Think your IT department's parochial? Try selling to SMEs It’s been a few years since I carried a quota, but over the course of my sales career I have signed some pretty substantial and complex deals in the large corporate space. However, it was the time I spent working with IT channel partners selling enterprise resource planning (ERP) systems into smaller businesses that I had to …
A hard-nosed approach to return on investment sounds pretty sensible to me. If your MD didn't need the extra server, he was wise not to open his chequebook.
Sometimes it can be cheaper - much cheaper - to pick up the pieces when something goes wrong than to stop it from going wrong in the first place. System flakiness isn't a problem if it's been chosen consciously, deliberately and rationally as the most cost-effective approach..
I remember a close friend who used to sell minicomputers back in the day being asked 'what solution he would recommend for stock control' to one small customer.
His reply, 'in terms of cost benefit, a trained storeman and a card index would suit your business better than any computerised solution would' did not go down well..
Indeed, but there is always an inroad.
For example, OK you really don't need this bit of 'xyz' superduper software, but what's your backup regime? Oh you don't have one!, Well you probably should for 'abc' reasons. Maybe this bit of software plus assistance in setting it up would help. Oh you don't have anybody on site to monitor whether the backup is successful or not. No worries we can e-mail the reports to our system an inform you/come around to fix problems if they occur. Later, umm we might actually need your 'xyz' superduper software, and as you've done such a good job on the general busy body stuff, we've come to you first.
It's quite a simple game really. (just needs time to cook).
I always found SMES an easier sell. Perhaps because I too was an SME and used to having to base every single decision on overall cost-benefit analysis. And my sales approach was 'select from products and methodology the solutin that best fits customers needs' rather than 'select from solutions the most expensive one that will advance the IT managers career at his employers expense, and my retirement fund'
From the other side of the fence, many moons ago I was the IT bod in an SME running a project and was about to recommend a buying decision, based on technical merit, when the CEO stepped in and blocked the deal. I was very lucky in that he didn't just tell the irritating young oik from IT to STFU and respect his decision or else, but he took me aside and explained that what the business required was what was best for the business and NOT what was technically the best solution on offer. What you seem to be complaining about is that you did not align your sale's argument to the actual business requirement. This is likely to be harder in an SME as the people in charge usually have more personally invested in the company, and therefore will be more likely to stick an oar in when the irritating oik from IT gets bedazzled by a bit of techno wizardry. Can I suggest you should spend a bit more time actually talking to us customers and understanding our businesses rather than just selling to us?
Having sold to both Corporate and SME environments I totally agree with this article. However I can sympathise with the MD who says he doesn't want/need two servers but at least gets the best support contract available.
What cripples some SME's is the short-sightedness and focus on the expanse of the system, not the suitability to the business. I often come across SME's who bought the cheapest, only to find it doesn't do what they wanted, unless they go for expensive bespoke work, and is hard (expensive) to maintain. Far better to have bought the "best fit" in the first place, regardless of initial cost, it always works out cheaper in the end.
As the saying goes "buy cheap, buy twice".
Yep, and what bankrupts some SMEs is buying over-expensive kit that wasnt suited to the business. Not buying expensive is not the same as buying cheap. As most people have said, its buying whats best for the business - the techies will generally not know what that is.
Most techies I've come across would like to buy lots and lots of kit, with each bit not doing a lot. It makes the catalogue look big but is uncomplicated and easy for them to look after.
""the MD did the mental arithmetic on the cost of downtime, and decided it didn’t justify the expense of the second machine"
Sounds like he made the right decision then?"
Provided he factored in all the costs.
Pay of all the staff left hanging around while system is fixed.
Cost of inability to assign and warehouse good inwards.
Cost of inability to make JIT deliveries.
A proper ERP covers all aspects of the business. If the HW that runs it is down, then effectively your business is down. If you think it's just an (expensive) server that can be broken and fixed at your leisure either the VAR or the IT dept have failed to explain their case well enough.
Or the MD is clueless and could not understand the explanation anyway you put it.
That last option is not quite as uncommon as you might think.
The problem exhibited here is of communication. The IT guy, who was dealing with the vendor, didn't understand the requirements of the Owner/Manager well enough to be able to specify them to the vendor.
The Vendor and IT guy therefore both wasted time in scoping a high-available system. The owner wasted his time in reviewing a proposal which didn't suit him.
