The holy grail, the SMB

For the last decade I've focused on the SMB market and in the end we ended up servicing about 4,000 clients. Over the years I've discussed this market with industry analysts, Fortune 500 company experts and the rest of the world. Clearly everyone has been quite interested in getting into the market because it's huge, at 8 million ish (+/- a lot), but for all the talk there has been very little in the way of progress for many, and virtually no progress for most.

Having talked with many folks about why this lack of success has been so universal, I wanted to share my .02.

To think about this we should first turn to the enterprise (Fortune XX). As we look at these organizations and why they can be sold (I'm talking about technology/tech services) through a single apparatus regardless of the industry that they find themselves in. As we dissect the enterprise we find a clear, and consistently structured, IT function and culture. This IT class is structured in standard silos, that align with research categories (chicken or egg I'm not sure), and technology marketers. The enterprise is large enough that the variation company to company is not significant to hamper the marketability of technologies into it.

So if we contrast the SMB to the enterprise we see the first generic distinction is that there are simply not enough resources to silo. With organizations in this category covering such a range of staffing levels the nature of the IT buying apparatus is virtually impossible to characterize. At the small end we have a small handful of generalists, up to the upper end of a few dozen technologists. What this results in is a group of technologist that, often, have no succinct strategy under which they're operating. And in the absence of strategy it's very difficult to know how to plan compelling marketing campaigns.

When we think about the continuum of size, makeup and focus of SMB IT it quickly becomes clear that the SMB IT market simply isn't a single market. By market I'm saying a group of consumers who's needs are consistent enough to be considered a group that can be address in common. The great epiphany for me is that the SMB market isn't. It's actually an amalgam of micro markets that need to be addressed individually.

If this hypothesis is indeed accurate then it leaves the largest organizations with a real challenge in addressing the SMB due to the limited scale of each of the micro markets. The Large scale vendor has global cost allocations that typically need to be spread across the various business units and the unit to address such small markets becomes a very challenging dynamic.

What conclusion do I draw from this? That the SMB is very fertile ground for mid-sized technology vendors and service providers. Translated differently...whoopee!!!