A Big Opportunity for IT Vendors

In March 2007, the New York-based Access Markets International (AMI) Partners, Inc., a provider of global market intelligence and consultancy services said that small and medium businesses (SMBs) in India were expected to spend around US$8 billion in 2007 to improve their IT infrastructure. This represented a 24% growth over the amount spent in 2006. In the past, some of the issues that constrained most SMBs from investing in IT infrastructure were cost considerations, inability to afford technical experts, and lack of awareness of the value of IT.

Analysts noted that though controlling costs still remained a priority for SMBs, they had begun to realize the opportunities provided by IT. The growth of the Indian economy and revenues of SMBs was a factor that was expected to result in an increase in IT spending among SMBs.

According to AMI, 93% of small businesses (i.e. businesses with 1 to 99 employees) and 86% of medium businesses (i.e. businesses with 100 to 999 employees) showed an increase in revenues in 2006.

Moreover, in a business environment in which they had to compete with larger domestic and international competitors, SMBs were increasingly viewing their investment in IT as a competitive strategy. This presented the IT vendors with a huge opportunity as this market had traditionally been underserved by most vendors.

In March 2007, Intel India (Intel) announced that it had started an initiative across the country called as the “SMB Advantage Program”. Through this initiative Intel aimed to assist its channel partners to increase their business with SMBs. It had identified 160 channel partners (comprising System Integrators, Original Equipment Manufacturers and Retail Partners) from 15 cities across India.

Intel had also identified five key SMB verticals – manufacturing (auto ancillaries, gems and jewelry, pharma and textiles), animation, stock broking and higher education. Intel would provide special training to its partners on the IT needs of these SMBs to help its partners adopt a consultative selling mode and deliver customized solutions. Intel also said that it had started this initiative as the target segment preferred to do business with local firms.

In collaboration with its partners, Intel also planned to host special events for these verticals where customers could purchase a complete solution. It had also tied up with ICICI bank to work with select partners to provide special loans to SMBs to invest in Intel’s solutions.

Some of the other initiatives in the program were focused on helping partners to establish proof of concept centers to help showcase its SMB solutions, and development of case studies along with partners that showcased how Intel’s solutions had made a difference to the SMBs.

There were also reward and recognition programs for outstanding partners. In addition to Intel, other IT giants such as Microsoft Corporation and HP had also adopted aggressive strategies to woo SMBs in India.

However, some analysts opined that these were significant challenges in targeting the SMBs. These businesses were spread throughout the country and across various industries and the IT needs of SMBs in one sector were quite different from that of the other.

The awareness level of the value of IT was still low among a high percentage of small businesses. Other challenges included lack of skilled and competent partners, and wide-scale piracy. The choice of an effective marketing communication strategy, media channel, etc, too posed a considerable challenge due to the diversity among the target segment.
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