Up Close and Personal

Published for the Week Of September 20, 2004

ip O’Neill, the late, great Speaker of the House, famously said, “All politics is local.” The analog for small companies is that all IT implementation is personal.

With projections that most of the growth in IT spending over the next several years will come from small businesses, IBM, Microsoft and Best Software--all powerhouses in their own right--are gunning for the small-business market with gusto, tailoring their software and creating special programs to win the business. Oracle, too, is aiming scaled-down versions of its database and applications at the small and midsize space.

IBM is spending millions to expand beyond its traditional glasshouse enterprise mentality with the Express software lineup for SMBs. Over the past few years, Microsoft coughed up more than $2 billion for Great Plains and then Navision to bulk up its accounting and ERP lineup for small businesses. Best Software is probably most entrenched in smaller accounts with Peachtree and other brands but now faces an onslaught by the big boys, all of which, let’s face it, will offer credible software.

These vendors can throw around as much money as they want, but when it comes to selling a solution into a small business, it all boils down to personal relationships.

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That is why solution providers such as Bryan Cafaro and Casey Hanson are so important not only to their customers, but to the technology vendors that are now all targeting small businesses.

Best Software, with its Peachtree, MAS/90 and other brands, has a good installed base in small business, but a bewildering array of product lines resulting from a buying binge may confuse potential customers.

Microsoft has targeted small businesses through the Microsoft Business Solutions (MBS) unit, and IBM has scaled down its WebSphere, DB2 and other offerings into Express versions. But both companies face obstacles in small business.

Microsoft is fielding an array of ERP, accounting and supply-chain brands that even its own partners are hard-pressed to keep straight.

Casey Hanson, vice president of New West Technologies, Portland, Ore., helped implement the now-almost-mythical Abernathy’s Northwest Hobbies, a Bellevue, Wash., hobby shop. The shop is owned by Oscar Ayala, brother of Microsoft executive Orlando Ayala, who never tires of talking up the shop’s automation accomplished by New West with Microsoft’s Retail Management System (RMS).

Orlando Ayala, COO of the MBS unit, said the key for solution providers is finding an area of expertise, honing it and making it repeatable. He and MBS intend to rely on a phalanx of such solution providers to generate the volume sales he says MBS needs. “I'm not interested in three hobby shops, but all hobby shops. I want them all,” Ayala told CRN earlier this year.

Hanson said his company is making hay with that repeatability. New West has long specialized in POS and retail systems, and its customers range from hobby shops to wine stores and other retail establishments.

Microsoft’s advantage is that its Windows-Office duo is the default desktop choice for most small businesses. “If you don’t know what you’re doing, you might assume Microsoft has a solution,” said Andrew Pollack, president of Northern Collaborative Technologies, a Cumberland, Maine, solution provider. But the company’s highly publicized security woes give even non-techie business owners pause, Pollack added.

IBM’s mainframe and glasshouse heritage is not typically top-of-mind when it comes to small business. Bryan Cafaro, president of Tri-Bry Business Technology Solutions, a Hoboken, N.J., solution provider in the IBM camp, said Express has helped, even though IBM executives acknowledge they are more focused on the “M” part of the SMB universe, which IBM defines as any company with 1,000 or fewer employees.

Critics maintain that IBM has tried to shrink down enterprise products to shoehorn them into small businesses instead of designing them from the ground up for the intended audience. Still, IBM Software, Somers, N.Y., fields about 500 people at its call centers, dedicated to drumming up business in smaller companies, said Bob Curran, vice president of IBM Software’s Teleweb Sales team.

Devi Gupta, director of strategic marketing at Prolifics, an IBM-centric New York solution provider specializing in portals and e-business work for midsize businesses, says she has started to get leads from IBM telemarketing for even smaller companies. She and Cafaro said IBM is using them to move its foundational database, e-commerce and other software into small accounts. “They recognize that small business is not their forte and that it is ours,” Gupta said.

Still, while small-business owners are interested in hearing about the big IT brands, they generally don’t buy on brand alone, solution providers say. They’re far more interested in results: How do these vendors and their bits-and-bytes solve very specific problems?

When it comes to a solution, they’re more than a little likely to want a person they respect and trust to come in, take a look at their needs, and set them up. They will buy what that trusted adviser recommends.

Even Microsoft partners acknowledge that many small-business accounts aren’t even aware that Microsoft--known for Office and Windows--fields an array of Great Plains, Navision and Axapta ERP (aka accounting) software. Or that IBM has spent a ton of dough refashioning WebSphere and DB2 to make them fit more easily into small businesses. Many are more likely to be running old QuickBooks or Peachtree Accounting software than anything else.

But the Web revolution has not been lost on these business owners. Even one-person shops want an online presence. “They’re not a lot different than our large customers. Most companies today have the basics covered. They’ve got accounting and payroll, whether it’s QuickBooks or a third-party provider,” said IBM’s Curran. “But as they try to leverage the Web more to broaden their reach to customers, and field new apps--CRM or supply chain--they need help.”

Cafaro typically spends quite a bit of unbilled time getting to know a prospect’s needs. “At first, it’s not at all about selling technology but understanding the business. Then, when I see an opportunity, I suggest a technology solution that is open-ended to allow for growth,” he said.