Consumer tech is making reseller life difficult in the SMB space

The increasing availability, and visibility, of consumer technology is catching the eye of many small businesses looking to cut corners on their IT budgets, but one reseller says it’s making life difficult for the channel and an analyst warns SMBs are exposing themselves to substantial security risks.

With rapidly declining price-points on many consumer products, such as external hard drives and wireless access points, as well as functionality designed for small home-based networks, consumer technology is increasingly beginning to seep into the SMB space says William Terrill, associate senior research analyst with the London, Ont.-based Info-Tech Research Group.

Terrill says one SMB IT manager he spoke with recently told him he was looking at using a 1TB consumer-grade hard drive to back-up his critical applications and carry them home, a prospect that raised alarms for Terrill.

“It’s like OK, and then what happens if your kids tie it into your computer and wipe stuff out?” asks Terrill. “It’s an interesting idea as a cheap backup mechanism for emergencies, but the security aspects become potentially disastrous for anything over than a very small office/home office environment.”

Wireless access point prices have also dropped dramatically, but lack the security necessary for a business environment. And with hard drives, says Terrill, while you may be fine with one device, with more than one management becomes an issue, and consumer products lack these management tools.

“It just isn’t something that mid or larger-sized enterprises should touch with a 10-foot pole,” said Terrill.

The problem though, he says, is that the IT staff at SMBs are techies. They go in to Staples or Best Buy, or onto electronics Web sites, and they see the prices for the consumer products. They’ll see a 2TB drive for under $1000, and wonder why they’re paying $5000 for what seems like the same product from Network Associates.

“It’s mostly the smaller businesses,” said Terrill. “The larger businesses have policy in place.”

It’s going to be a problem for resellers, he says, to compete with the margins of the retail outlets. While the $500 margin the partner charges goes to service, support, piece of mind, and a fast resolution and turnaround in case of trouble, Terrill says many smaller companies don’t see the risk, or appreciate it.

“The biggest problem the channel is going to have is proving their value-add,” said Terrill. “They’re going to look at that differential between the reseller and the retail price, and it’s going to be very hard to justify to a lot of these folks the price differential is worth it for the security of the enterprise.”

It’s a problem that Ernie Sherman is already running up against. As the president of Harris Computer Services, an Ottawa-based IT solutions provider, Sherman says he’s running-up against consumer technology as a competitor in the SMB space and it’s changing his business practices.

“If the client doesn’t value our expertise we move on a lot quicker,” said Sherman. “It’s a struggle to get them to look at the business case because they’re looking at everything as a commodity.”

It’s a case of a little knowledge being a dangerous thing. There’s so much information out there in the consumer space, says Sherman, that many SMBs figure they don’t need the channel and can just buy the boxes and do it themselves. The channel has an education job ahead of it, he says, to show businesses the value of its expertise and experience, but it’s a lesson many SMBs may not be ready to learn until it’s too late.

“Most people in the SMB aren’t educated enough (on IT) to understand the differences between a security product that should reside in the house and a security product to support a business network,” said Sherman. “They look at a D-Link router as being $80 and figure their secretary’s boyfriend can shove it in.”

Sherman says he had a recent client that was looking at securing its branch office communications to facilitate the use of an accounting system between multiple sites. Harris pitched a solution built around technology from Sonic Wall, but he says they didn’t get in the door because internal IT staff insisted they could do it themselves with a D-Link router. Needless to say, says Sherman, security was comprised and the bandwith wasn’t adequate to run the system. In the end, they ended-up coming back to Harris for the originally-pitched full solution.

“It’s never a problem until it’s a problem, and the client has a hard time grasping that,” he said.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.

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