Small, and hungry

Shyam Malhotra

When a segment of the market is expected to spend $8 bn on IT in a year, it does become the talk of the town. Thats why SMBs are the flavor of the year. According to AMI Partners, in 2007, companies with up to 999 employees were expected to take their IT related investments up by 23 percent over 2006, according to a study released in October last year.

Within this, manufacturing is poised to garner the largest share of the IT spend pie, with $3 bn. AMI also expects great growth in IT spends from banking, financial services, insurance, real estate, and a range of professional services.

So what are the SMBs shopping for?

Very small businesses (up to 19 employees) need IT to maintain quality, control their costs, and retain customers. Small businesses (less than 99 employees) meanwhile have moved on to better business management, communications, and networking. The medium size businesses are hitting the global trail and need a solid IT backbone to be able to cater to international operations.

While many small businesses are buying PCs and printers mainly, those who have already invested in these are looking at upgrades and new hardware. There is increased focus on storage and security solutions. SMBs are also buying packaged software and were expected to spend $640 mn in 2007, says AMI.

All this is great news. India has a huge number of small and medium businesses. By some estimates, SMEs are more than 90% by numbers, and contribute over 40% of the value in the manufacturing sector. There are going to be many more as entrepreneurial businesses are encouraged. And there is no way the country can be information technology enabled without this sector being involved. This has been an understated digital dividebut now shows signs of changing.

Yet, there are challenges, going forward. A growing business needs to keep its eyes firmly on the opportunities ahead and reinvent itself as the market demands. In the midst of this, having to track technology and its impact on the business is a huge challenge. Many owners are not comfortable with information technology. Hiring an IT team is an answer but hiring and retaining technology professionals can be a nightmare for the average SMB. In the larger cities the people are not affordable. Ultimately managed services are the answer but their professionalism,  reliability and affordability have to be enhanced.

The government has been doing its bit to build the awareness of using IT for SMEs. The National Manufacturing Competitiveness Councils national strategy report highlights that the use of ICT in manufacturing is dismal and awareness needs to be built to bring in widespread adoption. Through public-private partnerships, this is being worked on now.

SMBs need solutions that suit them. Not expensive technologies that have to be customized to suit their businesses. There is some evidence that the industry is responding to this need. Recently, Intel announced the launch of modular server building blocks based on blade tech specifications. With these, OEMs and resellers can assemble their own servers for this segment. Sun runs its Startup Essentials program which gives small businesses access to its systems and storage at discounted prices among other things. ERP vendors too have been tailoring their offerings for the SMB segment and giving low-cost versions. Technology, which was considered inaccessible till now, especially by small businesses, is being offered in new avatars.

Is it enough? For a hungry, growing child nothing is enough. And SMBs are just that.