SMB market pays but it takes a good operator

Although our industry talks about SMB as a single market, it’s not – it’s a fragmented collection of sub-segments we lump together based on customer size.

So inevitably discussions about SMB tend towards generalisation. Hopefully some of those generalisations still ring true for many SMB resellers. The main challenge SMB resellers face is that SMB deals often take every bit as much time and effort as enterprise deals, but the returns are smaller.

Put simply, cost of sales can kill profitability if you’re not really careful. SMB resellers have to balance their sales and customer support efforts against the returns. There just isn’t the margin in many deals to allow the high-touch sales, and bespoke solutions common in the enterprise market – it’s a volume game.

Successful SMB resellers leverage technology to ensure efficiency, scalability and repeatability in the deals that they put together for their customers – to deliver low-touch without reducing customer service.

They use e-commerce, automated and streamlined processes and the right partnerships to reduce costs and improve their agility and flexibility, allowing them to operate faster and more cost-effectively.

As a distributor, our role is to deliver the resources, systems and processes that empower SMB resellers to do more, with fewer resources, more quickly. We provide value-add services such as configuration services, quoting teams, efficient e-commerce and logistics functions such as online quoting and drop-ship delivery.

And we support them with deals and solution design resources to help them take cost out of their businesses, deliver efficiency and enable them to manage high volumes of transactions more easily.

The sheer number of competitors is another challenge for SMB resellers – both other SMB resellers and enterprise resellers looking to move into their patch to take advantage of what they see as a potentially lucrative SMB market.

In reality, existing SMB resellers have an advantage. They’re already geared to serve a high-volume, lower-margin market profitably. By leveraging smart technology and the right strategic partnerships they can extend this advantage even further.

Successful resellers also leverage their strong existing customer relationships and a deep knowledge of their customers’ businesses and the industries they operate in. They’re better able to understand the specific challenges of SMB businesses which, much like their own, are concerned with containing costs and increasing flexibility and agility so they can be more efficient.

Technology evolution – in areas such as cloud, mobility and the convergence of consumer and enterprise technologies (BYOD for example) – plays in their favour too. It brings capability and economies of scale previously only available in the enterprise to SMB customers.

This enables SMB resellers to extend the range of services they can offer beyond the laptops, desktops, servers, office software, printers and consumables that have traditionally been their mainstay. Now mobile solutions, hosting and cloud services and managed services are becoming an important part of the SMB mix, and resellers are adding value-add services around them.

Adding cloud to their service offerings also offers better cashflow surety and helps resellers to reduce lumpy revenue. In addition, technology advances are opening up new product opportunities for SMB resellers as niche technologies become mainstream. In our business we’re seeing growth in areas like digital signage, IP-based security and surveillance, and DC/POS –solutions that previously were only available from specialist resellers.

Now these technologies offer new opportunities for SMB resellers as they become more accessible, more widely adopted and easier to implement and manage. This rapid pace of change brings an additional challenge: simply keeping up with what’s on offer. For SMB resellers without specialist inhouse staff, keeping abreast of new solutions and technologies is an ongoing battle. A day spent training in new technologies is a day less selling or generating revenue.

Successful SMB resellers get how to juggle the balance to provide the right levels and types of in-house expertise, and combine it with specialist expertise from their partners – such as distribution partners and vendors – as and when they need it.

This is a key part of the value we bring to our SMB resellers. We’re a conduit for providing them with the right product information and advice, technical resources, and leveraging our vendor relationships to get them the best pricing, support and product information.

There’s no doubt this is an exciting period in our industry. While technology advances are allowing SMBs to take advantage of technologies previously only available to the enterprise, they’re also bringing tough challenges.

SMB customers are facing many ofthe same sorts of challenges – such as tightening security and ensuring 24x7 availability – that have tested enterprises for years.

Jay Miley is the vice president and managing director of Ingram Micro A/NZ.