IT evolution. This means that while it is possible to examine the IT plans for a large enterprise and easily see opportunities for IT process improvement, just about every service engagement looks like a green field in the SMB space. This is why services to the SMB space so far have mostly been of the warranty service nature—that is, break/fix.
Increasingly, though, SMBs will face the need to upgrade to collaborative technologies to survive in the hypercompetitive markets evolving. Consequently, any service that enables them to make use of such technologies will find favor and may even be perceived as essential. The good news, then, is services will become an essential enabler of the SMB dynamic.
What all this means in practice is that service provision will need to evolve to meet the new dynamics of the SMB space. Providers will have to offer services in the context of the products SMBs buy. Products will need to come with the incremental chunk of support architecture necessary to make them work in the first place, and co-exist and thrive in the presence of the next piece of technology and incremental piece of support architecture.
Vendors such as HP and Sun Microsystems have the right idea when they embed bits of their remote services technology in their products. What they lack, though, is an SMB focus.
Service in the age of the SMB will basically come in the box. If vendors can’t manage this, the channel has to provide it. VARs need to begin thinking about how to build service bundles that can be packaged and shipped with each product they sell.
Vendors can and should be a part of this service packaging. However, one thing is certain: The vendor or channel partner that gets this right will stand to make a lot of money delivering services to SMBs.
Mike Jude is an analyst with Nemertes Research. He can be reached at email@example.com.