SMB Comes of Age, Needs IT on Tap!

SMB Comes of Age, Needs IT on Tap!

The demand for IT services from the SMB sector is growing. It is a market that is characteristically different from large enterprises. Until now, the IT industry has seen this as a market for niche solutions in hardware and software. Despite an abundance of options and limited in-house knowledge, the plight of SMBs is far from being met.

The business needs of SMBs demand ‘holistic partnership’ .

This calls for a different service model, which relieves the segment from the challenges. ‘IT on tap’ is about making IT available as remotely managed and hosted services. TCS, with 35 years of IT solutions experience and expertise in various verticals, is making this happen by bringing IT as a Service catering to the needs of SMB.

Introduction

IT vendors, business financers and telecom service providers, all see a new business opportunity at the frontier. By and large, the industry has ignored the emerging market for small and medium enterprises – in India alone it is valued at USD 9.94 billion in 2007 (Source: AMI). The SMB spend on IT accounts for 57% of the global IT spend and is rapidly growing. Infotech spending by SMBs in APAC is estimated to exceed $95 million in 2007.

With technology emerging as a key driver for Emerging Enterprise Business (small and medium business), their technology needs are no longer confined to niche products and services, that can be delivered with little thought or consideration. Rather, this segment demands state-of-art solutions to scale up alongside the business and service providers to adopt matured operating and business models to service them.

SMB is a burgeoning economic component that is capable of driving economic growth in its own right. In Germany 46% of the GDP is contributed by SMBs. They have customers like Siemens, BMW and SAP setting standards for them. In India, contribution of SMBs to exports is 46%. SMBs now operate with a higher level of sophistication than before and the need for IT services to reflect this evolution is now at a critical stage.

For IT services companies to scale up to service SMBs, one may be inclined to think that it would be a natural augmentation of services for them. For instance, we may think it is easier for the SAPs and Oracles of today to service the growing ERP market. On the contrary, SMB is a different ball game. Products and solutions that have traditionally served large enterprises will find it difficult to unlearn and rebuild solutions to the characteristic needs of this segment.

First, small businesses are constantly battling capital constraints. Interest rate fluctuations and capital investments continue to plague them and assets needed for IT adoption are usually deferred. Instances of cost over-run or failures are an inevitable part of IT implementations in large enterprise segments - similar problems in an SMB can be fatal. What most SMBs would like is to pilot less complex solutions and scale up as the company begins to realize actual benefits. This can however, lead to a business compromise, where SMBs could end up taking lesser solutions not meeting the desired need. Therefore, the service model has to mitigate the risk of adopting expensive feature-rich solutions. And, finally, SMBs would like to invest on phased basis in order to allow investments return cash flows.

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