When it comes to suppliers of technology to midmarket companies, big isn’t necessarily better.
According to a wide-ranging study on the IT purchasing habits of midsize enterprises, small and emerging companies stand just as good a chance of winning the business as do large players such as HP Enterprise, Dell EMC, or Microsoft.
Research on this subject along with commentary from senior IT leaders who serve on the Board of the Midsize Enterprise Summit found that they want emerging vendors who understand the midmarket, grasp the business model of their customers and are willing to invest in a relationship. Those factors outweigh whether a supplier is large from a revenue standpoint or small. In fact, many IT leaders say that large companies often not easy to do business because of their size and complexity. The IT departments of many midmarket companies—often with 10 people or less—just do not have the resources to engage with large companies and their leaders prefer smaller, nimble partners.
The findings and commentary from IT leaders was the subject of a recent webinar conducted by the Midsize Enterprise Summit featuring CIO research from the 2016 conferences along with analysis from Gartner Research Director Mike Cisek. He told attendees that CIO’s want to understand how today’s tech suppliers are going to solve the business problems. “Sell the problem you are solving, not the technology,” said Cisek who focuses his research on SMB infrastructure and operations.
Based on Gartner’s SMB Buying Preferences survey along with the MES CIO research, Cisek found that the primary IT sources for lower midmarket firms are VARs, consultants, MSP, cloud service providers and some direct relationships with vendors that are midmarket centric. The upper midmarket are also reliant on channel partners such as VARs, MSPs and CSPs but also engage with large regional system integrators and also directly with vendors.
Emerging vendors such as Scale Computing, SimpliVity, ShoreTel and Cognos (which is now part of IBM) concentrated their efforts on serving the midmarket and built their businesses around the needs of growing midsize companies.
Anyone reading this is going to think that price is the most important criteria for midmarket IT leaders. Surprisingly, it isn’t. The survey found, there are other factors more important than price when it comes to vendor selection or signing off an IT project. “Establish trust up front early on. Build a partnership and understand the challenges we face. The marketplace is shifting and we are willing to go out on a limb with a new vendor if we believe in it,” said Michael Skaff, vice president of technology of the Masons of California.
The economics of running an IT organization have changed dramatically, said Doug Pontious, IT leader at Amerisure Insurance. Echoing the sentiment of many of his peers, Pontious said he places a premium on partners who can provide strategic thinking. “What we have is not enough for the demands we face these days. The days of having a large staff where you have a lot of specialists are gone. With a smaller team what you really need are strategic thinkers—those who can help us be nimble and responsive to the changing business models,” Pontious said.
“We look to our IT providers to help with that innovation, research, planning and keep us informed of what our competitors are doing. So it is very different skill mix we are looking to achieve at this point.”
Emerging technologies often go hand-in-hand with new or small vendors in such markets as security, IoT, hyperconvergence and cloud. In the midmarket CIO survey, IT leaders said it would be concentrating their investment in those four sectors over the next 12 months.
But according to Henry Chace, CIO of the Boston-based law firm Burns & Levinson LLP, suppliers in those segments must help IT leaders improve their organization’s revenue and profitability not just sell them technology. “We are being asked to understand the business to enhance the profitability and viability,’ Chace said. His advice to his peers is to make sure their tech suppliers understand the individual pressures and problems they are facing as organizational leaders.
Using the example of cloud, Chace said emerging vendors and suppliers must understand the reporting, compliance and regulatory issues customers face. “Understand the challenges,” he said, which include where data can be stored and how it is stored for retrieval or archiving.
Summing up his thoughts on the emerging supplier-CIO dynamic, Cisek said, “The intimacy and relationship required are unique in this space.”