Author Zoli Erdos

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You Know Wikis Have Arrived When ….

Jun 2, ’06 5:33 AM
Author Zoli Erdos Categories Infrastructure, Office - IT, SME-Blog, Software as a Service, Web Technology, WinWeb

You Know Wikis Have Arrived When …. they become the feature post in your regular junk mail – this time from an Executive Recruiter firm:

What in the World is a "Wiki"?

If you don't know what a Wiki is, you probably should.
The term "Wiki" refers to both a collaborative site on the web or your company's intranet/extranet and the software that runs the Wiki.

A wiki is a website designed for collaboration. Unlike a traditional website where pages can only be read, in a wiki everyone can edit, update and append pages with new information, all without knowing HTML, simply by using a MS Word type interface.

Wikis are the latest, greatest tool for group collaboration, project teams, document editing, etc. And, best of all, they are easy to use, affordable, and extremely flexible.

The easiest way to learn more is to click on the link at the end of this section of the newsletter and try it for yourself!

What can you do with a wiki?
Whether you're at work or at home, you can access and use a wiki. The wiki allows free-form collaboration, but most wiki software providers and hosts also offer structured applications that allow you all kinds of very helpful functionality.

Here are some of the things that can be done (depending on whose software you use and what applications may be available:

  • Create an intranet
    Publish company information, such as news or employee guidelines
  • Project management
    Schedule project deadlines, assign tasks, and define product specifications
  • Document collaboration
    Multiple users author documents with aid of version history
  • Manage a group’s activities
    Utilize event calendars, discussion forums, blogs and other apps
  • Collaborate with virtual teams
    Communicate with remote contractors or clients
  • Track software bugs
    Log defects and build custom queries
  • Call center support
    Access case histories and increase customer support

A wiki can be hosted on your company servers or there are a number of hosted versions available. There are a number of suppliers, each touting advantages over their competitors, of course.

One important aspect of a wiki — it is highly cost- effective and versions/solutions range from those for the smallest teams on the most limited budgets scaling up to full enterprise versions.

Thank you, dear spammer, for writing almost my entire post:-) And you, dear reader will soon be able to use a wiki – one of the many extra "goodies" that will become available to Winweb customers in the near future.

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SaaS for Very Small Businesses – Show Me the Money

May 31, ’06 5:47 PM
Author Zoli Erdos Categories Development, Infrastructure, Marketing/PR, Office - IT, Open Source Software, SME-Blog, Sales, Software as a Service, Web Technology, WinWeb

Recently, in SME / SMB Have Become Obsolete Acronyms I discussed how now, that business software and services have become affordably available to small businesses, the SME term has become inadequate to describe this market, especially from the software industry's point of view. Simply because the needs of a $100M company, which SAP and Oracle consider a "small" business are not even comparable to a 6-10 person company – traditionally referred to as SOHO, while recently a new term is popping up: VSB – very small business, the absolute "S" part of SMB.

Innovators in the software business are increasingly focusing on this segment. The result of this change is that "Enterprise Software" is no longer the luxury of large corporations. This might sound like a shocking statement, since "Enterprise Software" typically means the world of SAP and Oracle, and the traditional heavyweight, expensive, pay-huge-license-fees-upfront, then try-to-implement-forever model that does not work anymore.

But there is another definition that is largely being overlooked:
Software that allows a company to conduct it’s everyday business, supporting most of the core, fairly standard business processes any company performs repeatedly.

With this definition, Enterprise Software has a whole new, largely unpenetrated market to enter: that of small businesses. Such business functionality has traditionally been beyond reach for a typical small business, for two major reasons:

  • Cost (license, hardware, implementation, maintenance ..etc)
  • Lack of IT resources (integrating applications, designing processes, dealing with multiple vendors ..etc)

SaaS is the right answer for both, since it allows the SME user to start using the functionality without an upfront investment, does not require implementation, upgrades, maintenance, worrying about backups and security ..etc.

Of course several Open Source packages are available completely free, which is a perfect solution for the cost problem, but frankly most of these packages are by geeks for geeks; i.e. you really have to be quite IT-savy to implement, integrate, upgrade them, and as we stated most small businesses simply do not have that type of resource.

Stefan, Winweb's Founder and CEO started an excellent mini-series on Saas Benefits detailing a lot of technical, delivery, usage aspects – now I am going to look at the changed economics from the other side, the software vendors' point of view.

