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The Mid-Market Comes to Life
Mid-Market companies, largely ignored during the dot com boom, are coming into their own as solid businesses in a more sensible marketplace.
Posted May 14, 2001
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The New Economy wasn't kind to mid-sized companies in terms of public awareness. Nine months ago, dot-com mania split the public spotlight squarely between the growing hoards of electronic start-ups and the entrenched big names they were trying to topple. Everyone else was swept into the shadows.

But in the Post-New Economy, where dot-coms are pariahs and enterprises are no longer quite as desperate to "revolutionize" their information systems, the mid-market is emerging as a bright prospect in a bleak landscape. A growing number of vendors from all corners of the technology market now court the mid-market enthusiastically, revised sales forecasts and marketing plans in hand.

While mid-market company should bask in this new attention, they should be weary of opening the door to vendors that turn out to be Trojan Horses. Just because a vendor is selling to the mid-market doesn't mean it makes the best mid-market products. As a rule of thumb, mid-market companies are better served by vendors that have already traversed the mid-market terrain than by those that have only seen a map.

Mid-Market Action
The only surprise about the mid-market's rising popularity is that it took so long for the technology industry to realize its value. There are roughly 225,000 companies in the United states with revenues between $25 and $500 million (224,500 more, by the way, than are in the Fortune 500), which makes the mid-market the fastest growing segment of the U.S. economy. The mid-market is where companies are making huge leaps in revenues, experiencing 100 percent growth years and investing heavily in their future success.

It's also where companies face the ultimate make-or-break: Yes, I can make the transition from small, entrepreneurial, get-it-done company to a larger company with the right structure in place to succeed--or no, I can't. In many cases, the difference between "I can" and "I can't" is the vendor partners the company chooses to help them cross the bridge.

Crossing The Bridge
One of the most difficult hurdles a growing mid-market company has to clear is that of establishing process. Most of these companies are founded on a hardscrabble, entrepreneurial ethic that values what gets done more than how it gets done. Everyone does whatever is necessary to meet immediate objectives, which means the company can live to meet another payroll.

At some point in a company's growth, however, how things get done becomes as important as what gets done. It's time for the company to start acting its size, which usually means implementing a set of repeatable, systemic processes. Nowhere is process more important for a growing business than in managing customer relationships. Smaller companies usually cultivate and maintain customer relationships ad hoc. This kind of improvisation is a relationship killer--and therefore a business breaker--as a company grows in size.

One Approach Doesn't Fit All
Growing companies with the need to formalize their customer relationship management (CRM) practices have a few approaches from which to choose. One line of attack is the revolutionary approach: the company completely rethinks the way it does business, top to bottom, using as a template a sweeping, soup-to-nuts software package touted for its ability to establish process. Often this software was first designed to manage the complexities and convolutions of an enterprise-class business with some set of processes already in place. When a company aspires to be an enterprise, investing in enterprise solutions can seem like a step toward manifest destiny.

But the retrofit from enterprise to mid-market usually presents serious challenges. Designed at the executive level and then pushed down the food chain, the revolutionary changes created from a revolutionary approach frequently require many months, or even years, to implement. It entails process mandates, lengthy training classes, complex tools--in short, a dramatic change in the way the company's employees are accustomed to interacting with customers and reporting on their sales and customer care activities.

Chances are, however, that employees are tied so tightly to the company's entrepreneurial roots that they resent being retrofitted. The company then discovers that the only that's worse than spending a fortune on a new system is spending a fortune on a new system that no one will use. Somewhere amid the flow charts and mandates fundamental questions were obscured: Do the new processes help employees develop relationships with customers, or do they introduce a level of bureaucracy that neither employees nor customers will tolerate? Are processes fostering customer ties or hindering them for the sake of management-reporting tools?

The Other Side
A second, less invasive approach to process is the "injection" approach, which enables companies to gradually introduce process into the business by providing easy-to-use tools that are helpful to employees. In a way, it's process camouflage.

Companies taking this route start not at the executive-committee top but at the rubber-meets-the-road bottom. What can employees no longer do now that the company has more customers than can be called in an afternoon? What kinds of tools do employees want to help them automate routine tasks and maximize time for face-to-face customer interactions? Rather than supplanting their own ideas about customer relationships with someone else's idea of best practices, they provide tools their employees like and want to use--tools that can then be tied into a pervasive, process-driving (and management-friendly) system.

Chances are, this type of software was first developed not for the enterprise but specifically for the mid-market, by a company that understands how the mid-market works. Vendors that know the mid-market know that mid-market companies can't afford to spend their time on the internal gyrations of process enforcement. They understand that the most efficient way of establishing process where there was none is to provide a carrot, not a chair and a whip.

Food For Thought
Process is only one area a mid-market company needs to consider when choosing vendor partners. Cost matters, of course, along with speed, compatibility with existing systems and the ability to customize. Numerous companies from all over the market are loudly proclaiming that they meet these criteria and more. But when the stakes are this high, it's worth taking the trouble to find out who's a mid-market expert and who's an enterprise vendor in mid-market clothing.

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