The New SMB: The Smart Midsize Business
Executives and technology managers at SMBs are facing many of the same challenges now that their counterparts at large enterprises dealt with years ago. According to a study by AMI-Partners, SMBs are sorting through a wider array of sources and information to make educated product and technology choices. Some of the factors driving this trend, the study finds, are information overload, the need to process information faster, and the need to be more productive to compete globally.
AMI's report, "Purchasing Decision Making Behavior of Small and Medium Enterprises," says that, in over 75 percent of U.S. small businesses (companies with up to 99 employees), CEOs are the main force behind procurement decisions involving technology and business communication solutions. In the sub-20-employee segment, this decision-making power lies almost exclusively with the owner. However, the owner's influence significantly declines in 50+ employee firms, where in-house technology personnel begin to have greater influence.
In addition, though the study reports technology buyers in small businesses first turn to their peers at other small businesses, vendor Web sites are the next most important source of information. "Vendors want to keep this in mind," says report author Sanjeev Aggarwal, vice president for SMB infrastructure solutions at AMI-Partners. "Making their Web site SMB-friendly and regularly updating it is critical."
As for the midsize business segment, business/technology magazines and trade/industry magazines are the most influential in driving purchase decisions. Vendors who want to reach these businesses need to focus on garnering more editorial and analyst coverage, Aggarwal says, while additional focus on getting product reviews is also helpful.
These stats are relevant because SMBs across the United States are expected to invest nearly $241 billion in boosting their technology and telecom infrastructure and services this year, a 6.5 percent rise compared to 2006, Aggarwal says. This represents a huge opportunity for vendors that specialize in offering solutions tailored for SMBs. "The key reasons U.S. SMBs purchase these solutions is to improve communication and collaboration with customers, partners, and employees and to boost business performance and employee productivity," Aggarwal says. "The priority and mix of information sources that influence purchase behavior in SMBs is changing significantly. Today's information resources include a mix of traditional and Internet-based sources and media."
One Internet-based source is social networking, which is becoming more important to SMBs because many of them lack in-house technology departments. The report notes that social networking "will fill that void and supplement managers' information sources." Aggarwal adds that "isolated SMB I.T. professionals often miss out on peer networking and the informal communication that happens at coffee machines in larger companies." The potentially rich vein of peer recommendations may be the future of SMB procurement policy; at the moment, though, "the importance of social networking media as trusted sources is still low," Aggarwal says.
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