One of the interesting things about my job is that I get to talk to many people from a lot of different companies. Some of these conversations will turn into Test Center reviews; many won't. It dawned on me that I was being selfish in not sharing more of the conversations with readers, so I've made a nearly-mid-year resolution to do a lot more blogging based on the conversations I have.
One of my recent conversations with with Numara Software, a company that focuses on help desk software for the SMB market. They define SMB pretty broadly, saying that it includes any organization with 5 to 10,000 users. To meet the needs of this rather large market, the company has two core products, Track-It and Footprints. Track-It is positioned to serve companies from 50 – 5,000 users, with Footprints aimed at those with from 5,000 to 50,000 users. Tony Thomas, a product manager with the company, told me that both products center around five rules -- some quite predictable for any vendor approaching the SMB market, others looking like a real difference for Numara. Here's Tony's list, with my comments:
1. Give customer more for less, more flexibility and functionality for a smaller purchase price. This one is an "it goes without saying" sort of thing for a company that wants to play in the SMB space. It doesn't really matter how good the "value proposition" of a product is: If an SMB customer can't afford to write the check to start the installation, no amount of value is going to make any difference. I've seen too many companies (especially those that start out in the large enterprise space) lose sight of this basic fact.
2. Provide flexible products, since most customers are constrained from a resource standpoint. SMB customers aren't all that different from enterprise customers in the features they want -- they're very different in the resources they can devote to deploying technology to attain those features. I've had several conversations in the last few days with vendors who talk about SMB customers sharing the trait of very limited IT staff resources -- often down to the point of not having even a single dedicated IT staff member. Creating a product that can be rolled out (and supported) by a single IT generalist, or even by a contract resource, makes a great deal of sense for the SMB market.
3. Provide a series of feature and functions that help uncover assets, problems, etc. This rule gets to the point of helping customers know what they don’t know. OK, here's one that is important, especially for organizations on the smaller end of the SMB scale. Often, a truly small company doesn't have sufficient expertise to understand just how much they don't know about their operations and infrastructure components. Systems that are active in discovering system configurations and parameters, and then quite logical in how they display the information, can make a real difference in the operations of an SMB organization. The trick is to help an IT staff member who's serving as chief cook and bottle washer figure out which information is important, and why, without getting bogged down in tutorials or excessive detail.
4. Self-help. This is quite cost-effective for most companies of any size. You want to give users the means to help themselves, from resetting passwords to one-click installs, to central help files. This reduces time and knowledge requirements for technicians. Simply put, the more you can help users avoid calling on an IT staff resource, the more cost-effective the solution is going to be.
5. Be proactive. Help organization anticipate issues and plan for them. Vista is the most recent example of a technology that organizations are beginning to plan for -- many organizations will gratefully accept any assistance a system can offer in figuring out how to transition from one generation of technology to another.
Domestically, Numara sells through a direct channel. I found this quite interesting, since most vendors depend on an indirect channel -- a network of resellers and consultants -- to sell their products into the SMB space Numara has a professional services group that’s responsible for installation and configuration, training, and best-practices work, and it's with this group that the responsibility for helping customers make the software fit their way of doing business lies. Thomas told me that the majority of Numara's customers are in the smaller segment of the SMB space, but the product is moving a little up-scale. The reason given for that shift was interesting:
When Numara started in 1991, Thomas said, it penetrated the smaller companies in the space and stayed there. Today, the majority of their business comes from companies with 5,000 or fewer users. Now, though, budgets are shrinking for companies of all sizes, so larger companies are looking downstream, to products from vendors like Numara, rather than at products from traditional enterprise players like Tivoli or CA. Based on what Thomas said, it's a simple case of enterprise IT managers looking at the lower acquisition cost of software intended for the SMB space and deciding to see whether the product will scale to lots of users. This kind of market-merging will, I think, make it more likely that segments will increasingly be defined by pricing and licensing models, and by the type of sales team that calls on the customer, rather than the absolute number of features offered. Enterprises win with lower purchase prices, and SMBs win because the features traditionally found in enterprise products will keep migrating down-market.
I asked Thomas about the seductive quality of these larger customers knocking on Numara's door, and whether the company would look to move of of its business to the larger companies. He told me that it’s easy to be enticed by the large accounts, but that if the "S" starts moving out of the SMB, the company will need to take a look at what they're doing. He said that Numara had decided to expand into the larger customer space by acquisition, rather than refocusing. He said that they bought Footprints so they could fulfill the needs of the large companies without forgetting the smaller firms. He pointed to a market dynamic that's seeing the larger firms fighting to move down into the smaller customer space, with the result that the upper end of the SMB market is becoming more and more competitive. Numara, Thomas said, is trying to stay focused "on the very small end where there’s less blood in the water."
I thought it was an interesting conversation with fascinating comments on the market and one vendor's approach to success with smaller companies. I especially liked the very solid logic behind a continued focus on the smaller end of the SMB market. It's a segment that, I think, is going to do nothing but heat up over the next couple of years. From an IT perspective, it's a great time to be a small business.