Thinking small for SMEs
The channel would do well to stay on top of what small businesses need, says Billy MacInnes
10 January 2020 | 0
Most of the headlines around technology trends and IT are dominated by the interests of larger organisations and enterprises, ignoring the reality for many smaller businesses. What are the main technology/IT issues, trends and challenges facing SMEs in Ireland and what are their solution providers/MSPs doing to fulfil them? What practical issues do SMEs have to contend with that their larger counterparts don’t and how can channel partners, vendors and distributors help them overcome those challenges?
Shane Conneely, senior research and policy executive, Chambers Ireland, describes SMEs as “a hugely important part of the Irish economy, accounting for 99.7% of active enterprises and over two-thirds of jobs in the private sector. The vast majority are micro-SMEs which have fewer than 10 people.”
He says the biggest problem for SMEs with IT is the “challenge of finding people with the right skills” because those people are expensive. The lack of IT skills is leading to notable productivity shortfalls for those in the 50-250 employee category. “It can seem like the costs of major IT investment, with the need for training and upskilling across the organisation, are not worth it,” Conneely reveals. “However, the risk with this approach is that a competitor will make the move first and we’ve all seen industries transformed by a low-cost new entrant.”
In terms of direct technological challenges to SMEs, he stresses that “cybersecurity cannot be underrated, particularly for micro companies. If your business is working across two or three computers and you get attacked by ransomware and you are not prepared, it can be a disaster. I’ve seen sole-traders and very small professional partnerships targeted. Legal firms are coming under increasing threat due to the commercial sensitivity – and value – of the information they hold”.
makes an interesting point that small businesses most at risk with
new technologies are those in industries “that haven’t felt the
encroachment of tech challenges before”. For example, those still
operating as travel agents “are likely to weather whatever new
change comes next as they have already survived the turmoil of the
years, but if you’re in an area which has been relatively well
protected, it might be worth keeping an eye out on developments in
other countries to see if there are developing threats for businesses
similar to your own”.
While the IT industry is busy pushing topics such as artificial intelligence, machine learning and data science, it’s hard to know what sectors will be affected in advance. But businesses that have interpersonal skills, manual dexterity and creativity at their core are unlikely to be among that number. “In the areas where they will be most effective, these are often very technology-focused areas already, so they will be complementing the work of already very highly skilled individuals,” he adds.
Colm Greene, director channel sales, Dell Technologies Ireland, identifies a number of trends and issues SMEs have to contend with. He describes digital content strategy as “one of the main trends. A lot of companies have a digital content strategy and they’re moving business online. We see a lot of SMEs with some form of that but they are not fully engaged. In some cases, don’t have any at all.”
Another trend is the demands and expectations of millennials in the workplace and among customers because “they don’t consume content in the traditional way. They are active consumers of digital content. And a lot of millennials make employment decisions on what IT is used in their jobs, so that’s a challenge for SMEs”.
One of the most important issues is the movement to cloud, specifically where to, what they’re moving and who with. “They’re looking to improve automation, management and productivity of the business, but how do they do that? What cloud strategy do they go for?”
Partners and MSPs are helping “customers navigate through a lot of these trends”. To achieve this, they are having more solution-based discussions with customers “to help align these trends and underpin their vision, goals and strategy to achieve what they want to do”.
Partners are often quite successful around managed services because smaller customers don’t have the resources onsite. “It’s easier to use a partner to outsource management to improve productivity and drive down costs,” Greene explains, pointing to Infrastructure-as-a-Service as an example. Many SMEs are trying to simplify and improve managing their data but there are so many trends in the market and they need help to navigate through them to ensure they have the right solution in place to remain relevant.
Security is a big issue. Moving to a digital strategy with anytime, anywhere working brings a lot of security challenges and threats to the IT infrastructure that they wouldn’t have had to deal with before. “Do they have the skills set to do it and do they know what’s available in market to help them with that? How do they find the right skill set to manage this new world of digital and cloud, onsite and offsite, and try to make that work?”
MSPs can help customers navigate through the complexity and simplify the process. Greene believes partners in Ireland “are exceptionally good at helping customers to implement the solution to help them with their vision and strategy”. They can also help customers by offering more OPEX options. “There are some really clever finance options out there for SMEs to help them get the money they need to transform. We’re starting to see flexible finance options, such as pay as you use where you pay more as you grow. There are no big upfront infrastructure or services costs. It’s working really well in helping SMEs get over their budget issues.”
He notes that many SMEs want the simple option, “they want to deal with one particular vendor, secure a services package around that and have it neatly wrapped up in a good finance and security package. It’s great for partners because they have one throat to choke for everything, they don’t have the complexity of dealing with multiple vendors”.
