'Mid-market seeks solution, not products'

BANGALORE, INDIA: IBM is more than ever bullish about mid-market and sees a lot of business scope from this segment.

The server major, which conducted a mid-market early this year, believes that there is a whole lot of focus on this fast-growing segment today. This was part of its efforts to understand the customer to see whether its and that of the mid-market customers' priorities are aligned.

Also Read: IBM #1 in server market follwed by HP Dell

Jyothi Sathyanathan, vice-president of IBM.com, IBM India South-Asia, believes that the mid-market is more concerned about problems than products. "We should be talking to them about solving problems rather than delivering products," says Jyothi.

In an interview with Srinivas Rasoor and Deepa Damodaran of CIOL Jyothi Sathyanathan talks about the company's approach to the mid-market through Virtual Branch Offices, Flexi CIOs concept, its 'Small is Big' approach and much more. Excerpts:

CIOL: How do you define mid-market?

Jyothi Sathyanathan: Mid-market for IBM is defined as 100-200 employees. We don't go with turnover and it is secondary for us. Manufacturing is the biggest of all in the mid-market, followed by education and retail.

The IBM.com segment deals with mid-market. The team has two kinds of people. Coverage Team manages the relationships with customers and Brand Team provides solutions.

The Brand is again divided as Pre-Sales and Post Sales. We use a mix of field as well as inside sales specialists in the team. They are capable of creating relationships as well as selling technology over the phone.

CIOL: So human element is very less in your mode of working?

Jyothi: We believe this model is complementary instead. We understand that discussions are not  avoidable all the times.

However, our way of doing is to first choose the customer and then talking to them. We use a range of marketing and intelligence expertise to understand which customer is right and then start a conversation in order to understand their need.

At the same time, we allow customers to come to us. We also have web-based tools to capture the customer who come to our website. When someone spends a quality time on the site, the 'time team' opens up a chat with them.

In mid-market it is very important to make the customer aware that they should be choosing IT to solve a problem, which could be to increase revenue and profit, or decrease expense or to manage cash flow.

We have set up over 40 VBOs so that customers can reach out to us. We are opening up more offices across the country and expanding in a big way.

We understand that in mid-market, for every company, no matter how small or big it, its investment is always important for it. So, IBM's approach to every company should be the same. 'Small is Big' is our way of approaching the market.

CIOL: We believe that this segment has contributed almost 11 per cent of IBM's total revenue?

Jyothi: Mid-market is a high-growth engine. Percentage really does not matter. As you go down, and as the GDP of the country grows, automatically the bottom of the pyramid will also grow.

A third-party report has sized it at about $2.5 billion market, which is growing very fast. Our target has nothing to do with market growth rate.

This business can go much faster, it can be 10, 15 or 20 per cent.

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CIOL: So what is the typical requirement of these companies. Is it more about knowledge on IT, or hardware requirement or consulting?

Jyoti: One is awareness. Companies have to understand that IT is not merely a utility. They have to

understand that this helps them in growing. This needs a lot of education.

Two is that they cannot afford IT professionals. In mid-market, friends circle and peer groups often influence a company in making a decision with regard to IT. They don't often get professional advice in terms of IT decision making.

What we try to do is to share our experience and knowledge, and give them a comparative study in terms of cash flow, employee ratio etc, and tell what needs to be addressed and what need not.

It is very difficult at times. Companies get wary of our interference. However, once they understand what we are trying to do, they appreciate our approach. This approach has been very successful so far.

CIOL: Is this where you have introduced the Flexi CIO concept?

Jyoti: Yes. The concept is slowly catching up  We just launched it a month back. A medium or small business cannot afford a CIO, whereas we can offer this service for a particular period of time for a price.

We give the companies a template study on where they are today and where they want to be in future.

We are trying to bring organisations of the same kind together and offering them shared CIOs  with skills which suits more to that industry.

These industries need many basic things to be done, they need not get into the level of finish. Benefit of an IBM Flexi CIO is that he is from IBM and so has the right connections in the industry and the expertise.

We have a consulting group, the GBS group, which caters to it. We can see a huge interest for this. However, now people are just watching it. We will get the underlying benefits once the initial concerns are addressed. It will take time though.

Customers have turned more selective and careful. They will invest only in something that gives value in terms of profit, turnover, expense and cash flow.

So it should be business values that makes more sense to them, rather than product values.