Enterprise IT - The future sales model

In his blog post , Mike Speiser, argues that Small to Medium Business segment is the next growth engine for Software and that Enterprise IT Providers should look out for disruption in their space led by the consumer web revolution.

While I agree with the conclusion of Mike (refer my earlier post that made similar conclusions here) , I do not agree with some of his arguments.

Mike's key argument is that with cost of sales going down ,as a result of the realization of the vision of self service technologies and next-to-zero software distribution costs, it creates an opportunity for new startup's to take advantage of this and hence this is the engine you should be looking at.

I would argue that there is more nuance to selling into SMB than having great self service technology and a cost model based on SaaS. Although people think SMB and Consumer segment are similar as a result of the fragmented nature of the markets , there are actually some significant dissimilarities. SMB's make decisions in groups typically influenced by a large Enterprise facilitator. i.e Doctor's would buy office software that works with the files their hospital uses. Insurance agents will typically buy their Insurance carrier recommended IT software. In a lot of cases Enterprise IT vendors sell to associations and groups ,realizing the actual sale with the SMB business; as a result the assumption that you cannot have direct sales for SMB is not true. Assuming that having better self service capabilities makes their life simpler is also not necessary true. Their life gets simpler with more factors like better integration with their affiliates.

So to play in the SMB technology space you need to have a platform provider that aligns all the relevant players. Microsoft has been this platform provider untill now. People like SAP understood this and focused on the Enterprise Solutions that integrated the SMB into the Enterprise processes but did not enter the SMB space per se.

Google is trying to be the new platform provider as a result of the platform moving to the web. So the opportunity now exists for start-up's the bet on the success of this platform and hence be successful.