If there's doubt that the IT guy will reflect the ownerr/manager position, and the owner/manager can't be accessed directly, then perhaps it will bebetter to create two proposals so he has some choice :)
The challenge in scoping a technically complex system is that it is very hard for the business decision maker to understand the proposal. What has worked for me is to prepare 3 proposals - high road, middle road, low road - with a description of how they vary in cost and benefit (finding the "best cheap option" makes for a stimulating challenge).
Then it's up to the leaders to choose an option - and the compromises inherent in the chosen option become their responsibility, not that of the IT guys.
What is a killer (learned the hard way) is to try to do things as cheaply as possible, because that *will* cost time and ultimately need re-doing. However sometimes it is necessary because until the benefit of some new technology is perceived, the funds for a proper implementation will not be forthcoming. Probably what is key here is that the "quick cheap option" must be accompanied by clear written caveats expressed in business terms, e.g. "this system will support at most 10 users and the equipment will need to be replaced in 3 years' time".
I once worked for an SME that bought an accounting and payroll package and a PDP/11 to run it on. The MD negotiated a really keen price - so keen that the supplier went bust between supplying the hardware and installing the software.
Not, in the end, a wise buying decision, although it worked out well for me because I taught myself serious programming on the unemployed PDP/11.
Had a similar experience. Manager drove down the price and, as we had scope-drift, insisted these all be included. Vendor wanted our company's name on their client roster and sucked it up until their eyeballs were buldging out of their heads. I tried to suggest that killing the goose was not a self-sustaining idea: we would pay more inthe future. And indeed they did when the vendor went belly-up. But I had moved on. Keen pricing has to be done with an understandig that they, like you, want to make a profit, and that moral behaviour and reasonablenss have their own long-term pay-offs.
If what you need is a single server then trying to use two to do the job of one is a complexity in itself. Also two machines doubles your chance of a breakdown even if the functionality remains. Without someone to notice that you are only running on one machine you are no better off. Providing the system is good enough for the job it's more down to the companies response to a breakdown that matters.
"We were close to signing the deal when we were called into the old-school MD’s office at the last minute"
Ask him what business he was doing involving himself in technical decisions, now sod-off back up-stairs and go back to innovating ...
"I have learned that this hard-nosed cost/return-on-investment-driven approach to IT investment often adopted by owner-managers is the reason why so many SMEs have such dodgy IT infrastructure"
All IT pros reading this, print out the above quote and put it on the wall and realize this is why your job will never be anything but long-hours endlessly patching lowest-bid crapware ...
When I worked in a small IT company, I came across some people who were supposedly running small businesses. In actual fact, they were ignoring everything except what a couple of their preferred salesmen told them.
They would seal some fantastic deal but because they saw any decent administration as a waste of money, their accounts received were a complete joke. Any form of knowledge other than how to sell something was seen as demeaning although I wonder whether they knew words that long.
They despised their shop floor workers because they wore overalls and did not laugh at their in jokes.
They despised their book keepers because they were an overhead and didn't wear good suits.
They objected to the fact that they had to have a computer to run their payroll and one got cross with me when I accidentally explained to them the meaning of the word backup. Apparently now knowing this fact was so far beneath their station that even knowing a simple word made them less exalted beings!
It was quite a few years ago but I just tried googling a couple of company names and most are out of business and one seems to exists in name only and the business has moved to a competitors in another city.
Conclusions: Being proud of not knowing something is seriously stupid and a bad attitude to run a business with. Ignore what is irellevant but despising people who make your business actually function is not a good long term plan.
Ever tried to buy a SAN as an SME? If possible, the SME IT guy should arrive armed and wearing body armor. Get the point across fast.
The SAN salesman for Highest Profits also brought along, uninvited, a gang bang team of PC salesman, Enterprise Software Salesman, Service Salesman, Printing Salesman, Server Salesman, and a couple others.
The SAN partner for Implied Bondage Makeover wouldn't try to discuss options; gold plated and locked in or nothing.
Everest Mountain Climbing tried to sell me a SAN which was actually SCSI arrays with some fast dancing. The dancing wasn't as fast as the music.
