The sweet spot

The sweet spot

SMBs might be an ideal market for managed services, but mid-market and enterprise organisations are also embracing this sales model

SMBs have always been thought of as the sweet spot for managed services providers, but many are also experiencing strong take-up in the mid-tier through to enterprise space.

“SMB has always been the sweet spot, and logically, they’re the ones that should be adopting managed services. When we talked about the ASP model, people believed it was SMBs that would pick that up. But it’s not clear SMBs will pick this up more rapidly than departments within large enterprises,” Frost and Sullivan’s Andrew Milroy said. “It’s not surprising, because often it’s the large enterprises that start something, and SMBs follow up.

“Anecdotally, often we’ve seen start-ups in the enterprise space might adopt the cloud or hosted model to get that functionality, but small firms that have their PCs and server for a while, tend to be more conservative about new models of computing, especially in Australia and some other countries. It’s often departments in bigger firms adopting these innovative models.”

CA’s Klasie Holzhausen cited increasing demand in the higher tier-two market, going into the lower tier-one.

“There is certainly openness around looking at managed services and enterprises taking this on-board,” he claimed. “A lot of organisations are asking why they keep trying to focus on IT, and want to focus on core business. As long as they can align IT with business requirements and support business with critical applications, that’s fine.”

Seccom Global’s Gavin Matthews said it is experiencing increasing demand for its specialist security managed services in the larger end of town.

“They’re looking at their IT team, and the first guy to go is the security expert who is costing them $150,000 per year. It may be because we’re in a specialty area, whereas the SMBs just want their PC and networking gear to run, and want you to shave security down as much as you can,” he said.

But for Kaseya’s partners, SMBs continued to be a huge growth area, Tim Dickinson said. He claimed many of its resellers were achieving growth rates of 50-100 per cent per annum.

“The growth in the market is providing these solutions to SMBs. To me, the reason behind that is because 90 per cent of providers still operate in a break/fix model, and people don’t like it. That’s where the opportunity is,” he said.

Milroy admitted SMBs, up until recently, had been enjoying a strong economy and had shied therefore shied away from investing in new technology. But increasing reliance on IT systems, coupled with the downturn, could trigger a rethink.

“Some of those businesses aren’t recognising how reliant they are on the IT systems as they’ve grown up,” NetForce’s Scott Atkinson said. “Five years ago, I remember going to a customer and saying we wanted to make a change to the network, and he told us to go ahead and do it there and then, in the middle of the day. They didn’t think anyone was using it and it didn’t matter. You can’t do that now – these are business critical systems, even within a 10-person company.”

PK Business Advantage’s Conrad Hilder also suggested SMBs had been hindered by the people traditional servicing that market.

“All of us are at organisations that put more thought into managed services, and we know it isn’t just coming up with another IT widget to sell. Yet all over the countryside, organisations will still be dealing with mum and dad’s fish and chip and IT shop, and that’s how a lot of those SMB IT providers think. The lack of maturity is not necessarily in the company, it’s the people servicing it,” he said.

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