Techaisle Analyst Insights

Typically, IT suppliers focus on product or service transactions – the point at which a buyer commits to a contract with a specific seller. IT vendor compensation plans are structured around the transaction, and lead funnels captured in CRM and marketing systems coalesce around this event. And because IT professionals are often engaged in signing contracts for IT products and services, vendor sales and marketing initiatives often key on the IT function.

From a buyer’s perspective, though, the solution adoption cycle is much longer, and commitment to a specific product or service is less important than establishing the business context that drives the need for investment, and the processes needed to ensure that the business obtains anticipated value from this investment. Before they commit to a contract, organizations need to identify the need for a new solution, align the need with strategic and operational plans, and identify and evaluate solution options. Once the product/service is acquired, the buyer’s process continues: the business still needs to deploy the new technology, train IT and business users on its features, evaluate the effectiveness of the solution in meeting current requirements, and optimize the solution over time to maximize returns.

Techaisle conducted a unique survey of SMB organizations. To understand the current state and implications of distributed IT influence and authority, Techaisle surveyed roughly equal numbers of business decision makers (BDMs) and IT decision makers (ITDMs) across seven employee size categories, and then analyzed results to create a unified view of the new decision authority realities.

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.

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.

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.

Techaisle’s 2015 SMB and Midmarket Mobility Adoption study shows that to emerge as leaders in the mobility solution market, suppliers will need to tailor their offerings and strategies to specific clusters within the SMB market. Successful suppliers will need to be cognizant of, and visible in addressing, key SMB selection criteria.

Figure below presents an analysis of SMB mobility solution evaluation criteria, tied to the attitudinal groups used for SMB segmentation analysis. This segmentation and perspective highlights how increased sophistication changes the requirements that SMB users have of suppliers.

Small Business Segments
Within the small businesses, the Pre-IT segment is looking first and foremost for a trusted brand. These small business buyers opt for horizontal suppliers for their first step into mobility solutions. Data from other segments suggests that increasing sophistication leads to more exacting expectations.

Basic IT buyers are looking for help with managing BYOD and for effective customer support, while Advanced IT buyers look for assurances of information security, for manageability, and for suppliers’ credible brands.

Midmarket segments
“Manageability” is the most essential attribute for suppliers targeting midmarket firms. The basic IT segment is looking for assistance in supporting a large number of mobile platforms as a means of dealing with the BYOD needs of a larger (relative to small business) workforce, and/or as a means of supporting customer access to public systems.

The midmarket Advanced IT group, like its small business peers, requires a combination of manageability and information security, and adds customer support and the requirement for multi-device/platform support.

The enterprise IT group –the largest spenders represented in this chart – have a few unique requirements. This group demands interoperability and customizability as it seeks to integrate mobility solutions within the broader IT infrastructure, and looks as well for ease of use as it rolls out mobility solutions to a (relatively) large and diverse workforce. Techaisle expects that over time, an increasing number of SMBs will pursue these capabilities as they, too, tie mobility into their overall IT/business architectures.

A recent Techaisle survey of 1,862 SMBs in China found the market for Onsite/Remote Managed Services has been growing rapidly and is near the $3B mark in the mid-market space; expected to reach $2.847 billion in 2012.

Other important points include that the 250-499 employee segment represented the largest share among company sizes, with 47.5% of the total. This is followed by the 100-249 group with ~30% and finally the 500-999 category with ~23%.

On the Services side, PC Services are the largest segment with $800 or 28% of the total, followed by Other Managed Services $509M or 18%, and Server at $485 or 17%, Seven of the top 10 service segments top $100M, providing a good  set of opportunity segments.

Having lived in Korea and  Hong Kong from the early 1980s through the mid-1990s and watching the Seven Tiger markets rise from bit players to important gears in the global IT supply chain, this doesn't really come as a surprise - however the rapidity and thorough break away toward private property and commercial economy  that China has managed, exceeds even the early predictions and forecasts.