Some of us SME IT folk aren't that gullible; and aren't that inexperienced. We just like to act that way; and the big boys fall for it every time. Still wouldn't hurt to have a gleaming stainless steel negotiator hanging next to the cellphone on your belt.
Let's face it, in a corporate environment you're divorced from the real money. Everything happens with POs and Invoices and Budgets. In an SME environment, the money is far closer to the surface and the MD will believe that every penny belongs to them. It's therefore not surprising that it's harder to get money spent on things that the MD struggles to value, i.e. technology.
Within an SME, demonstrating the value of the investment is not just a game, you really do need to demonstrate why the investment is needed and what the return will be and that usually needs to be a tangible return. That's partly where the problem lies because: IT Suppliers don't see this to be their role or they make up the most terrible lies to get the sale, the IT rep from the SME doesn't usually have the skills to do this and MD doesn't have the time nor inclination to do it themselves. So, they go on instinct - does it feel too much/too little too sophisticated/not sophisticated, etc. Clearly not the way to invest either, but they do it in other parts of their business quite well, but then that's because they "know" those other parts of the business.
So, what should they do? Well, one solution is the part-time or Fractional IT Director from a corporate back-ground that takes ownership of all this shenanigans and provides the MD with independent, impartial advice and guidance at a board level providing MDs with someone who can be relied upon to ensure their business technology is fit for purpose and enabling growth. That's what my company has done for the past few years and it's working well.
...my experience is that the SME's think that good enough is good enough and the big corporates want the best of the best, so that they can be the best.
I once specced up a system for one of the largest firms of its type in the world and it was a paper- based system. They were horrified and wanted a computer system. When I produced the justification for the design, they instituted the paper system the next day and, as far as I know, they are still using it - I demonstrated "necessary and sufficient" to them.
When running a SME, I specced up Sage Line 50 (back in the day) for the accounts and it had errors in it (the VAT calculation was erroneous if you put the figures in one way and correct if I used another part of the system). It became so frustrating that I ended up using Excel for all of it (an old banker's trick), which worked very well. Egg on my face there for an over engineered solution spec.
As a corporate buyer, I became wise to IT salespeople and used to send them out for coffee, whilst I talked to the techie. That saved an awful lot of money because salespeople are basically bullshitters (my non-techie division director nearly fell off his chair when a salesman for a big data processor talked about "massaging the data" in one meeting, for example) and it's easy to tell if a techie knows their stuff - which they generally did. However, the general view, in my experience, is that corporates throw money at things to maintain (or gain) a "competitive advantage". Actually, I wanted that particular product precisely because I could massage the data but that was too much information for my boss. Nevertheless I got it in on a practical basis that ensured his arse was covered and massage was not mentioned in my guff.
Running a SME, I wouldn't buy anything unless I had to or I could realise an immediate uplift in the bottom line.
Early on in my business career, I came across a phrase that seems to portray the difference in thinking between a SME and a large corporate with great accuracy: "The fox runs for his life, the hound runs for his lunch".
I see the same phenomenon with fish tanks - a big fish tank is less susceptible to fluctuations in composition than a small one. I think that this is the fundamental difference between the two extremes. Microsoft is reputed to have enough money in the bank to pay everything for six months if it didn't bring in any money at all. What SME has that amount of "give" in their business model?
Another factor that springs to mind is that SME owners generally have an intuitive feel for the state of their businesses at any given time, whereas corporate types have to look it up on a system somewhere. That's a big difference in awareness.
Then, there's sales and marketing. The perception of sales and marketing at the corporate level is nowhere near the perception of sales and marketing at the SME level. SME's just don't seem to understand a sales led organisation, they only seem to understand a demand led organisation. This is simply because SME's don't have the marketing budget of the corporates.
Finally, there's debt led expansion. Since the '90s business schools have taught that debt led expansion is another way to achieve a competitive advantage. For a SME, debt is the devil incarnate and it really does keep small business owners up at night.
I can't really fault either mentality as an approach to succeeding in capitalism, I think that, if we are to have a world that is an ecosystem of big corporates and SME's then we need to understand and see the value n both perspectives. Ugh, I'm sounding like a Rand Corporation think tank. Time to go.
In conclusion, there is an obvious discontinuity between the thinking of the small business owner who earns money to put a roof over their head and food on the table and the corporate type who has a salary coming in every month.
The fox runs for his life, the hound runs for his lunch
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