Source: Alcatel-Lucent SMB
I think our business partners might offer several arguments debating the validity of my question. The mindset and approach to serve Small and Medium business is very different than that needed for Medium and Large Enterprises (MLE), not only for our business partners but for Alcatel-Lucent Enterprise too.
SMBs face completely different challenges, ones that are similar to those faced by an MLE but the magnitude of which could either make or break the SMB. As an example, consider issues like cashflow and credit lines which impact SMBs and MLE alike but the magnitude of impact differs. While a MLE might be able to buffet these winds for a few weeks, it would sink the SMB boat in a matter of days.
An SMB or entrepreneur therefore looks at any investment or expense with a microscope. Consequently IT investments are no different for a SMB than purchasing a water filter or coffee machine for the office. The mantra is ‘if cheap can do, then make it happen’ and I think if I started a my own small business today, I would think along similar lines.
The SMB market is a volume driven game requiring local warehousing, prompt delivery and service. It is, therefore, no surprise that when speaking with business partners, they prefer to suffer the longer sales cycle involved in selling to MLE who are relatively less price sensitive and allow for longer lead times than sell to SMBs.
Selling to SMB requires a different business model, one that most business partners (not only for Alcatel-Lucent Enterprise but those of other vendors also) are not accustomed to accommodate in their financial systems. It’s a model that creates a chain of periodic payments as compared to a one off receipt or in other words, Infrastructure-as-a-Service (IaaS). Since cashflow is constantly scrutinized for daily operations, SMBs find a small monthly outgoing fee palatable as compared to a lump-sum expense.
This morning, I was discussing Marketing in 2014 with a reseller who sells customer queuing and feedback systems based on a Software-as-a-Service (SaaS) model where every user license is charged a monthly fee. A partner in East Africa employs a similar idea with photocopiers where every page printed or photocopied is charged over a period of time rather than one time investment for the machine. A similar financing/leasing or pay-as-you-go model can be adapted for enterprise communication solutions for SMBs, especially in developing countries.
I’ve come to realize that SMBs suffer from similar challenges in the developed world, as well, but with high bandwidth availability, SMBs can offer home working as an employee retention option and therefore need Unified Communications tools to facilitate productivity. This creates cloud telephony opportunities leading to subscription based revenues or a SaaS model in other words.
This is key difference with our part of the world where low bandwidth availability and employer mindset call for on-premise technology investments and manpower. Therefore the opportunity to explore with our business partners is whether subscription-based models can be adapted for on-premise installations.