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CompTIA Research Confirms Strong SMB Opportunities for Channel Companies

comptia logoBy Seth Robinson, Senior Director of Technology Analysis for CompTIA

With smaller budgets and fewer resources, efficiency and cost reducing improvements continue to remain top priorities with small and mid-size businesses. Those are two chief reasons SMB organizations put so much focus on implementing new technologies and improving their existing platforms. Of course, finding the right price/benefit balance isn’t easy for the companies that try to do it on their own.

Only 17% of small businesses are truly satisfied with their existing technology platforms and solutions. 55% of them also included new client acquisition among their top priorities and, recognizing that the competitive environment and customer behaviors are radically shifting, understand they need to change. This information, as well as a detailed account of the opportunities in this space can be found in the latest CompTIA Research report: Enabling SMBs with Technology.

Small business owners and managers know that technology can be the great equalizer, giving them the ability to take on much larger competitors without breaking their budgets. That’s true whether implementing a new backup and data recovery solution or moving their servers and all their capabilities to the cloud. The efficiencies and flexibility those systems provide can be a real game changer for any business, regardless of size. Channel partners who can define the specific needs of their clients and match them with the most appropriate technologies will likely enjoy the most success. In the SMB space, the solution providers and agents who can cost-effectively provide those types of solutions can expect their client numbers to swell.

A Prosperous Segment

The Small Business Association suggests there are nearly six million U.S. companies with less than 500 employees (their designation for SMB) and 21 million others organizations staffed solely by owners. These businesses generated 63% of the net new jobs in the past 15 years with startups driving a vast majority of those hires. In addition, SMB organizations employ 48.5% of all private sector employees and pay 42% of the total U.S. private payroll.

IDC suggests the U.S. SMB segment, defined as businesses with 1-999 employees, purchased more than $152 billion in IT hardware, software and services sales in 2014. Without an abundance of capital to invest on technology initiatives, many of these firms will continue to seek the best value or find organizations willing to support their needs with a minimum investment.

Solution providers are often in a better position to help SMBs not only accomplish those goals, but to increase their capabilities to equal those of their larger, enterprise counterparts. Businesses in all shapes and sizes are beginning to view technology as a primary enabler, helping them achieve greater goals instead of simply supporting their day-to-day operations.

SMB organizations are still feeling financial pressures today, especially those in highly competitive markets. Others are growing faster than their capital resources or cash flow allows, meaning they need access to flexible solutions such as cloud and other recurring services. While cost reduction is still a top priority among more than half the companies in this survey (63% of micro-sized, 58% of small, and 52% of medium-sized companies), many SMBs simply need help achieving their objectives. 43% said they have some ideas for where they would like to go, but are unsure of the strategy for achieving those goals. That’s a prime opportunity for agents and solution providers with tech and business savvy.

The Agent/Solution Provider Advantage

It’s no secret: the larger IT services firms usually pay the most attention to their enterprise clients to get the biggest “bang for their buck.” Like any business, they employ their resources in a manner that maximizes their investment and stakeholder equity, so targeting the Fortune 500 may make perfect sense. Sure, that may leave them with little time and capital left over to focus on the SMB, but that’s where their solution provider partners truly shine.

The common misperception is that channel success comes from having more “feet on the street.” While that voice definitely helps, the real advantage from having a network of quality agents and solution providers comes from their relationship-building capabilities. A personal touch, combined with ability to diagnose and address specific needs with tailored solutions is the value channel professionals bring to the table.

The CompTIA study uncovered some other interesting information that can help providers better understand their SMB clients. For example, while newer startups tend to be more resource constrained, the older companies tend to have legacy processes and infrastructure that may impede flexibility and upgrades. Channel partners are typically better positioned to evaluate their customers’ current assets and future needs so they can propose the best possible use of all their resources. Those are the types of efficiencies SMB organizations are looking for.

Just a small percentage of SMBs (12%) are basically a blank slate, building their organization from the ground up. While they could develop or bend their processes and systems to fit large, direct sales organizations’ offerings, they will likely do most of that work on their own. The channel partners who can bring them both business and technological insight will definitely have a distinct advantage over those who don’t.  

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