The clash between IT vendor hype and the reality of running a small business is clear. Ian Campbelllooks at how the recession has hit an already strained relationship
THE IT industry is responsible for more than its fair share of Groundhog Day moments, particularly for small and medium-sized firms who must get a distinct feeling of deja vu when there’s a knock at the door from someone selling a big vendor solution that will solve all their problems.
In the last five years Oracle, SAP and Citrix have all tried to push “lite” versions of their enterprise products to smaller companies that had not previously been on their radar. Others like Microsoft, HP and Dell have looked to build on their foothold in the sector by selling more sophisticated solutions. These endeavours are not exactly altruistic as they pitch into a global market valued at €193 billion.
Elements of big enterprise solutions inevitably trickle down to small firms, but it remains a notoriously difficult market to crack. Research from AMI Partners reveals that just under half of firms with less than 100 employees have any IT staff, so the challenge is making products and services that are easy to deploy and simple to use.
“It is the owner/managers or the accountant that often assume the IT role. They have very little time to make decisions and when they do and buy something, it feels like it’s coming out of their own wallet,” said Hugh Gibbs, research analyst at AMI.
Avine McNally, acting director of the Small Firms Association, said that her members are more tech savvy than they used to be but there is still a fear factor. “What they have works and there is a fear that if they move to new systems they might not get the same benefits or end up with bigger problems.”
The mantra of IT companies that customers must “invest to save” is falling on deaf ears, according to McNally. “People are more cautious than ever about making an investment in technology because they have more trouble accessing credit. And when they do have their hands on the money there is the temptation to put it into other parts of the business that need it more urgently.”
The recession has compounded a strained relationship. Credit is tighter, revenues are down and cash flow is restricted. Yet the vendors still plug away.
At a recent event in Stockholm, HP launched the ProLiant MicroServer for firms with less than 10 people, part of what it calls its Just Right IT portfolio, a range of appliances that integrate easily together. It also unveiled servers and storage devices bundled with Microsoft applications in an attempt to make virtualisation technology more viable for mid-sized companies.
Christian Kelley, European vice-president of the server division, explained HP’s approach. “Small firms want to expand their business but they don’t have time to mange their IT. So we’re launching a selection of products for them where everything works together. It saves them time and money and they don’t have to go to multiple vendors.”
The difficulties in selling to the sector is something that HP acknowledges which is why it puts its faith in experienced channel partners to sell the solutions, resellers that often assume the role of IT manager for companies with little or no in-house expertise.
IT Force is a services company that regularly fulfils this role in Ireland, primarily as a partner for Microsoft and Dell. Most of its customers have around 20 to 50 PCs, according to Joe Molloy, director of managed services. Its role is as much about giving advice as selling the kit.
“There is a mismatch between what enterprise vendors supply and what small firms need. They sell too much on the technical specifications and rely on people like IT Force to fill the gap,” he said. “Ultimately, all managing directors really want to know is the price and that it works.”
With 12 years experience of working with small firms IT Force said that the market was starting to change. “I wouldn’t say it’s any easier to sell but people now expect to have technology. They want more of it and they want to get more out of it,” said Molloy.
Hugh Gibbs put this down to the consumer experience where a new generation of gadgets has made the benefits of technology much clearer. “Owner/managers now have products like smart phones and expect to bring similar technology and the same levels of simplicity to bear on their businesses.”
The cloud is another way of doing things that some analysts identify as the endgame when it comes to enabling small firms with technology. Outsourcing the entire IT infrastructure to a service provider’s data centre might be the best way forward for small firms, releasing them from the cycle of constantly investing in new appliances and the headache of managing them.
“Interest in the cloud and remote services has definitely increased in the last year, and there is no doubt that it has the potential to change a small firms relationship with IT,” said Gibbs. He believed it may well be a long-term solution for smaller firms once they get over security concerns about where their data resides.
ARE YOU BEING SERVED? HP'S NEW BOX OF TRICKS
The launch of the HP ProLiant MicroServer is the latest example of the trickle-down effect of technology for businesses, bringing server-based information sharing to companies of less than 10 employees.
About half the size of a typical entry-level server, HP is selling it as an alternative to sharing files and running applications off interconnected PCs.
The €265 starting price is a little misleading because it ships with an AMD Athlon processor but without an optical drive or operating system. They cost extra and unless the small firm is particularly tech savvy, they will need a HP partner to come in and set it up.
HP says MicroServer will handle standard applications like file and print sharing as well as smaller email and accounting packages, but said it is not built for running databases or heavyweight business applications.
