Mid-sized businesses suffer from middle-child syndrome, says Microsoft Corp.’s general manager of midmarket marketing, and the tech industry hasn’t done a good job catering to their needs.
“Most of the IT industry, including Microsoft, quite frankly, has put a lot of effort into serving enterprise customers for a long time, and more recently, in serving the needs of small businesses,” Davide Vigano said at a Microsoft-sponsored roundtable on mid-sized business technology.
Mid-size businesses are stuck in the middle, Vigano said. “They can’t deploy enterprise solutions, because quite frankly, they don’t have the resources to do it. And they cannot deploy small business solutions, because that would be the wrong thing for them to do.”
His “middle-child syndrome” allusion speaks to an identity crisis of mid market companies. “Very often a mid-sized business used to be a small business and became a mid-sized business. Some of them want to be an enterprise. Some of them are quite happy to stay a mid-sized business.”
While an enterprise has a large staff of technology specialists, a mid-sized business tends to have a few generalists to cover the waterfront. In fact, said Vigano, of 1.4 million mid-sized businesses worldwide, one million of them have a single IT person.
“Very often, mid-sized businesses don’t have IT budgets,” he said. “Every year, they have to fight for their budget. And usually, the fight goes like this: ‘Do we do another server farm and rev the servers, or do we buy two more trucks?’ … It’s really hard to go to a CEO, an entrepreneur, and have that conversation, because that person really knows what those two trucks can do for him.”
U.S. small and mid-size businesses spend about 40 per cent more on IT than their Canadian counterparts, said Eric Gales, vice-president of small business, midmarket solutions and partners for Microsoft Canada. The longer that goes on, the harder it is to close the gap.
“The technology is there, the interest is there. We just have to get it translated more often,” Gales said.
Part of the problem is that single, overworked IT generalist often doesn’t know what the solution looks like.
Three years ago, Webcom, a producer of softcover books, ran 18 disparate systems on a 18-year-old AS 400. An average meeting, according to Mark Delvecchio, the IT and ERP business manager, the average meeting consisted of 45 minutes of arguing over the sources and reliability of the numbers they were using, and 15 minutes of making a business decision.
Webcom approached Microsoft partner Ideaca Knowledge Services to help figure out what the technology might look like that would work for Webcom. “Ideaca helped us decide that Navision was what we wanted, but we did the implementation ourselves,” said Delvecchio. Once they’d settled on Navision, Webcom added a Navision-certified developer to the rolls.
Delvecchio said Webcom took an iterative approach to reinventing its business systems – “If we can do this, we’ll see what else we can do” – beginning with the estimating system. Webcom had tried and failed to automate it three times before. “Our executive didn’t really embrace the sheer extent of how it would change the company,” he said.
With the new estimating system, the estimating department went from seven people to two, and the time for an estimate became minutes instead of weeks. Both those savings allowed Webcom to become more consultative with customers. “If all you’re doing is scrambling to get a price to a customer, there’s not much time to talk about anything else,” Delvecchio said.
Ideaca’s consulting manager for custom development and business intelligence, Richard Iwasa, said Webcom was a good example of a typical midmarket customer: constrained IT department, budget and total cost of ownership driven, cost-sensitive. Midmarket companies often don’t have the luxury of long-term strategy, he said, resulting in ad hoc organic growth.
Many midmarket companies see technology as a commodity, Iwasa said – e-mail, Web access, word processing, etc. Others, though, look for mare value: “How can I use this to improve my business? How can I use this to reduce costs?”