If SME’s could not in the past afford Enterprise Software, the same held true for the Software Industry: they could not afford SME’s, since there was just no way to profitable reach millions of small businesses. The cost of customer acquisition vs. the very low license fees made it an uneconomical model, whether via direct or channel sales. A common "dirty secret" of the industry is that about 80% of a an enterprise software company's cost is Sales and Marketing. There's a lot of "fat" in that sales process that needs to be cut out.

Once again, technology comes to the rescue: the Internet, and largely Search Engine Marketing changes everything. Joe Kraus, Founder of JotSpot and previously Excite sums it up:
“ Ten years ago to reach the market, we had to do expensive distribution deals. We advertised on television and radio and print. We spent a crap-load of money. There’s an old adage in television advertising “I know half my money is wasted. Trouble is, I don’t know what half”. That was us. It’s an obvious statement to say that search engine marketing changes everything. But the real revolution is the ability to affordably reach small markets. You can know what works and what doesn’t. And, search not only allows niche marketing, it’s global popularity allows mass marketing as well (if you can buy enough keywords). “

Another benefit of SEM (search engine marketing) is that while traditional advertising can pick the right demographic groups, it cannot pick the right time, only a fraction of the target audience is in “change mode”, looking for a solution. That’s the beauty of Search Engine Marketing: obviously if you are searching, you have a problem and are looking for a solution, which is half a win from the vendor’s point of view.

Small Business Trends published a survey on “Selling to Small Businesses”, which supports the increasing importance of SEM: “A full 73% of vendors attract small business customers through search engine results”

Joe has another excellent article worth reading; especially the last two bulletpoints are relevant to our discussion here.

What we're seeing is that the SaaS model changes not only the technology and the delivery of software to customers, but the marketing and sales process, too, which is perhaps where most of the excess "fat" can be cut from. Software companies can now directly and affordably reach millions of small customers. The entire marketing, sales, delivery, implementation, support, upgrade process is seamless, highly standardized, conducted via the Net, teleconferencing, Webex-like sharing in new low-cost ways.

So how do software companies make money on small businesses? Ziff Davis has the answer: “Products for the long tail and SMB market, where 72 million businesses spend $5k or less each year, are a much easier play” Wow, I don’t know where those numbers come from, but if I were a SME-focused software vendor, I’d certainly like them … there’s a goldmine out there.

AMI Partners confirm: U.S. SMBs to Spend $2.2 Billion on Software in 2006

(This article, with minor changes is cross-posted on my personal blog)

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Wiki Could Have Saved School $250K

May 24, ’06 4:16 PM
Author Zoli Erdos Categories Infrastructure, Office - IT, Software as a Service, Web Technology, WinWeb

Here’s an interesting story from the US:

"At Cobb County school system in Georgia a spam filter is causing a political dust-up.

Officials say a bid to provide telephone services to the system was gobbled up by the filter, and the bidder was subsequently disqualified, according to a report in the Atlanta Journal-Constitution. The term "long distance" was apparently what triggered the block.

The school system had requested an e-mail as a follow-up to the formal bid, which had previously been submitted on paper. When they didn’t see the reply, officials dismissed the bidder and awarded the contract to another–more expensive–contractor. Now the bidder and the school system are arguing over whose fault it was." (source: Blogma)

Here’s a wonderful showcase that calls for a wiki.  What’s a wiki? Well, basically it’s very simply editable web-pages that facilitate collaboration – but instead of me explaining, why don’t you watch this  excellent short video .

So what could the school district have done?  Set up separate wiki pages for each participating vendor where they directly upload all relevant documentation.  If they make changes, the wiki keeps track of versions and shows what the changes are.  School district officials who have a role in the decision-making process have access to all vendor pages, so they can compare the bids, plus they can set up their own internal workpages where the create notes, discussions, tables .. i.e. collaborate easily.

At the end of the process they have one compact site, the wiki that includes the official bids as well as all supporting documentation instead of hundreds of emails, cc’s, untrackable attachments.

Wikis are one of the many extra "goodies" that will become available to Winweb customers in the near future.

(Parts of this article have been posted on my personal blog)

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TiEcon 2006: Software Luminaries Panel : The Software Richter Scale: 1, 3 or 7?

