Magazine Article | March 20, 2013

The SMB Market's $1 Trillion Secret

By Jay McCall, Business Solutions magazine.

Some resellers shy away from selling to SMBs, but there’s overwhelming evidence that indicates this could be a costly decision.

The SMB market has been a staple for the channel for many years, and cost savings continues to be the primary driver for this market, which is often difficult to define. One buying trend that is changing with SMBs is their openness to managed services. “Because IT infrastructure is no longer a ‘one-box’ proposition, and instead encompasses private, hybrid, and public cloud offerings, SMBs are starting to embrace the cost savings and growth opportunities that can be achieved with managed services,” says Chris Cramer, partner manager for NetEnrich, a global provider of remote operations center services.

So, exactly how much potential is there in the SMB market? “Analysts at Gartner say the SMB market is projected to cross the $1 trillion mark in IT spend by 2015, and 42% of SMBs are expected to increase their IT budgets during that time,” says Matt Taylor, CEO of Mercury Payment Systems. “These numbers are encouraging, but keep in mind that many SMBs are still worried about how to manage technology once they’ve purchased and deployed it.” Mercury Payment Systems’ research suggests that many SMBs suffer from a lack of internal resources and IT skills, so the solutions that will be the biggest winners are the ones that are easy to use, work with customers’ existing infrastructures, and come with customer support.

Two IT Wants SMBs Can’t Live Without
Honing in on the hottest products and services SMBs are clamoring for is a difficult task, but recent feedback from several industry experts point to two that should be high on your radar: mobility and the cloud.

“Mobility is on everyone’s mind, and the BYOD [bring your own device] movement is fueling the discussion and making it critical that MSPs [managed services providers] have a mobile device management [MDM] tool and a cloud services strategy that aligns with their sales and technical talent,” says Marco LaVecchia, director of sales at N-able Technologies. “Not only are mobile devices a top seller and a technology that the end users ‘get,’ they are great conversation starters for MSPs who offer mobile device management.” N-able’s research found that the value to customers is not so much about the monitoring as it is about the management of mobile devices. For example, being able to remotely reset a password or wipe a device clean if it’s lost or stolen are important services VARs and MSPs should be providing. “Knowing how to package an MDM offering is going to be the key issue resellers need to address,” says LaVecchia.

The cloud used to be a topic that many analysts thought would be embraced by the enterprise first and SMBs later, but what actually happened was the reverse. “Despite an increased interest in the cloud among SMBs, there are still many SMBs that are afraid of it or don’t think it’s secure enough for mainstream use,” says LaVecchia. “Others don’t understand where it can help their business. The MSP’s role is to help its customers make sense of it all.”

Avoid Common SMB Pitfalls
Even though SMBs share a lot in common with one another when it comes to number of employees and annual revenues, that’s oftentimes where the similarities stop. “One of the biggest mistakes resellers make when selling to SMBs is relying on a cookie cutter model,” says NetEnrich’s Cramer. “To win in this market, resellers need to provide solutions that are customized for each SMB customer.” Put another way, if you don’t align the business problem with the right hardware, software, and managed services, you will lose that client.

“Many IT solutions providers have been relegated to ‘commodity’ status because their primary focus is trying to undercut their competitors,” says Mark Sokol, senior product marketing manager at ConnectWise. The bottom line is this: Low-cost providers eventually fall into the trap of being overworked and underpaid — two things an entrepreneur desperately needs to avoid. Sokol offers a couple of tips to help MSPs avoid this common trap. “Instead of selling cheap data storage, engage your customer and find out, ‘What is one hour of downtime worth to your SMB customer? What about a full day?’” says Sokol. “Once you get them to start putting a dollar amount on a business pain point like the threat of lost data or productivity, you’ll find that the solution you offer will be worth more than a few cents per GB.”