Got to love the SMB

Despite the SMB being the target of virtually every vendor in the Middle East, IT and the people responsible for it within the SMB are still undervalued, delegates at an IDC conference were told. Daniel Stanton was there.

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By  Daniel Stanton Published  March 26, 2006

|~|vanheerden200.jpg|~|Van Heerden: IT is not the same value to SMBs as it is to the corporate sector.|~|If any IT manager operating in the small-to medium business (SMB) field feels unloved and unrecognised, they are not alone. Paul van Heerden, research manager of IDC, opening a recent conference, confirmed to the assembled IT managers what many of them already felt: they are undervalued.

According to IDC, some two-thirds of SMBs in the Middle East do not have a dedicated IT team. Perhaps recognising this, many of the products on display at the event were designed to be simple to deploy and configure.

"IT is not the same value to SMBs as it is to the corporate sector," said van Heerden in his presentation. "The IT budget is typically less than 1% of annual turnover. This implies that it's not a big budget item and not very important."

A big budget sector it might not be, but someone still loves the SMB - the IT vendor. Attracted by the sheer volume of all those not so big budgets, the underdeveloped IT infrastructures of the SMB are where vendors are now focusing their efforts. This was evident at the IDC-hosted conference and exhibition roadshow, which visited Saudi Arabia, Qatar, Amman, Bahrain, Kuwait and the UAE, and gave SMBs the opportunity to meet with IT vendors and discuss their needs.

There is a simple reason for this, explains Jamie Dewar, SMB manager for Cisco Systems: "We know from the research that we've done, and IDC confirmed it, that in the next four to 10 years, 40% to 60% of the IT spend will come from SMBs," he says.

"It's a huge market, we're absolutely focused; that's why we're investing US$2b in the market in 30 new products."
Survey data from IDC discussed at the conference revealed that the main concerns of CIOs in the Middle East are contributing to the bottom line, consolidation, and managing cost. Two-thirds of IT spend in the region was on hardware, with IT services accounting for 19.8% and software for 13.2%.

"This implies there is a lot of infrastructure moving into the industry and there is a lot of organic growth'" said van Heerden in his address. "Hardware spend will eventually go down and software will go up as you try to get more value out of your systems."

For the moment, vendors, who presented at the event were happy to encourage further hardware spend and focused on the value of their SMB solutions. Among the vendors present were several who are better known for providing corporate solutions but now want to build their presence in the mid-market.

Cisco was one of those, and showcased their data and voice communications solutions, CallManager Express, Unity Express, and Integrated Services Router, which are designed to be simple to deploy and operate.

Hassan Hamadani, marketing executive for Emirates Computers, says that overseas-based vendors have been slow to see the potential of the SMB market, but are now making a strong push for customers. He says that the high turnout reflects the growing number of entrepreneurs in the Middle East.

"You have to consider how Dubai is growing, and with an industry that's growing you have a lot of people who want to try to start their own thing," says Hamadani.||**|||~|bentley200.jpg|~|Bentley: Cost and complexity has been an issue.|~|He adds that local knowledge and support was an important factor for many customers.

John Bentley, sales director Middle East for Hitachi Data Systems, says that the market is now ready for the kind of solutions that are now emerging from the vendors.

"With fibre channel storage attached networking, even with NAS (network attached storage) solutions, there has been high cost, high risk and probably a higher degree of complexity. SMBs have stood back from that and they've been worried about it," says Bentley.

"Just over a couple of years ago, well over 50% of the implementations were still direct attached. Now SMBs are waking up, they're looking at other solutions; they're looking more and more at a network storage environment.
"I think the businesses have caught up and the solutions have now become available at affordable prices with less complexity for this market." He adds that HDS is able to bring down technology from its corporate products to benefit users of its SMB products.

Globalisation was another concern for many SMB users in the region. Ranjit Rajan, marketing manager for Epicor Scala, told the audience that it was important to use IT products that could cope when they were applied beyond the Middle East.

"Customers here are no longer restricted by the boundaries of the UAE or the Gulf, so you need an application that will standardise your processes across this region as well as across the world," said Rajan.

Maged Talaat, Microsoft Dynamics product manager, Microsoft Gulf, was there to speak of the benefits of its new Customer Relationship Management (CRM) solution.

"It's an easy system, it's customisable and can be implemented quickly," Talaat said. He added that Dynamics offers out-of-the-box functionality for companies who did not have the time or resources to customise their CRM solutions, but those that did could add additional modules.

Ramin Attari, Nortel's vice president Middle East, was one of the vendors to urge SMBs to invest wisely rather than excessively.

Attari told the room: "In order to compete in today's fast-moving environment, successful small-to-medium businesses need to create solutions based on appropriate technologies implemented well and cost-effectively.

"Typically, today's smartest and most flexible solutions to business communications are based on Internet Protocols and on what we call converged solutions: business systems that combine voice and data to reduce costs, increase efficiencies, and speed response and reaction times."

The day ended with a panel discussion between invited IT consultants. Amr Selim, management trainer with the Knowledge Network, asked: "Do you find yourselves buying the latest technology and struggling to make anyone in the organisation use it because you haven't got the budget for training, and at the end of the year maybe only one person can be sent to train?"

Murmurs from the audience suggested that he had identified a common event.||**||

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