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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Midmarket technology & business buyers: two peas, two pods

Business decision makers (BDMs) are an intrinsic force in most midmarket organizations and are the primary decision makers in some high-growth technology areas, including collaboration, social media and analytics – meaning that increasingly, BDMs are ‘the boss of IT’. These BDMs view IT as a component of business processes, rather than as a stand-alone silo. Techaisle SMB & Midmarket Decision Authority data shows that twice as many BDMs as ITDMs (IT decision makers) in midmarket businesses say that it is critical for IT to understand how technology contributes to overall organizational success. These BDMs have specific objectives for technology usage, clear perspectives on adoption drivers and impediments, and tend to be influenced by information sources that are different from the inputs used by ITDMs.

This pressure from business managers leaves IT leaders scrambling to stretch limited budgets to meet seemingly limitless requirements, striving to deliver predictable, secure systems that respond to the increasingly varied needs of their business users and competitive environments. The growing divide between IT authority and responsibility, exacerbated by the fact that business perspectives on IT are shaped by information channels that are not part of the IT professional dialogue, has created an environment where businesses are struggling to develop the cohesion needed to promote or embrace new IT capabilities to achieve business objectives within existing IT and business process structures..

In a unique survey, Techaisle posed the same question, “expectation of associating business success factors to IT solutions” to both BDMs and ITDMs and probed to identify what each expected from the other. Techaisle data shows that BDMs tend to have higher expectations of IT; while business decision makers and technology decision makers are reasonably well aligned in some areas, there is a wide expectation gap in others, which may explain (at least to some extent) the continued proliferation of non-sanctioned, “shadow” IT.

techaisle-midmarket-linking-it-with-business-success-resized

The figure above provides a simplified view of differences between BDMs and ITDMs across several different factors. Although there is a tacit agreement that both business and IT management should understand business related success imperatives and should be able to associate IT solutions to achieving those objectives, closer examination of the data shows some important differences between the two groups:

  • 53 percent of upper midmarket BDMs say that it is very critical for business success that ITDMs are able to identify and associate IT solutions with business efficiency, productivity & profitability. On the on the flip side, only 30% of IT executives in these upper midmarket businesses say that business executives should be able to associate IT solutions with business efficiency, productivity and profitability. Responsibility for delivery clearly rests with IT, and BDMs have very high expectations from ITDMs.
  • Data also clearly shows that BDMs again have high expectations for support in using technology to build customer connections. Over 40 percent of BDMs believe that it is critical that IT has a grasp of solutions that enable beneficial customer & supplier interactions. In contrast, only 1/4th of ITDMs say that BDMs should have a grasp of such solutions.
  • Employee productivity is an important aspect of business and in most cases businesses are expecting IT to understand and deploy core technology solutions to make employees more productive.
  • Business process automation is an area where there is better alignment between IT and business. However, automation is a dominant need within the 100-499 employee size segment; nearly 40 percent of BDMs in the segment say that it is critical that IT can identify requirements for automation and associate IT solutions with these needs.
  • Cross-organizational integration is recognized as being important by both BDMs and ITDMs in mid-size businesses: over 50 percent of both groups agree that it is critical for both business and IT to associate technology solutions with business demands. This is an area where both BDMs and ITDMs are fully aligned.

The trend towards increased BDM involvement in IT decisions is likely to accelerate further. BDMs are already active in shaping demand in core IT markets, and they are the dominant force in high-growth areas like collaboration, social media and business intelligence/analytics. ITDM and BDM divergence will continue and although there is cross-pollination they may as well continue to operate from different pods. Although it may be tempting to try to bring the various parties together, IT suppliers cannot successfully act as intra-corporate matchmakers: they have to come to grasp with the reality of selling to two different constituencies which have different expectations.

