SMBs: Tapping into Technology
Rajesh Shetty, VP Sales, Cisco India and SAARC
Globally, the IT spending in the SMB market is expected to reach $I trillion by 2016 according to research firm Gartner. In India, market sources estimate IT spending for 2012-13 to be nearly $80 bn (INR 400,000 crore) and a major chunk of that is expected to come from the SMB segment.
Going by the numbers, the SMB segment is witnessing steady growth and IT spending in the sector is likely to increase. However many SMBs still perceive IT adoption as a time consuming and complex process and therefore prefer to stick to their existing traditional processes.
As it stands, IT adoption amongst SMBs in India is still around 10-20 percent. Despite these numbers, fact is also that many SMBs in India are technology-ready and have begun to transform themselves from the traditional 'pen & paper' business culture. (Zinnov).
Technology adoption by SMBs
SMBs in India understand, and are increasingly adopting technology for the betterment of their business by investing heavily on tools like PCs, Internet and websites to market themselves and compete in both global and domestic markets. IT adoption among SMBs is growing and according to IDC, this is expected to double by 2015. Amidst their apprehensions about adoption and the need to grow bigger and better, SMBs seek technologies that help them optimize efficiency and resources at an affordable price.
Hosted services, VoIP and collaboration are gaining traction among SMBs because these new technologies are affordable, offer ease of access and present a predictable monthly cost. Technologies like cloud computing provide SMBs access to applications and services that they otherwise find unaffordable.
Due to the flexibility and pay-as-you-go cost structure which is simple, scalable, affordable, convenient and customizable, cloud computing is commercially viable for many SMBs. According to IDC, the cloud computing market in India is expected to grow at a CAGR of 40% by 2014. Driven by cost and performance the technology will be a hot pitch for SMBs.
Areas like security and mobility are also gaining significant traction. Mobile applications are enabling SMB employees and customers to access information from anywhere and at any time. Similarly technologies such as Video collaboration help SMBs considerably reduce the travel cost involved to do business and are increasingly being sought after. There are very encouraging trends in the video piece as technologies like Telepresence have moved from the enterprise to a personal video level; one can do it even on a personal computer.
Cloud and virtualization technologies are definitely game changers as they will allow people to do more for less. Video, security and cloud are expected to be new growth areas for a large number of SMBs in India, though we are still scratching the surface.
The metro cities are still the big contributors to the SMB growth in India; however the size of the IT market outside the six metros is also significant. Tier II and tier III cities are preferred destinations for SMBs to set shop given the availability of a large pool of talent, marketing opportunities and other resources.
The concentration of SMBs in Tier II & III cities offers a huge potential for vendors. The mounting awareness about IT and its advantages among SMBs, their readiness to pay a premium for quality business solutions can together contribute to the vendors' changing marketing strategies. All major technology vendors have realized this potential and are aggressively going after this sector.
Within tier-II & Tier-III cities the good news is that things are getting better. Technologies like 3G are slowly becoming accessible overcoming barriers of bandwidth. Earlier, it was the question of availability of qualified people, but today the cloud-based delivery model places a lot of emphasis on enablement of solutions.
Vendors can tap into the opportunity in Tier II and Tier III cities by offering technology solutions tailor-made for SMBs and train their partners on how to handle queries from SMB customers regarding the benefits of technology. Training the partners to understand the unique problems faced by SMBs and how to address those problems is another requirement besides providing training on installations and trouble shooting.
Announcing aggressive channel partner programs for the SMB market that ensures increased profitability to the partners helps to build dedicated sales teams and develop strong lead generation programs as well. While it is true that the market is not easy to capture, it is a question of time before the addressable market is tapped fully.
As the IT spend amongst SMBs looks to out-strip the speed of growth among large enterprises, vendors can make the most of the opportunity by having a very tight channel partner network, dedicated sales teams, and offering customized, scalable products/ solutions that benefit SMBs.