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SMBs: Large Software Vendors Set Their Focus on Small
The Fortune 500. Large companies have long been the target for software companies. The contracts were big and so usually were the margins. But that’s no longer the thinking. Vendors have moved their focus to SMBs, companies with between 200 and 2000 employees:
Headline: SMBs will be IBMs Biggest Market in Five Years.
Headline: Oracle Revs Up Battle for Mid-Market Applications Customers
Article: …HP and its rivals, which include IBM and EMC, believe the SMB market offers the best prospects for new customers…
Article: …Embrace Small and Midsize Business: Microsoft remains the SMB king…
Gartner estimates that the 80 million small and midsize companies in the US will spend $450 billion in 2007. In the first quarter of 2007, IBM had $4.1 billion in SMB sales compared to $6 billion in financial services, their biggest vertical. Soon the SMB market will become IBM’s largest.
IDC reports that IT spending for SMBs will grow 8 percent in 2007, but the report notes that not all vendors are correctly packaging their software to sieze the opportunity. Many software vendors strip out features and lower prices to address the small to mid-market.
IDC reports rather than stripping features software targeting SBMs needs to be simplified or made easier to use, something that can often requires greater effort than creating the software and services bundle typically sold to large enterprises.
SaaS is one trend in IT that seems to be a perfect match for SMBs budgets and resources. Yet the IDC report found that only two percent of SMB respondents are using SaaS.
