• January 15, 2008
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Big Changes in Solutions for Small Businesses

Adoption of CRM and similar applications by small and midsize businesses (SMBs) is no longer in doubt, according to new research by AMI-Partners. The report, entitled "Top Trends Reshaping the Small and Medium Business Solutions Market," identifies seven interrelated ways in which the market will change. "There's a changing dynamic in the market, with the potential to help businesses that haven't been customers of solutions vendors," says Laurie McCabe, vice president of SMB insights and solutions with AMI-Partners, and the report's author. "We've taken a look at the things reshaping how vendors approach SMBs, who the customers are, and what they're expecting." The seven factors listed in the report are:
  • The Consumerization of Business Solutions;
  • Software-as-a Service (SaaS), Chapter 2;
  • Turning the Integration Tide;
  • Transition to the Insight Economy;
  • Upward Mobility;
  • SMBs Catch the Web 2.0 Wave; and
  • Workforce Shifts Change the Face of Small Business.
Of these, consumerization may be the most noticeable to casual observers. After numerous attempts to deliver truncated versions of application suites originally intended for large enterprises, vendors are realizing that ease of deployment and use are critical considerations. While people are getting more comfortable with technology, technology is getting more comfortable as well. "Tech doesn't have to be hard, and consumer-oriented vendors like Amazon and Zoho are broadening their scope to include small business," McCabe says. "If implementation and deployment is a hurdle, many SMBs won't do it. Vendors must do what needs to be done to ensure the user experience is closer to the ease of an Amazon or Facebook." SaaS, touted by many as an ideal option for small businesses -- and still on the rise within the sector -- hasn't reached anything like ubiquity yet. In 2004, 10 percent of small businesses and 15 percent of midsize businesses used SaaS, according to the report; those figures had doubled by 2007, to 21 percent and 30 percent, respectively. As one might expect, the availability and falling prices of broadband Internet connections has helped the rise of SaaS, but other factors have played -- and will continue to play -- more important roles. In the report, McCabe outlines several of these factors:
  • The broadening of the SaaS playing field from niche players to also include large, established vendors;
  • development of SaaS ecosystems, offering customers a more cohesive approach;
  • emergence of varied, flexible, and affordable pricing options that align more closely to consumption;
  • richer, more flexible functionality; and
  • the growth of industry-specific SaaS solutions.
No single trend discussed in the AMI report truly stands alone, but McCabe's last bullet point includes a degree of insight into SMB users themselves, and how assumptions about them may need to change. "Demographics are shifting," McCabe says. "The trend of people starting their own businesses is on the uptick: Young workers just out of college, retirees and others who have left the 9-to-5 business world, stay-at-home mothers who don't want to give up on business and entrepreneurship -- all need business solutions to support them." The diverse backgrounds of these potential customers will spark a need for better-targeted offerings. "SMB marketing has traditionally been targeted to companies that want to grow their business, but many of these entrepreneurs don't want to grow beyond being home-based. They want to operate on their own terms, and may be turned off by the growth message," McCabe warns. "Vendors must recognize this and create best-fit opportunities." Related articles: Quality Management Market Forges Ahead DMG Consulting's latest figures reflect the market's increasing profitability, especially with SMBs. Are CRM Systems Too Complex for the SMB? "Getting staff to use the software" remains the biggest challenge for the small and midsize CRM user. SAP's Midmarket Design SAP Business ByDesign is the company's new on-demand midmarket product; much of its success hinges on SAP's channel strategy. Business Objects Gives SMBs an Edge New feature to the company's Edge series promises to address the financial concerns of midmarket companies. Maximizer Tries to Score a Perfect 10 with SMBs With Maximizer CRM 10, the vendor hopes to provide SMBs with the tools to compete. IDC Eyes Technology's Future In particular, small and midsize businesses (SMBs) will continue to show strong interest, with the sector expected to increase spending by between 8 percent and 10 percent. NetBooks Targets the 'S' in SMB The creator of QuickBooks debuts a new on-demand business management system, catering to the very smallest of the small-business segment. Unified Communication: Connected Anywhere, Anytime In an increasingly global economy, unified communications should be on the top of the to-do list for small and midsize businesses (SMBs), according to a new report. Are We There Yet? After years of false starts, wrong turns, and disruptive detours, SMBs can now steer themselves in the right direction: Marketing can finally get them where they want to go. Feature: The 2007 Market Awards: Small Business Suite CRM The small-business themes of this past year have been partnership and verticality. The New SMB: The Smart Midsize Business As their needs grow more complex, SMBs are turning to a wider array of information in order to make educated product and technology choices. SMBs Are Embracing Enterprise Software New research reveals that enterprise and CRM software isn't just for the big boys anymore. This Little SMB Went to Market SMBs are turning to specialists for products and services to help themselves take advantage of the Web. SaaS Is a Four-Letter Word for SMBs Adoption of on-demand solutions by SMBs continues to increase, but many smaller companies are still wary of the concept of software-as-a-service, according to a new study. SMBs Find Commonalities and Differences Small and medium businesses have similar broad needs when it comes to IT and growth, but the specifics are not so close; considering them one group may be a mistake. Midsize Businesses Are Fueling CRM's SMB Growth Microsoft, Oracle, Sage, and Salesforce are listed as some of the top solution vendors in the segment. Bigger Isn't Always Better CRM technology adoption in the SMB market is below 20 percent.
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