Managed services versus break/fix
Hupseld is also scathing of the increasing tendency towards the adoption of managed services, over the break/fix model more traditionally favoured by the SMB market.
"Given the choice, most of our customers are happy to work with a fixed price for customer support visits as required. They are happier with this than with the idea of paying for ongoing support," Hupseld said. "We stand by our reputation of creating robust systems upfront so that their ongoing support needs are minimised."
However, many resellers are looking to move their SMB customer base into a managed service, where they pay a small monthly fee for regular service, rather than the more traditional break/fix model, where they pay only when something goes wrong.
Having invested heavily in software infrastructure which enables the company to deliver an affordable managed services model, Phrixus' Giles argued it was in a customer's interest to opt for the ongoing fee, rather than the higher one-off costs of the break/fix approach.
"Managed services is simply a more proactive model, where we ultimately spend less time onsite fixing a problem, and more time managing the systems remotely, and dealing with problems before they arise," Giles said.
Proponents of the managed service approach argue that it shifts the risk of IT from the customer to the reseller, and creates modus operandi where it is in the reseller's interest to ensure the customer's systems are reliable and functional at all times.
However, to make the approach cost effective from the reseller's point of view it also requires a significant investment in remote management software, which is particularly costly until the reseller can establish a large enough customer base to take advantage of economies of scale.
"We don't really want to be billing by the hour, we'd rather charge a fixed rate, but it doesn't really become cost- effective until you have a large enough customer base to adopt a remote management technology," Synergistic's Mackie said.
To market to market
By far the greatest challenge faced by SMB resellers however, is figuring out how to actually reach their target customer base in a noisy and diverse market place. At one stage, Connect Solutions' Small spent $10,000 on a comprehensive marketing campaign, only to win a single customer. More recently, Synergistic Network Solutions spent $2000 on a direct marketing kit, from which it has yet to see any return.
According to Mackie, the principal problem faced by SMB-focused resellers when it comes to marketing is that they simply aren't marketers.
"I don't think we've picked up a single customer through advertisements or direct marketing material," Mackie said.
In fact the broad consensus in the SMB market is that direct sales and marketing campaigns largely fall on deaf ears, while a good word from a trusted peer carries significant weight.
"99.9 per cent of our customers come from word of mouth referrals, or people moving into a new company and bringing us with them," Small said.
Phrixus' Giles agreed, pointing out that the reason the company has developed apparent specialisations in totally unrelated areas such as financial services and plumbing is the direct result of one happy customer talking to another.
"We found one plumber, and they were happy, so we ended up with more," Giles said.
And while he conceded word of mouth has been a valuable resource, Giles is keen to try other options, especially in an attempt to build up a customer base in his local area.
"Plain old simple door knocking, and it seems to have worked as I was received quite well," Giles said. "We've developed a little calling card basically saying who we are, what we do and where we're located, so we'll see if it turns into work."
A market with endless IT requirements, and tiny IT budgets, a vast geographical spread and diverse business requirements, apparently immune to marketing, but addicted to the sound of its own voice; it's little wonder the vendors leave this vast unwieldy sector firmly in the lap of their channel partners.
And right now there's at least one reseller who wouldn't have it any other way.
"In this space, 2008 is going to represent new and incremental business opportunities," Small said. "There's a lot of potential in the education space and big opportunities in terms of rolling out managed services; it's going to be a great year."
