Selling to the small and medium-sized business (SMB) market has major potential in Canada, but with tight budgets and lack of direction among those businesses, the channel here faces challenges.
Earlier this month , CDN, alongside Dell Canada and Microsoft Canada, hosted a live CDN Debate in Toronto to tackle the issue of growing your SMB customer base and selling to an often challenging market.
The event brought together Joe Ussia, president of Mississauga, Ont.-based Infinite IT Solutions and Christopher Woodill, vice-president of solution strategy at Toronto’s Navantis Inc., to take on the subject.
Lack of funds: Understanding the business plan
Typically, small budgets are a major barrier for partners to sell to the SMB. According to a 2011 report entitled “The State of the Canadian SMB” by ITBusiness.ca, nearly half of respondents’ budgets will remain flat for that fiscal year.
“I think moving forward, it’s going to be a bigger challenge,” Ussia said. For him, developing long-term plans for customers is the answer, rather than suggesting an intimidating forklift overhaul.
“Small businesses, in many cases, actually lack the expertise to develop those plans in the first place,” Woodill agreed. “We work from the strategy level down.”
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Business consulting, then, is as important as the technology piece. Woodill suggests being a partner at the planning stage. Then, if you can suggest solutions that are tied to those growth opportunities, you’ll be able to sell better.
Solution providers also need to be flexible and creative in their pricing models, he said. Leasing and managed services offerings at a monthly rate can be a way to combat tight budgets.
A large part of SMB spending is also focused on keeping the lights on — maintaining everyday things such as e-mail and phone systems, Woodill said. If you can provide solutions to minimize costs there, you can free up budget spending for bigger projects.
Who you target depends on the size of project and what you’re trying to sell, but it’s imperative to figure out who the decision-makers are as soon as possible, he said. If you’re working directly with an IT manager, for example, there might be three other people above that employee who also need to approve decisions.
In ITBusiness.ca’s survey, 35.8 per cent of businesses said their CEO sets the IT strategy, while 42.6 per cent said everyone in the organization contributes. Only 18 per cent of surveyed businesses said the IT department is responsible for IT strategy.
“For sure, you need to get to the purse strings,” Woodill said. “In a small business, that’s often the owner or company president. If you’re talking to the IT guy, you’re probably talking to the wrong person.”
If the business owner isn’t interested in talking to you, they probably aren’t serious about taking on a new project, Ussia agreed.
Lack of direction: Working with internal IT
Many small businesses lack internal IT staffs almost entirely. “I think one of the reasons why solution providers exist is because of this topic,” Ussia said. “We act as their CIO.”
A larger challenge comes when an IT staff does exist internally, but may be understaffed, inexperienced or simply untrained in certain solutions.
Sometimes the internal IT staff could be someone trained in finance, or what he calls the “infamous nephew,” — a family member with generalist experience working as the IT staff, Ussia said. Usually, internal IT acts as a “school nurse,” he said. They can typically provide a Band-Aid solution, but for something complicated like stitches, you need an expert.
That generalist vs. specialist dynamic usually leads to managed services agreements. But with larger organizations, “managed services” can throw people off, making the business owner and employees feel they’re losing control.
Infinite IT Solutions instead uses the term “shared support,” which is essentially the same thing, but makes it clear that his company isn’t taking over completely.
“I think the first thing to think about is flexibility,” Woodill said. Some departments are just set up in a particular way and are used to working a certain way. “You can either fight against that and try to change that or you can adapt to it.”
“We believe in picking our battles and picking what we’re good at,” Ussia said. Otherwise, if you promise too much, the internal IT people can become your enemy.
“Our customers find vendors really confusing in many cases,” Woodill said. “We never go to a customer and say, do you want to buy some SharePoint?” Instead, his team works to build a whole integrated story to show the business result.
Selling the cloud
“Customers simply don’t understand what cloud is all about,” Woodill said. “You need to think about the big picture around integration.”
SMB customers, for example, might be buying monthly applications for point solutions, such as Google Analytics, but none of those various cloud offerings are integrated with their IT infrastructure.
It’s not really helpful to talk about the “foggy cloud,” but again, focus on the business outcome, Ussia said. In many cases, the cloud may not actually save the customer money either, so focusing on outcome is again more important.
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For backup solutions, for example, his company might ask a customer what they think would happen to their data if their office were robbed over a weekend.
According to ITBusiness.ca’ SMB survey, 51.4 per cent of businesses surveyed thought cloud computing could improve or help grow their businesses.
But for now, SMBs will likely gravitate toward a mix of on-premise and cloud solutions, according to Ussia. “We also believe that it’s going to be a hybrid model for a very long time. Business owners love control,” so moving everything to the cloud might not be an option yet.
But, how do you convince a business to move toward a new solution when their legacy system is fine?
That can be tackled by seeing which direction a company’s competitors and industry are going, according to Ussia. In one case, his customer “didn’t evolve as their industry evolved and they lost market share,”he said. Proving that was incentive to move over to a newer and better solution.
Many vendors are now tailoring solutions specifically toward the SMB and those solutions can result in cost savings. However, in ITBusiness.ca’s report, about 30 per cent of businesses said finding products suited to the needs of the SMB was their biggest IT challenge.
Some SMB-focused solutions are well-marketed to particular verticals, Woodill said. But they tend to work best for small, niche companies, so picking the cheapest solution, even if it is tailored to their industry, can end up constraining many customers with wider business objectives.
Another solution, then, is to take generic products and make them work for the company’s industry-specific needs. Woodill’s team might take a CRM system and make it work fordonation management for a non-profit organization, or case management for a law firm.
Subscription models can also make a lot of sense for smaller businesses to save costs on tools such as business intelligence, data analytics and social CRM, he said.
Again, understanding the business objective, or helping the business discover it, is the first priority. “We get pushed by the vendors for revenue, revenue, revenue every day,” Ussia said, which is understandable. But without focusing on how SMBs actually run their businesses, you won’t get far.
Follow Harmeet Singh on Twitter: @HarmeetCDN