Johannesburg, 09 Nov 2005
Many small businesses struggle to manage rapid growth and cash flow, and therefore have difficulty envisaging, let alone implementing, sound long-term IT planning. As a consequence, resellers have to adopt a different approach to the market.
"Resellers have to work around the SMB market dynamics to be successful," says Errol Wills, managing director of business and financial software reseller and solutions provider, Lorge.
"SMBs have their own way of doing things, particularly the purchase of IT equipment, software and services. Their methodology is often constrained by cash flow and their approach is totally different to that of large enterprises with dedicated procurement departments.
"Published research indicates that about half of SMBs buy their technology from a reseller while some 30% buy directly or online from the vendor. A common denominator is that the product is always wanted quickly," adds Wills.
"Increasingly small businesses are accepting that they need independent expertise to help them set up their systems and networks and are turning to higher-end value-added resellers that provide support and service offerings."
In studying the market to plan its approach in this sector, Lorge unearthed some interesting research statistics. For example, when buying equipment that is seen as complex, SMBs tend to be very loyal and purchase what they know and trust. Yet less than 50% of them consider the suitability of a system for a particular purpose to be the most important buying criteria and only 27% believe that cost is the most important factor in such decisions.
SMBs also tend to upgrade software applications via annual maintenance fee agreements rather than throw them out and buy new ones every three years, as many larger companies do.
"They also seem to draw a line between low-value, commodity equipment and high-value items such as value-added services. As a specialist business and financial software reseller we find that it is better to avoid selling commodity products with the solution. Our efforts are better focused on support and services where we add the most value," says Wills.
He believes business software will continue to be a growing market among small businesses, with decision-makers continuing to source their software information from friends or co-workers, brochures and advertisements and the Internet.
"Online software expenditure continues to grow and there is still room for more significant growth as SMB decision-makers turn to more accessible channels to obtain their software product information. Software vendors looking to reach SMB decision-makers via the Internet need to improve online education and product information in an attempt to build a reputation with those accessing the information."
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