The SME standard

WHAT A DIFFERENCE two years makes. Back in 2000, I remember that two-thirds of the press releases crossing my desk carried a tag line resembling "XYZ software, enterprise solutions for Fortune 500 firms." Everything from product design to supply structure favored huge corporate accounts. The trend toward consulting and away from ready-to-run software and hardware put much of technology's promise out of reach for companies that didn't write six-figure purchase orders.

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One of the beneficial side effects of a long recession is that it knocks starry-eyed vendors back into reality. Large companies spend big when they have money and cut big when they don't. SMEs (small to midsize enterprises) don't have fat to live on in hard times, so they have to keep spending to stay in business. The smarter small operators are not only staying in business, they're thriving by selling to one another and by replacing the services that big businesses lost to staff cuts.

We got into this mess, in part, because vendors learned that big companies don't pay much attention to what things cost. Smaller companies play suppliers against one another and fret over every dime. They walk away from deals they can't afford. That pushes prices down to reasonable levels -- but only if there isn't someone bigger who says "I'll take it" when a vendor can't sell overpriced goods to more alert customers. It isn't that anyone turned lazy. IT got hit with rapidly escalating requirements and rushed purchases to keep up. People in the IT decision-making chain were given too little time to properly research acquisitions.

Some vendors still treat the market as though there is no upper limit on prices. They won't let go of boom-era economics despite the mountain of evidence that proves they're out of touch.

I'm not railing against big business. I just think this is a perfect time for large operations to map out long-term planning and purchase strategies that borrow from the SME model: Think before you buy, and no matter how badly you want something, be prepared to walk away from a bad deal.

And this time, when coffers are full again, don't snap back into the country-club mentality. Paying $50,000 -- plus $100,000 in consulting fees -- for an application server that's worth $5,000 doesn't make you a member of the elite (but I can think of some more accurate terms).

Big business should welcome and support the trend toward market-driven pricing and policies. Dell broke it off with Hewlett-Packard and Cisco because Dell decided customers wanted prices brought down. Quite true, but Dell is making a mistake if it thinks it only needs to work on the bottom end of its catalog.

Corporate customers can't cross into the consumer market to look for bargains. Adjustments must be made across the board, and it will happen when IT buyers of all sizes insist on fair prices and high-quality service. After things get better, they must stick together to keep the market sane. If big business splits off and starts rubber-stamping orders again, we'll be back here in no time.