Monday, November 14, 2011

SMBs a Bright Spot for IT Sales and Marketing into the New Year?

Hopes for the much anticipated economic recovery in 2011 were recently dashed as the European debt crisis proved worse than anticipated, and the US credit downgrade added additional uncertainty.  As a result, several analyst firms have dropped their spending outlooks, and are predicting tight IT budgets for the New Year. IT solution providers are quickly reacting to the pessimistic forecasts with a sales and marketing strategy rethink – trying to appeal to today’s more stressed and frugal buyer.

But the news is NOT all bad. According to SpiceWorks latest State of SMB IT report, there was a 9% increase in second half 2011 budget forecasts, the highest planned budget uptick over the past two years. Despite all of the negative worldwide economic news and sentiment , and decided impact enterprise IT spending, small and medium business leaders are optimistic enough to grow IT spending further.

According to the 962 respondents, SMB IT spending on hardware, software and services has increased from an average of $108K per organization in 2009, to a planned $143K in the second half of 2011. Hiring demands are increasing at the same time, from a low of only 20% planning staff additions in the latter half of 2010, to 31% currently planning staff additions. These findings are leading some to predict that the ability to attract and retain talent will quickly become a major IT challenge.

SMBs are leveraging more cost efficient and agile IT strategies to be frugal,  but at the driving business operating efficiency and effectiveness. As a result, SMBs have invested more in certain infrastructure areas, especially virtualization, up 7% from prior period, and cloud computing, nearly doubling every six months, especially in storage and backup services.  Spurred by mobility and usability demands, the survey revealed that tablets are taking SMBs by storm as well.

SMBs Ready to Celebrate Good Times?
Even though growth is evident for SMBs, pressures remain to drive IT and business operations cost savings, while creating a more flexible / mobile environment for business success.

Here’s where we think the SMB challenges will  be for 2012, and tips for how IT solution provider sales and marketers can best succeed in addressing these opportunities:

1)      Do More with Less – SMB IT has to wear many hats, and although budgets are increasing, likely the innovation and service demands on IT are outstripping the modest increases. As a result, SMB IT will struggle just keeping the lights on, having little time to investigate new opportunities, and struggling to find the time and budgets for new and innovative projects.

Tip#1: Be Provocative – SMB IT leaders are looking for consultative help to identify issues and opportunities they might not have been aware of, and prioritizing key issues/ opportunities of which they are readily aware, but having a hard time convincing  frugal senior management to address. Leveraging research white papers, case studies and diagnostic assessments, sales and marketing can help increase opportunity awareness and prioritize that important IT infrastructure or business solution.

2)      Risk Adverse – small businesses have to get the most out of every investment, and although they are more optimistic than larger enterprises, remain risk adverse, fearful that they might make a wrong project bet. For SMB IT leaders, and the senior business managers and owners they report to, it is often easier to maintain the status-quo, than to take a chance and risk change.

Tip #2: Prove that there is a “cost of doing nothing” – armed with research, case studies and tools, sales and marketing can help quantify that the status-quo is costing the organization more than expected. This can importantly prove that the SMB is spending more than they should be on IT or business operations, wasting money with poor business processes and productivity inhibitors, or losing key business opportunities.

3)      Price Focused – As one might expect when times get rough and budgets are constrained, price dominates the decision making process for the vast majority of buyers, with some 64% of 448 small and medium business respondents indicating such in a TricomB2B / University of Dayton survey: The Considered Purchase Decision. 

Tip #3: Elevate the Discussions beyond Initial Purchase Price: In a price-focused environment, discounts will gain attention and often can be enticing to frugal buyers. Appealing to the discount shopper in us all can prove successful; however, most solution providers need to elevate beyond the “discount dance”, elevating the discussion so that buyers understand that lower initial price might actually be more costly. Research, case studies and tools to quantify lower total cost of ownership (TCO), the cost to own and operate the asset or service over the useful life, can help move the focus from up-front price. As well, quantifying the incremental business value of the proposed solution can help SMB IT understand the ROI and payback of perhaps paying more up-front .

4)      Need to Leverage and Empower Business Resources – Most small and medium businesses have limited human capital and business assets by which to succeed. They need to get the most out of each and every resource, and technology is often utilized as a potential multiplier of business efficiency.

Tip #4: Prove Business Value: With the current economic-focus, it is important to help quantify how IT could potentially be leveraged to improve business productivity, streamline processes and drive resource utilization improvements. White papers, case studies and tools that can help IT quantify the value of proposed business-focused IT investments can help to economically justify and prioritize such projects.

5)      Need to Serve Customers Better and Innovate to Gain Competitive Advantage – Most markets are experiencing more empowered customers with heightened expectations, more pressure from competitors to keep customer relationships secure and market pressures to capture and grow limited new revenue opportunities. There is more pressure than ever to improving customer relationships and competitive advantage via social, marketing, sales and service technology.

Tip #5: Prove Customer / Competitive Value: Each SMB has unique and growing customer and competitive challenges. Providing the research, white papers and tools to tie solutions and proposals to addressing these key goals, and quantifying the value of improved customer relationships (such as increased customer retention and lifetime value) and competitive market share improvements, can help to justify and prioritize proposed customer / competitive focused IT projects to frugal senior managers / owners.
The Bottom-Line
Even though good economic news is hard to come by, SMBs might represent the one bright spot for IT vendors in 2012. 

However, even with the proposed budget increases, SMB IT leaders are still forced to do more with less, remaining quite risk adverse and price-focused. Business, customer and competitive demands all remain high, likely outstripping the modest expected budget gains. This presents unique challenges for IT solution providers seeking to capture more SMB opportunities in the New Year.

Successful sales and marketing groups will recognize the spending bright spot, putting in place the content marketing and sales enablement strategies to help facilitate SMB IT to address the challenges of modestly increasing budgets in tough times. This should include:

1)      Being provocative to help consultatively uncover and prioritize opportunities;

2)      Helping prove to buyers that there is a “cost of doing nothing”;

3)      Educating the buyer that initial purchase price should not be the only decision factor, instead elevating the discussion to include total cost of ownership (TCO) and incremental value

4)      Quantifying the business value of solutions, particularly how IT can be used to improve business efficiency;

5)      Proving the customer / competitive advantage of proposed solutions, especially how IT can be used to drive business effectiveness.

Sources:
State of SMB IT 2H 2011, SpiceWorks

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