December 10, 2019

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The changing face of SMB demand

by Stuart Wilson, Thursday 26 January 2012

Kathy Schneider, European executive director of channel marketing and programmes at Dell discusses the impact of changing SMB demand on small ICT resellers:

“The IT industry is no stranger to change and the need to adapt but in recent years, events have moved faster than ever. Resellers face a very different business environment now than before the credit crunch. The same period has coincided with one of the largest technology upheavals since the introduction of the desktop. The result is significant disruption to established SMB spending patterns, necessitating radical re-shaping of how resellers conduct their business.

The global recession required customers to look at their priorities and that put capital spending under harsh scrutiny. Then the explosion of hype around the cloud preceding 2008, rapidly turned into a practical reality, bringing with it significant operational benefits to customers, as well as the opportunity to manage costs more effectively.

As these realities continue to shape customer conversation, many resellers now feel they are working a lot harder for the same volume of business. Technology suppliers need a new approach, a new language and new types of expertise to survive in the market.

In late 2011, Dell commissioned some research, in which resellers in UK, France and Germany were interviewed about their SMB IT business and how it was changing. Most of the respondents (75% in fact) noticed a significant change in the SMB market and stated that they have experienced a drop in sales in the last few years. The main reason for this was attributed to increased sensitivity to prices - clients want more for their money.

When customers purchase technology they focus much harder on achieving the best possible price or procurement terms, inevitably restricting margins. However, even those margins were harder to come by as resellers reported a growing trend for customers wishing to maintain existing and sometimes outdated infrastructure rather than replace it. Customers are also more prepared to purchase cloud services, as an alternative to deploying traditional high capex investment architectures in-house.

Resellers reported that the value SMBs customers place in their relationship with them was as strong as ever. However, the new patterns in IT decision making is leading to them providing ever higher levels engagement and consultancy, just to slow down the rate of decline in revenue. The frustration for many resellers is that these conversations while high value to customers, don’t fit within a business model that they can monetise.

When asked what customers now require from vendor partners, the most important contribution, beyond supplying leading technology to emerge was the need for insight and information into new market opportunities. In addition, customers also wanted advice on how they can turn these opportunities into effective revenue streams, especially with regards to services and the cloud.

Today, a key focus for all vendors selling through the channel should be to give their resellers in-depth knowledge around the customers’ buying decisions - the financial aspects, the technology, the support systems, architecture, software expertise, including licensing and networking - everything that the solution should cover. Ultimately, customers still need the help of their resellers. Resellers need to be able to listen to their issues and have the toolkit they need to transform those issues into revenue.

The findings reflect a fundamental shift in SMB spending patterns in the years since the credit crunch. SMBs are continuing to restrict capital expenditure, instead extending the life of existing investments and adopting cloud services as a cost-effective replacement for traditional ICT infrastructures. SMBs are now seeking new types of advice and services from their partners. To maintain profitability, today’s resellers must adapt to these changing business models, while vendors must provide clear insight and a framework to monetise new opportunities.”


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