SME Procurement is Dead

Compared to the brave new world of cloud-based services and pay-as-you-go charging, the old ways of selecting and procuring business technology appear evermore antiquated. Nowhere is this truer than in the SME segment where organisations in every sector are waking up to the freedom they have to pursue new approaches, and the advantage this gives them over larger competitors. Nick Claxson, MD at Comtec Enterprises, explains what this means for the Channel

Comtec Enterprises Managing Director  Nick Claxson

Comtec Enterprises Managing Director
Nick Claxson

The traditional separation between personal and business technology has gone out of the window as individuals become more confident in autonomously adopting new applications and devices to suit their needs. The resulting ‘consumerisation’ of enterprise technology is now all around us, driven on by a greater supply of ICT capabilities delivered as services. Key to this evolution has been the improvement of service experiences that simplify the access and orchestration of complex technology. A great example is the development of enterprise app stores; easy-to-use marketplaces for ICT services that are as simple to consume as widgets and games on your smartphone.

It all ties into the subscription economy we live in today. Where, despite low interest rates, everyday people and businesses alike are averse to spending capital when they can instead spread the cost of investments to match their income. This is increasingly a generational habit too, and as today’s ICT buyers retire and more ‘millennials’ enter the workplace to replace them, selling to the growing ‘Subscribe Tribe’ becomes a strategic imperative for all channel players.

A notable part of the SME segment is startup and early-stage businesses, growing fast and demanding technology to enable better performance and efficiency. Why on earth would they want to be weighed down by monolithic ICT systems and burn available capital away on ICT equipment? Surely a better way to accelerate their business would be to avoid getting tied-in to any onerous, long-term commitments, or incur any technical debt?

Hence services, such as cloud telephony for example, are significantly more appealing that purchasing a PBX system and, frankly, having to live with it. If we’re honest, startups aren’t alone in viewing ICT assets as ICT burdens.

Disruptive technology needs to disrupt channel businesses

Most organisations, regardless of size, have grown an interest in pursuing digital objectives. In plain English, this is all about taking advantage of cloud-based technology to ensure they aren’t left behind by their competitors, don’t overspend on ICT and don’t become irrelevant to their customers. On some level, this means creating a business transformation and channel partners should be ideally positioned to support them through this process.

But first there is much to do within channel organisations to transform internal processes and mindsets to this new world of cloud-based consumption and annuity services.

The most obvious to my mind is shifting technical support away from on-premise hardware to virtual service delivery. Take that to its logical conclusion and ‘install and maintenance’ naturally becomes less about systems engineering and more about user training. Project management skills also come to the fore, as customers expect faster turnaround times and high ongoing service levels.

Another key issue is staff remuneration. The best salespeople expect to be paid handsomely for their ability to close new business. But without huge chunks of customer capex rolling in, how can channel players justify paying out generous upfront commissions? The answer could lie in nailing customers down to two, three or even five-year service plans with contracts that heavily penalise them for breaking off. But that goes against the instincts of the Subscribe Tribe, where people expect to be able to switch around if they aren’t happy, and tune service levels up and down on demand. A brave move would be to offer customers what they want – a 30 or 90 day notice period with no strings attached. Given that the services delivered are essential, and the pricing and quality correct, this approach could actually inspire more loyalty than one that slaps on contractual handcuffs. But what happens to your commission plan then?

The impact on resellers who fail to accommodate the shift away from feast or famine sales targets to month-in, month-out recurring revenues could find themselves losing out on the sales skills needed to succeed in this market. Or worse still, retaining too many of the old school blaggers who refuse to evolve. And skills do need to change; it’s less about winning business and walking away, and more about nurturing a long-term consultative relationship as a trusted advisor. It’s what the Subscribe Tribe expects and you’d be foolish to ignore them.

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David Dungay

Editor - Comms Business Magazine