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SMB Interest in Managed Services and SaaS Ripens
AMI-Partners reports 100 percent growth in interest among small-to-midsize businesses in managed software and services.
Posted Sep 7, 2009
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According to small-to-midsize (SMB) research firm AMI-Partners, nearly 40 percent of SMBs now say they are interested in deploying software-as-a-service (SaaS) solutions. Additionally, the survey that reaches 11 countries reveals that 60 percent of SMBs worldwide express interest in managed services, which is nearly a 100 percent increase from three months ago. SMB technology budgets may be contracting, but the willingness of business decision makers (BDMs) to seek new software options appears to be expanding.

"Ever since the downturn started, we have seen SMBs become much more willing and much more committed to investigating and exploring new IT solutions," says Chad Thompson, a vice president with AMI's market strategy group. 

The analyst explains that it's crucial to examine the areas of growth in context of the economy. Given tough conditions and constricted operating budgets, many small-and-medium organizations have terminated or significantly reduced the IT manager role, he says. That being so, they are looking more to managed services or outsourcing options that require little or no IT support. Thompson says SMBs are also looking increasingly at models that are pay-per-use or ones that have flexible payment plans. 

Thompson notes that medium-sized businesses in particular are paying attention to managed security options. "With both business- and technology-decision makers we are seeing more interest on the security front because they see it as something they can deploy relatively easily and inexpensively," he says. "If they are to become an acquisition target or unsure of their future, they can make that investment and plug and unplug as they need to." Not only are SMBs pursuing pay-as-you-go solutions and software that doesn't require hefty technology reinforcement, they are restructuring the decision process - and more importantly, giving the business side more technology buying power.

"One of the biggest things we are seeing right now is that business decision makers - they have become everything," Thompson says. "An IT purchase simply will not happen unless you have the BDM engaged early on." This changes the role of vendors and software marketers. "IT marketers [must] connect early and directly with BDMs in saying, ‘This IT solution is going to help you increase employee productivity in a tangible way.'" Thompson says the best method for engaging the BDM is through marketing messaging and value propositions that lend themselves more at an industry or vertical level. For example, let a doctor talk to a doctor, he says.

Also apparent in the study is a big uptick in the BDM's role in brand selection. Where historically, a business manager might have suggested that the technology department invest in a certain kind of solution - say a Netbook, for example - today, the BDM is along for every step of the buying process. The BDM is selecting the brand, color, and flavor of the technology product. This being so, Thompson says marketers must rethink their go-to-market strategies. "As an industry, software vendors, and more specifically, software vendor marketers need to do a better job in developing value propositions, messaging, and positioning in a way that speaks and resonates with the BDM more so than the technical decision maker," Thompson says, "which means less about ‘speeds and feeds' and more about 'How is this solution going to deliver and address my exaggerated pain points?'"

Not only do software marketers need to gear up for a different type of buyer, but they need to take note of an elongated purchasing process, as well. "To say [purchases] are prolonged is an understatement," Thompson says. "The purchase process has become longer so with marketing materials and software specifically, we have to be thinking about how our marketing materials move that SMB through the purchase process more quickly." The analyst suggests giving potential buyers more information upfront. Give them comparison charts of competitive solutions. In other words, pull out all the stops in educating consumers. Also, be sure to relate the marketing message to the business buyer. "In the world pre-downturn you could get away with marketing and value propositions and messaging that was more ‘speeds and feeds' and maybe talk about a great discount or promotion that drove the purchase to occur," Thompson says. "In today's world you have to connect with that BDM in a way that helps [the buyer] look beyond the IT budget and think about the solution ... and the value proposition."

The AMI vice president reiterates that we're dealing with a new world in terms of marketing in the IT SMB space - and it doesn't look like it's going to fade away anytime soon. Thompson says he expects that SMB sentiments toward the economy will become a bit more positive over the next year. However, he doesn't anticipate any purchasing spikes throughout the 11 countries AMI keeps tabs on. "In terms of both the cost-cutting efforts and the revenue-generating efforts," he says, "we are seeing a reboot [or a] a reset of behaviors." 

News relevant to the customer relationship management industry is posted several times a day on destinationCRM.com, in addition to the news section Insight that appears every month in the pages of CRM magazine. You may leave a public comment regarding this article by clicking on "Comments" at the top; to contact the editors, please email editor@destinationCRM.com.

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