Big ticket technology

The million-dollar question, if you're an IT vendor, is: what do SMEs want? The answer is simple: enterprise-level functionality with an SME price tag. Delivering that, on the other hand, is less simple.

Says Spartan CEO Kumaran Padayachee: "If you look at what distinguishes an SME from a corporate in terms of IT needs, SMEs are lacking from a knowledge perspective. A corporate invariably has an IT manager, director, CIO and 20 or 30 IT staff. When we deal with such customers, they know what technology they want and where they're buying it from. All they want is an operating lease."

An SME's IT infrastructure, capacity and know-how is very limited, he says. "They do not have the luxury of investing resources in those areas. They typically invest in sales and operational executives. What's left over goes to admin - and IT is last.

If we don't give them software they can use, they opt out of accounting software completely.

Steven Cohen, CEO, Softline Pastel

"With an SME customer, we start with the basics. They deal with technology needs reactively. They don't know what they require, where to get it, how to get it or how to structure it to meet their needs."

The problem with many of the approaches taken to the SME market is that they start with enterprise software and scale it down to SME level. Softline VIP sales director Sandra Swanepoel says the complexity of enterprise software can never be removed.

"SME-specific software has upgrade paths that can grow with a business, making it more efficient, as opposed to using enterprise software where the strengths quickly become an SME nightmare. Training on scaled-down products is also not comprehensive or complete enough, making the challenges even greater."

Synaq MD Yossi Hasson says SME versions of heavyweight proprietary solutions generally offer fewer features. "What if the particular whistle that has been left out is one the SME needs? And what if there are still features in the 'lite' version that the SME can easily do without?"

Softline Pastel's baseline package, Pastel Xpress Start-up, is targeted at the SME market. Pastel sells approximately 1 400 such packages every month, but the company realised that 30% of users who bought the package had stopped using it within a year. A survey showed that it was too difficult to use.

Says company CEO Steven Cohen: "Take a low-end SME with a receptionist who also does invoicing. These people never know what's a debit or a credit - and they shouldn't have to. The attitude from vendors has always been that you need a bookkeeper; the guys should have said: 'No! I don't have one and your software should be easy enough to use that I don't need one'."

Cohen's solution to the problem has been to rewrite the basic package from scratch, removing complex accounting terms and including plain English terms. Users can also go back and make corrections if they make a mistake, which, Cohen admits, they shouldn't be able to do because of the fraud potential. But, he notes: "The guys are going back to Excel where they can make corrections anyway. If we don't give them software they can use, they opt out of accounting software completely."

Synaq's Hasson says most of his company's customers are looking for Exchange alternatives. "It's a combination of licensing costs, the difficulty in supporting, managing and maintaining it correctly, hardware costs (Exchange 2007 requires 64-bit architecture) and the eco-system around it (Exchange requires Active Directory and a domain controller).

"Open source alternatives don't need this and can run as standalones on older hardware and give the same functionality. Also, not all SMEs require collaboration functionality. With the majority of OSS collaboration solutions, the licensing model says that if don't need the full suite, you don't license [the bits you don't need]."

He notes that some customers are definitely looking for collaboration and CRM suites. "A few are looking at accounting or ERP packages, but ERP is not big in the SME space. I think SMEs don't see the benefits; it's too complex for small organisations to run."

Obsidian Systems MD Muggie van Staden agrees. "The main thing SMEs are looking for is good e-mail and collaboration software - shared mail, calendaring, a place to put files and share them. A big thing we are starting to see [demand for] is central log-in and good SMME security, network gateways and backups.

"There is definitely a move to virtualisation. The guys are prepared to spend more on one large server and virtualise all their applications, including their Windows solutions on one Linux box. It's a question of cost and power savings people want to achieve. It's easier if you have one UPS driving two or three big servers than 10 small servers, and then there's ease-of-use.

ERP is not big in the SME space.

Yossi Hasson, MD, Synaq

"We see a lot of SMEs that have been given bad advice in the past and are running white box cheapies and now realising that it makes sense to use enterprise stuff in their environments. They're buying brand name servers because they get better value in the long run. We're seeing a lot of them realise that enterprise technology can fit into their budget and environment. A lot of time it's pure education," he says. "SMEs just think they can't afford or use [enterprise] technologies."

The main problem with reaching SMEs is the sheer breadth of the market. There are 1.2 million registered SMEs in SA, and countless more in the informal sector. According to the Ntsika Annual Review of 2000, small, medium and micro enterprises (SMMEs) contribute more than 60% to overall employment. According to the Annual Review of Small Business in South Africa, small businesses contribute 45% to 50% of GDP.

SMEs and SMMEs operate in every sector, from spaza shops to ICT resellers. Pinning them down to on-sell technology is something of a challenge. Vendors have focused on the M in SME as a smaller and more easily identifiable target. They also have bigger budgets.

The future for many vendors lies in this space. Working out how to reach SMEs through channel programmes, roads shows, traditional and new media, and direct sales is a must. For SMEs, finding partners that can help them navigate the acronym-heavy and hype-laden technology path is vital.

IBM and Westcon have both introduced initiatives aimed at bolstering the SME reseller market, providing much needed support to these companies servicing their SME brethren. Outgoing State IT Agency CEO Llewelyn Jones has made some firm announcements around supporting SME resellers. Many of the international vendors such as HP, Microsoft and SAP have targeted SME programmes. However, the fact that an SME in American terms has an annual dollar revenue exceeding most of Africa's large companies is a problem.

Whether any of SA's SMEs have noticed all the love flowing their way is also a matter for debate. Certainly, IBM's SMB director Gary Carroll is disappointed at the take-up of the SME Toolkit introduced by IBM in conjunction with the IFC and DTI last year. The programme is targeted at SME ICT companies and provides certification that their products will work with IBM, as well as membership of IBM's Partner Programme. Only three resellers have signed up.

Carroll says negotiations are under way with a further seven. "It's not just a matter of filling in and signing a form," he says. "We want to make sure they understand the programme, that their product runs on IBM, and that both parties agree to [their] signing up to the Express Advantage Programme too."

The short version? If you're an SME, beware the jargon and hype. Make sure you partner with a company that understands your business. If you're a vendor or reseller, good luck...