May 18, ’06 4:02 AM
Author Zoli Erdos Categories Development, Marketing/PR, Open Source Software, SME-Blog, Software as a Service, Start-Up, Web Technology

I see that Stefan started a mini-series on the benefits of SaaS – the Software as a Service model. I thought it would be interesting to insert here my notes from the  Software Luminaries Panel at TiEcon 2006, a Silicon Valley, California Entrepreneurial Conference I attended last weekend..  While Stefan’s series will obviously look at SaaS from a small business user’s point of view, this Panel discussion examined the issue from the software companies standpoint – some are larger organizations, others are startups, i.e. small businesses themselves, just like most of our readers here.  Please note, even though I am  publishing this, after the Conference, but did only very basic editing,  essentially posting my raw notes from the meeting.   I’ve also deviated from the role of passive note-taker here, as this is a subject where I am somewhat competent, and can’t help but insert my own comments here and there – you will see those in italics.  I invite Panelist, participants and obviously readers of this blog  to feel free and correct / add to my notes in the form of blog comments.

There were parallel sessions run with industry luminaries in ballrooms next to each other. Moderator  M.R. Rangaswami opened on the humorous side: the audience picked the right session, as he peeked into the next room where the Semiconductor luminaries session would take place, and saw a sign there saying "semi-luminaries" :-)    M.R. is Co-Founder of the Sand Hill Group and host of the recent Software 2006 conference (an annual event).  .

As introduction he uses his Software 2006 slides about  Software’s quiet revolution. Three major realities:

  1. Changes represented by SaaS , Open Source, while CIO’s indicate increased spending on software.
  2. Real business is in the Enterprise (but consumer technologies find their way into the Enterprise)
  3. Thriving ecosystem critical

Panelist(s)

  • Larry Augustin , Angel Investor, Founder VA Linux, SourceForge …etc.
  • Amit Chatterjee , VP Strategy SAP
  • Mark Gorenberg , Partner Hummer Winblad Venture Partners
  • Jason Maynard , Research Analyst Credit Suisse
  • Zach Nelson , President and CEO Netsuite
  • Sanjay Parthasarathy , Corporate Vice President Microsoft Corp. (Chief Evangelist of Microsoft Church)

Starting with a few canned questions for warmup, then taking audience questions.

Question:  Will there be a billion-dollar software company in SaaS? 

Jason:  Yes, Salesforce, NetSuite to begin with.. Client-server, on-premise screwed customers, overpromised, underdelivered. SaaS will be huge, it has barely  scratched the surface so far. 

Mark: Agrees.  Hummer Winblad did 12 pure-play SaaS investments. SaaS is most disruptive.  Siebel was the uncontested market leader and the appearence of Salersforce.com killed it. (I can’t help but insert my own opinion here: Sure, Salesforce squeezed Siebel from the bottom up, but two other factor were just as significant in their demise: the "overpromise, underdeliver" syndrome, i.e. customer dissatisfaction after expensive and lengthy projects; and the fact that SAP that already owns the Enterprise market significantly improved their own CRM  offering, and the integrated approach offers a better value proposition to their customers then the standalone Siebel CRM-only solution).  

Sanjay: We’ve already seen billion-dollar  SaaS companies:  eBay and  Google, just not in Enterprise.

Amit:  SaaS by itself is not a business model… for larger organizations hybrid models work better …with increasing process complexity and integration requirements there is a need for a mix of  on-demand and on-premise solutions.

Question specifically to Zach: Larry Ellison (Oracle CEO, owns over 50% of NetSuite, which is expected to pull off a billion-dollar IPO this year) stated that SaaS is only for SMB’s not for large corporations. Is that so?

 Zach: He is generally trying to avoid speaking for Larry. (They clearly have an interesting relationship, Larry has to be somewhat anti-SaaS, and Zach can’t really get into a public debate with his absolute majority owner. It seems to me that Larry is betting on two horses at the same time)  Nobody will switch software because they want to, or because SaaS ismore fashionable. First and foremost customers have a functionality challenge, which the software company has to meet.. Functionality is the primary consideration, and the delivery model supports it.

Sanjay:  We shouldn’t be talking about software as a service, it’s actually software + service.

