About 40 percent of U.S. small and medium-size businesses (SMBs) are planning to spend more money on technology in 2004 than they did this year, but IT vendors will need to make sure they deliver appropriate technology at the right price, said analysts from The Yankee Group at the Boston company's SMB Forum Monday.
After making do with their current infrastructure and software environment over the last two years, many companies with fewer than 1,000 employees have decided that it is time to upgrade, driven by improvements in broadband services, wireless communications, and customer-relationship management software, said Eileen Eastman, vice president of business communications strategies for Yankee Group.
These businesses understand the need for technology to enable them to compete with larger businesses, but SMBs are more sensitive to price and return on investment requirements than their larger cousins, Eastman said.
In a recent Yankee Group survey, SMBs identified improving efficiency and lowering overall costs as the primary reasons why they purchase technology products, Eastman said. But acquisition costs are the single most important factor when these companies make purchasing decisions, she said.
Vendors need to deliver technology that meets the specific needs of these customers, Eastman said. "This is not enterprise-light. This is a different market with a different focus," Eastman said.
SMBs are looking to upgrade their software and hardware infrastructure, but many will also look to improve their network security, said Eric Ogren, senior analyst at Yankee Group. Spam and viruses are the two main problems plaguing this group of customers, and Ogren recommended that SMBs hire service providers to install content filtering security products such as intrusion detection software.
Many vendors once shunned the SMB market, but have aggressively gone after that market as enterprise customers cut back on their spending over the past few years, Eastman said. As those vendors compete for the attention of SMBs, they need to realize that the customers now expect more from them than ever before, she said.
One company that has responded to the concerns of SMBs is Hewlett-Packard (HP), Eastman said. HP recently kicked off a $750 million marketing campaign that brings the company closer to local resellers, she said. This allows HP to let local service providers, which are in a better position to understand a customer's specific needs, represent the company and provide services while selling HP hardware into a tricky market, she said.
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