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Influencing the SMB technology buyer – rapidly shifting information sources

There is one common issue that IT firms across the spectrum face: the need to find an effective way to attract and engage prospective SMB customers. Techaisle’s global SMB survey research shows that there is no one method that will engage technology buyers within the small business or midmarket segments: in both markets, SMBs use a mixture of multiple reach and multiple depth vehicles to understand and evaluate options.

Over the years, Techaisle has been asking survey respondents to identify their “sources of information for technology solutions” in their technology buying journey. Respondents are prompted through a list of 14 options, spanning traditional and online media and advertising, websites, whitepapers and case studies, face to face sales calls, personal recommendations, blogs/forums, and search engines.

Comparing data across several years provides a fascinating trend. As the number of technology options, vendor choices and sources of purchase channels continue to increase both in number and complexity SMB technology buyers have also progressed in their choice of types and numbers of trusted, reliable and useful information sources for technology guidance.

Look at the figures presented below comparing data across two years, 2013 & 2015. Several observations immediately jump out for both small and midmarket business.

In 2015, small businesses are using completely different set of information sources than they relied on in 2013. A consistent top source from 2009 to 2013 - “Recommendations from friends, colleagues or partners” has fallen to seventh position in 2015. This is certainly not surprising as most of the “recommenders” are in the same predicament as the small business buyers, that is, grappling to understand the rapidly changing technology options and corresponding ability to solve with business issues. The role of TV advertising has percolated to the top and the usefulness of articles in technology websites and magazines cannot be understated.

techaisle-small-business-influencing-the-technology-buyer

The midmarket segment has increased the number information sources in 2015 than in the previous years. Data presented in the figure below shows some interesting observations for midmarket. Although percent of midmarket businesses using “IT Company website” has remained unchanged its relative position has fallen from 1st in 2013 to 5th in 2015. It is neither the most dominant source nor it is the first point of influence for midmarket businesses. Similar to small businesses, TV advertising and technology websites, magazines have percolated to the top for midmarket businesses.

techaisle-midmarket-business-influencing-the-technology-buyer

Use of content marketing avenues such blogs has remained unchanged at between 8% - 14% of SMBs. Its position in the list of information sources has also stayed the same, between 12th and 14th in terms of ranking. It is of course true that different vendors (and SMBs) use similarly-named options in different ways – for example, visits to an IT company website can be cursory or can be an intrinsic part of a detailed supplier evaluation, and “blogs/forums” encompasses both some of the most superficial and some of the deepest content on the web.

The data provides several important perspectives on the challenges facing technology marketers generally, and cloud marketers in particular, who need to attract new SMB customers to their offerings.

The first issue is the sheer number of vehicles used by buyers in both the small and midmarket segments: in each case, the data suggests that they use an average of more than five sources of information when evaluating potential solutions and suppliers.

The second issue that is evident is that marketers need to use a mix of mass-market tactics to attract initial interest, transitional marketing options to deepen and shape that interest, and in-depth materials to establish preference within buyer accounts. Clearly, there is a “buyer’s journey” that needs to be overlaid across these many marketing vehicles, to manage the process from initial interest to sale.

Thirdly, to complicate the influence points further, BDM influencers usually differ from ITDMs. No one information source is used by more than 65% of members within the four buyer segments considered in the research (small business ITDMs and BDMs, mid-market ITDMs and BDMs).

The findings also show that “shallow” vehicles represent about one-third of overall sources used by small businesses, and just less than 25% of those used by midmarket buyers; that “moderate” vehicles capture 41% of total small business attention, and about one-third of midmarket buyer interest; and that “deep” options represent just over 25% of the information mix in small businesses, and 45% in firms with 100-999 employees.

IT marketers today will need to take a portfolio approach to marcom targeted towards SMBs. There are some areas that clearly need to be covered and executed well and some sources that should be of particular focus for specific SMB segments. The stakes around effective communications are high; with estimates currently holding that SMB buyers are 60%-80% or more of the way through their evaluation processes before they contact an IT vendor.

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