Small Business Thinks Big Tech

I came across a great article from the National Post that discussed small business technology buying and thought I would highlight it for you.

Traditionally small businesses are not as early an adopter of large scale technology as their corporate counterparts. This is usually due to the massive investment needed to prepare for large scale IT projects. This has left enterprise resource management (ERP) and customer-relationship management (CRM) to the big players only - until recently.

With the move the the web of many ERP and CRM vendors and the building of scaled down versions from their enterprise customers, small businesses are beginning to take notice. Here are the keys for the vendors who have made the leap to small business successfully:

1. Understand that SMBs are a different market: Larger organizations typically roll out ERP systems over a five year period. Small businesses need to see a faster return on investment. They need to justify the purchasing decision very quickly and see results coming in.
   
   
2. Tell stores of SMB success: When doing your sales pitch don't compare your SMB prospect to an enterprise customer. Show how you have made it work for a smaller company that is just like them.
   
   
3. Offer software as a service: Instead of costly up front setup fees and licensing agreements, offer monthly plans that allows the small business owner to more effectively manage their cash flow.
   
   
4. Focus on customer relationships: Most small businesses rank customer relationships as the most critical factor in their success and 50% are using technology to help find new prospects
   
   
5. Demonstrate measurable payback: The more you can demonstrate the financial impact to the small business the more likely you will get a yes answer.
   

Small Businesses Not Buying CRM / ERP

A new survey by AMI-Partners reveals an interesting trend in the CRM / ERP market. Medium sized business are adopting the new technology to help them grow their businesses but small businesses are not.

According to the study, over 33% of medium businesses are currently using CRM and ERP system while over 25% of them are planning on making a purchase within the next 12 months. This represents a significant opportunity for CRM and ERP players looking to move downstream from their large corporate clients.

Sau Lam, a research analyst for AMI-Partners had this to say:

This data indicates that U.S. MBs have made the connection between streamlining and automating business processes, and maximizing productivity and value in the market. MBs also recognize the value of integrated suites: 75 per cent of those surveyed use an accounting/financials module that is part of a larger solution suite.

What are the top drivers of the growth in the medium business market?

• Compete more effectively with larger companies
• Improve operations
• Better serve customers
• Meet evolving business needs and regulatory requirements

The industries leading the ERP boom are wholesale and professional services while professional services are the innovators on the CRM side.

Small businesses, however, were a different story altogether. While almost 75% of small businesses use accounting software, only 12% use ERP / CRM systems and although 11% of small businesses plan to make purchases in the next year, it is far short of their medium business counterparts.

What's holding small business back?

• High price tag of applications
• Lack of IT staff to support implementation and support
• Lack of perceived needs