David Waldron, director of cloud services, Radius, says significant changes in the technological landscape over the last 10 years, particularly the shift from on-premise to cloud and a greater focus on securing personal data, “have brought about new meaningful challenges for SMEs,” Waldron states, “not least the adoption of new IT solutions and a change in working practices and methodologies”.
MSPs need to be able to “educate clients on technological advances that can benefit their business in order to remain efficient, productive and compliant”. They have to appreciate “an SME is not a ‘scaled down’ version of a large enterprise and that an SME’s capabilities tend to be embodied in the nature of the owner/manager. This brings with it the structural and financial challenges faced by SMEs in implementing the latest IT and security best practices”.
He notes that the primary driving factors behind cloud computing services for enterprises and SMEs were its resource aggregation, quick scalability, OPEX v CAPEX expenditure advantages and the ability to quickly allocate and de-allocate resources during peak and off-peak periods. “Reality suggests, however, this elasticity of cloud services for OPEX savings during slack productivity periods works much better for enterprises with vast cloud resources,” Waldron comments. “The issue comes down to size of the organisation and the clear advantage scale has for enterprises over SMEs.”
In terms of security, the cultural, behavioural and employee-size differences “do not correlate equally for SMEs as for enterprises,” he remarks. “Critically, this is where SMEs need a more creative and holistic approach by their MSPs, channel partners and vendors to advise on an IT/cloud/security roadmap that will futureproof their business needs.”
To stimulate SME adoption of the latest technological and security advances, MSPs, vendors and distributors have to promote and develop information sharing networks and events for SMEs to overcome their skills and knowledge gaps in those areas. “Adoption of basic best practice steps such as multi-factor authentication and employee training lag significantly behind for SMEs in comparison to enterprises,” Waldron says.
It’s not purely down to budgetary issues because solutions can often be attained for little or no extra expense. “The reality is SMEs still believe only large buildings go on fire and this is where the mindset and cultural differences between the two groups come to the fore,” Waldron observes. “This is where MSPs in particular need to stand up and be counted for SMEs.”
John Nolan, sales director, Westcon UKI, believes It’s an exciting time for SMEs. There is a breadth of product solutions available to SMEs, particularly as start-up challengers enter the market with competitive cloud offerings and enterprise vendors are adapting their offerings for smaller business markets. “We feel this steep GTM-change is going to create a new breed of consultancy-led resellers within the current partner community,” he says. “This will be most visible in the UC&C channel initially, with security and infrastructure following.”
Westcon recommends SME partners selling on-premise, hardware-based solutions should “think like an enterprise player and look at how you can differentiate, potentially with your own unique MSP proposition. Blending solution wraps, focusing on a specific market and using finance to accommodate demand for monthly billing are all worthwhile considerations”. Security technologies should also be a key part of any portfolio because security is top of any CTO’s priority list.
Exponential growth v skills shortages
Mark McHale, vice president for the North-West EMEA region for Arrow ECS, singles out the ongoing exponential growth in data as a challenge, in terms of securing it and for compliance. Many SMEs want to migrate to the cloud, “but don’t know where to start, particularly if they have invested heavily in legacy systems”. A lot of SMEs don’t have a dedicated IT resource in house so they have to rely on specialist third parties to bring the skillsets into their business.
Technology solutions providers can assist resellers, managed solutions/service providers and SMEs by allowing them to access pre-sales specialist skills that assist with selling new technology solutions – giving insights into real return on investment and benefits. In addition, technology solutions providers like Arrow can help to arm reseller partners with market intelligence “so they can help SMEs make the right, most meaningful business decisions when it comes to buying and adopting technology”.
Karen O’Connor, general manager, Datapac, describes cybersecurity as “a huge challenge” for many SMEs because cyber-criminals don’t discriminate between enterprise and SME – they face the same level of threat from cyber-attacks. If anything, SMEs “are often targeted as cyber criminals attempt to exploit weaknesses resulting from limited budgets and a lack of specialist resources”.
Constrained budgets make it difficult for SMEs to keep pace with changes in technology. Many require a business case to be made for IT investment and don’t operate with an allocated IT budget. The widespread skills shortage in the IT market exacerbates the situation. “Smaller enterprises are being pitted against larger organisations in the war for talent, making it hard to attract and retain skilled professionals,” she says. Without the in-house resources and knowledge, navigating the complexity of today’s business environment is a massive challenge.”
MSPs can help SMEs overcome many of the technology challenges they face by giving them access to a specialist level of skills, knowledge and services that would otherwise be too costly if they sought to procure these in-house.
She adds that the OPEX model is another benefit because it enables SMEs “to treat IT management as a utility rather than having to finance capital expenditure and worrying about costly refresh cycles”.