Small firms embrace enterprise software

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Small firms embrace enterprise software

Technology such as CRM and ERP now filtering down.

A growing number of small and medium businesses (SMBs) are waking up to the potential benefits of enterprise software that would have been used previously only by much larger organisations, according to new research.

A study from research house AMI-Partners categorises and analyses SMBs in four distinct tiers based on IT behaviour: adoption; needs and attitudes for customer targeting; product positioning; and focused offerings.

Tier one is 'enterprise adopters' which view IT solutions similarly to large enterprise counterparts and drive the lion's share of IT spending.

Tier two is 'early adopters' which embrace new IT solutions to optimise productivity, but lack the resources needed to deploy full-scale solutions.

Tier three is 'value adopters' which implement IT solutions after others have done so with a relentless focus on costs.

Tier four is 'needs help adopters' which employ IT solutions only at the threat of losing customers or suppliers.

"Tier one SMBs account for the smallest percentage of the overall SMB universe," said Sau Lam, research analyst at AMI-Partners.

"But, in general, they outspend tier three and four SMBs on IT. In the enterprise software arena, this gap is even more pronounced."

For example, the study shows that tier one and two SMBs account for almost three-quarters of spending on CRM and ERP technology, while tier one and two SMBs account for more than three-quarters of the CRM and ERP investments in the SMB market.

"Enterprise solutions vendors must understand the different needs and sophistication levels of these segments and craft go-to-market strategies with products, marketing, channels and pricing aligned to the needs of each segment, " said Lam.

Tier one SMBs make up just over six per cent of the 'universe', but spend an average 10 times more on IT, and twice as much on CRM (or ERP) solutions, as their tier four counterparts.

Other findings include tier one and two SMBs being more likely to buy software directly from packaged software vendors, while tier three and four SMBs are more likely to do so from regional or national retail chains.

Understanding the similarities and differences among these four segments of the SMB market will help vendors better tailor solutions to meet the requirements and needs of a fragmented SMB marketplace, according to AMI-Partners.
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