Selling to SMBs

Small businesses mean big opportunities for vendors in the Middle East. The SMB market is the place to be for sustained sales growth

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By  Stuart Wilson Published  March 28, 2005

Sales potential|~|SMBghassan200.jpg|~|Ghassan Lababidi, marketing manager at 3Com Middle East|~|There is no consensus between vendors when it comes to defining the small and medium business (SMB) sector. Some look at the number of employees, some the installed PC base, while others will categorise clients by revenues or IT spend. However, all agree that the SMB sector is moving fast and that channel strategy is critical for success. The year ahead is shaping up as a crucial period in the development and recruitment of SMB-focused channels in the Middle East. Vendors need a solid reseller base to reach such a wide customer base. There are only so many enterprise, public sector and large account projects to go round. Little wonder that vendors are flocking en masse to the fertile green fields of the SMB space as they look to accelerate sales growth in the Middle East. For many vendors, the Middle East SMB strategy is part of a much broader global push into a dynamic market segment. Hazem Bazan, regional SPO manager at HP Middle East, explains: “It is very clear that SMB is the fastest growing segment not only across the Middle East but across the world. There is so much potential within SMBs because of the diversity of their IT needs.” It is a message echoed by Nisar Khan, channel account manager Middle East and Africa at Trend Micro: “Many vendors focused heavily on the enterprise segment in the past and are only now turning their attention to the SMB and creating specific solutions for this market segment.” As more and more vendors turn their attention to the SMB space, channel strategy has rapidly emerged as a defining factor that determines success or failure. For vendors moving down from the enterprise level, making the transition from a one-tier channel strategy involving systems integrators to a two-tier distribution model using second tier resellers is a tough task. To serve such a fragmented customer base, building up channel breadth and reach is vital. Claire Jones, distribution manager at 3Com Middle East, explains: “The channel is key to the success of reaching SMBs. As vendors we do not have the workforce that will enable us to reach all the SMBs. We rely on the channel’s extensive breadth and coverage to reach the vast number of SMBs within the region.” Ghassan Lababidi, marketing manager at 3Com Middle East, continues: “Our strategy is to ensure that the channel has the right tools to help them target the SMB market. The channel needs to be educated on 3Com’s broad product offerings, regularly updated on new technology and new products and supported through the creation of end-user demand.” 3Com is not alone in lauding the importance of a balanced approach to push and pull marketing to ensure that the SMB strategy is a winning one in the Middle East. To reach out to this burgeoning customer base, vendors need to have motivated resellers on the ground and customers that fully understand the benefits of investing in technology. ||**||Channel recruitment|~|SMBSpurgeon200.jpg|~|Katie Spurgeon, regional channel manager at Veritas Middle East|~|Security software vendor Veritas has invested heavily in building up its SMB channel during the past year. As well as providing an insight into the reseller recruitment strategy, Katie Spurgeon, regional channel manager at Veritas Middle East, also highlights the variations applied by vendors when it comes to defining the small and medium customer environment. “We refer to the customers as small and medium enterprises (SMEs) and these are typically companies with between one and 30 servers,” says Spurgeon. “When you look across the region, 90% of companies fit into this category and that makes it a huge customer base to target.” To target such a wide and scattered audience, Veritas embarked on an extensive regional tour last year taking in an impressive 22 venues. This local outreach, combined with a clear two-tier distribution model involving Aptec, Mindware, Tech Data and an additional distributor in North Africa, has produced impressive results. During the last year the number of SME-focused Veritas resellers in the region quintupled and can now be counted in the ‘hundreds’ according to an upbeat Spurgeon. For HP too, the channel is a vital sales engine to drive the deployment of SMB solutions throughout the Middle East and take new concepts such as mobility computing out to a scattered customer base. HP has introduced SMB-focused initiatives that promote the benefits of its wide product portfolio to customers and plans to launch even more in the coming months. “We cannot address the SMB market unless we use the channel,” adds Bazan. “We are planning mobility initiatives that focus on both the channel partners and the customers in the coming months. SMB programmes have produced strong sell out in the last quarter thanks to the effective combination of push and pull campaigns.” Selling IT solutions to SMB customers is far removed from the world of enterprise sales where consultants and engineers can talk technology with dedicated internal IT teams. In many cases, SMBs do not have an in-house IT resource and this means that the benefits of IT investment need to be presented in a way that the client both understands and appreciates. For software vendors, it is also necessary to educate SMBs to look beyond their immediate hardware infrastructure needs and understand the value that software solutions can bring to their business. “The SMB market has been driven by hardware sales and many of these companies like solutions in a box that works straight away,” says Khan at Trend Micro. “This is changing now and many are starting to appreciate the hardware-software combinations that are on offer. It is also a case of training the hardware-focused resellers on the benefits of the software solution and using them to transfer this message on to SMBs.” ||**||Making margin|~|SMBHazem200.jpg|~|Hazem Bazan, regional SPO manager at HP Middle East|~|For resellers prepared to step up to the challenge, and build up the skill sets that allow them to deploy complete IT solutions at an SMB level, solid growth opportunities beckon. “This is a fast-growing market as more and more start-up companies emerge,” says Jones at 3Com. “For a reseller, the attraction is that the SMB sector does not require long-term planning or complex design issues. It also does not face the delays that are often associated with budget constraints at an enterprise level due to the large costs involved.” “The SMB can be a quick sale with reasonable margins made easy by vendors such as 3Com with concepts such as value switching,” adds Lababidi. “It is as simple as A, B, C: advanced features, the best warranties on offer in the market and customer-centric solutions that are easy to use and manage.” The technology issues facing the largest enterprises are mirrored at the SMB level. For vendors — and the channel partners that represent them in the Middle East — it is a case of taking these issues, addressing them in a way that makes sense to SMBs and packaging up the solutions in a way that makes them appealing to customers that may not have a dedicated internal IT resource. One method increasingly employed by vendors is the formation of alliances to pre-bundle software on hardware aimed at SMBs. The SMB sector remains one of the most significant opportunities for vendors to maintain their heady sales growth in the Middle East markets. With the enterprise customer base pretty much covered with established vendor-client relationships in place, the new battleground is the SMB market. However, for vendors to make the most of the opportunity they must display unwavering channel commitment and an innate understanding of the customer pain points that exist. ||**||

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