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SMB Gets R-E-S-P-E-C-T

12/22/07

Over the years we’ve heard a lot of table-thumping from large software vendors about their intentions to better serve the small-medium business market (SMB). Mostly, that’s all it’s been -- table-thumping.

Lately, though, they’re getting serious. The global enterprise-class market is now a heavily-grazed plain roamed by a few gigantasaurs like IBM, SAP and Oracle. To continue eating, they must develop small-fry hunting skills.

IBM’s experience is instructive. According to C|net, IBM’s SMB focus has been overseas where the company has seen early success in Brazil, Russia, India, China. Amazingly, about 1% of IBM’s 4% sale growth was derived from these countries last year. The recently cheapened dollar ought to put even more wind behind the back of this trend.

As it moves down into SMB markets, ISO will of course run into Microsoft and software-as a service (SaaS) competitors like salesforce.com. In the heated contest to ensue, expect all of these players to accelerate the pace of their SMB IT acquisitions.

What sorts of SMB IT will attract the greatest attention? Channelpro magazine says:

  • Data Storage and Consolidation. Specifically, storage attached network (SAN) hardware and software, formerly the province of larger users. Dell, Hewlett-Packard, IBM, and Network Appliance are offering new SMB products in this space.
  • Managed Services. The term refers to outsourcing IT expertise, most completely in the case where the vendor meets all its client’s needs -- everything from applications maintenance to help desks to security. The challenge here has been to deliver these services in a cost-effective manner. But increasingly sophisticated offshore operators and automated support mechanisms promise SMB-style economies.
  • Server Virtualization, or software that enables SMB’s to get rid of server farms, replacing them with one or only a few physical servers that run all applications and operating environments. Seems like such an obvious idea, you wonder why it only got hot a year ago. VMware leads this pack, with Red Hat, Novell, and Citrix in the mix and Microsoft as usual jumping in late.
  • Blade Servers. Imagine a house that you can expand or contract depending on the age and number of kids living in it. Server blades are interchangeable and make efficient use of space and energy. Another obviously economical idea, now increasingly within the grasp of SMBs. IBM and HP lead this segment.
  • SMB-Sized Applications. As computing power grows ever cheaper, the big enterprise software houses are trying to meet SMB’s halfway by putting out simplified app packages or by selling app access “on-demand”. Note Oracle’s “Accelerate” bundle designed to facilitate rapid installation and SAP’s “Business ByDesign” initiative.

But don’t forget the myriad of smaller software houses who have all along served SMB’s. These guys are about to get the respect and valuations that up to now have been associated only with “big iron” installations.

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