SME tech sales tough despite projected success

EU Commissioner for Telecoms and Media, Viviane Reding, yesterday urged technology firms to concentrate growth in small and medium sized businesses (SMEs) in order to boost Europe’s digital economy.

But while tech giants such as SAP and IBM have intensified their mid-market sales strategies in past months, because of the segment’s large growth potential, vendors warn that SME sales strategies are often difficult because of their lack of technical awareness.

Reding spoke at the Lisbon Council in Brussels and pointed to the 23 million small and medium sized enterprises in Europe, which account for over 100 million jobs, saying they could be the “mainstream of Europe’s economic resurgence”.

The market’s potential for growth was also echoed by SAP chief executive Henning Kagermann who recently said midmarket companies, which the firm defines as those with fewer than 2,500 employees, will account for up to 45 per cent of total software sales by 2010, in contrast to the current level of 30 per cent.

Meanwhile, IBM has been less forward with its projections for growth in the market but the company’s General Business division, which includes its Midmarket unit, currently accounts for about 18 per cent of IBM’s revenue and has been one of IBM’s fastest growing divisions over the past five years.

IBM launched an initiative earlier this year to provide partners with rewards for growing business around IBM’s midmarket software.

However, according to the firm, the market poses a challenge to sales teams because mid-market organisations tend to be wary of buying new solutions and are anxious about leaving what they know behind.

“Generally they can’t afford to get hung up on technology,” said IBM General Business European marketing vice president, Caroline Taylor.

“Most organisations still store data in Excel spreadsheets,” she added. “The market is a Microsoft heartland”.

Taylor referred to a recent IBM survey of 100 board-level board level decision makers of mid-market organisations where 24 per cent still used email to share data and information among users. Additionally only seven per cent of those surveyed monitored key performance indicators.

James Bureau, a sales manager for IBM Cognos reseller partner Inca Software, said he had come up with certain strategies to try and overcome the difficulties in selling to medium size businesses.

For example when selling a solution Bureau uses different IT terms to those he uses with enterprise customers.

“Because often they just don’t know what terms like corporate performance management mean,” he said.

“Often I speak to a finance director with IT responsibilities because mid-market businesses don’t often have a central IT department,” he continued.

In her speech, Reding noted the lack of productivity-boosting ICT tools owned by small and medium sized businesses. She said only nine per cent of SMEs use electronic invoices and only 11 per cent have technology-based human resource management.

Analyst Clive Longbottom at Quocirca, said it was vital for SMEs to stop relying on error-prone manual processes to deal with data.

“The vast majority of mid-market organisations have yet to equip themselves with the necessary business intelligence tools, despite appearing to be better informed than their enterprise-size cousins about the value they bring,” said Longbottom.

“In a challenging economic climate, organisations need to have confidence in their business decisions and the data that underpins them,” he added.