Mark: A number of companies are selling to both small and large organizations. What’s exciting is that this is the very first time when medium sized companies can get the same functionality as the large guys! ( I tend to think the same is true for small businesses, in fact that may be an even more radical change, and it’s a mistake that analysts often only think of the midsize market when they speak SMB )

Jason: Disagrees with SAP’s Amit on the notion of need for hybrid.  Software needs to become a utility.  There is no room for innovation in most corporate  IT budgets, 80% of which is spent on running the infrastructure.  Let go of thee server!  I know it’s hard …it’s your baby … you may get visitation rights at your SaaS provider:-) (huge laughter at audience)

MR  makes a comment/question on recent high-profile outages in the industry, largely at salesforce.com but elsewhere, too.

Zach: Not all delivery models are created equal.  Sforce runs on "big iron", (find article here) while Netsuite opted for a grid-like system based on cheap boxes. When a salesforce.com server goes down, it effects the majority of customers,  when NetSuite loses a box, a maximum of 50 customers are effected. This setup  also helps rolling out new versions smoothly, in a phased fashion,  while  Salesforce.com has to do it in "big bang" style.   Zach predicts Salesforce moving to a grid-like environment soon.

Larry: It’s about ease of adoption.  Software has become a lot easier to create, it’s acquisition is a painful process, and that’s the part that SaaS improves.

Sanjay: Service orientation helps picking best-of-breed solutions, mix and mach. The current trend of consolidation in the industry is actually contrary to it.

Amit: SOA is critical, some services in the cloud, others in the enterprise. 

Zach: Picking composite applications to mix and match is difficult, especially as business processes get more complex.. Composite transactional  applications are a fantasy -  far to difficult to synchronize.  Example: Microsoft CRM and Great Plains are hard to synchronize, even though MS owns the code for both.  Integrated transactional systems are unbeatable – that’s why SAP owns the Enterprise.

Question:  Consolidation, Oracle acquisitions .. getting bigger and bigger – is there room left for innovation?

Larry: Oracle is buying since it’s not doing a great job of innovation itself.  Startups have the benefit of new distribution mechanisms, SaaS, Open Source, user base helps them.

Amit: Lot of room for innovation by partners id they participate in verticals.  He "only" has 6000 developers, cant cover the whole world.(audience laughter)  Larry interrupts: I’d like that problem, I have 12. With 6000 how can you NOT cover the world? (even bigger laughter). Amit: Citibank has more developers then SAP.

Question about data privacy, Security. 

Zach: Especially for small, midsized businesses NetSuite’s security is better than running on local server next to coffee machine. 

Larry: Security is still a huge  unsolved issue.

Sanjay: The real data challenge is mashing structured and unstructured data. 80% of corprate data is unstructured  without business processes: xml is the glue. 

Larry: Html amplified the problem of huge amount of unstructured data, the future will be to move to have data in xml and html is just the presentation.

Question: Are there profitable SaaS companies?.  Sforce is barely profitable.

Mark: Salesforce.com is barely profitable, .Rigthnow is making decent profit,  employees (?_) is largely profitable.

Jason: Many are profitable,  SaaS lowers the cost of distribution – there is price elasticity in the market.  SaaS also helps reducing R&D, support costs – salesforce only needs to support one version, SAP, Oracle multiple ones.

Zach: When he joined NetSuite their sales model was direct. Now with success ecosystem develops.  Typically start with direct, build customer base, then ecosystem develops.

MR‘s comment/question: Software 2006 had a panel: Open Source: money machine or money pit? 

Larry: Open Source is a young model, there can not be a lot of profitable companies yet,  Red Hat beng an outstanding example.  On $10M in R&D Salesforce.com spends 100M in Sales & Marketing..  It’s cheaper to create software then sell it > Open Source helps eliminating the huge sales costs.

Jason concurs,  sales is 80% of cost.  Enterprise Software companies don’t make a lot of profit on software sales, their profit comes from maintenance.  Smart Open Source companies jump out of this expensive sales cycle and focus on support only.  They will increase botttom line while reducing top line.

Larry:  There is also a culture change: people did not understand software, they had to be educated and had to pay for that education.  Now everyone is computerized, carries a PDA, cellphone ..etc.  This means the  education need is reduced, good opportunity for Open Source’s pull model.

Question: SAP , MSFT will you be giving away your products free? 

Sanjay: Fuzzy answer on giving away software and promoting distribution. 

Amit: Support, explore Open Source, but not fully embrace.  SAP does not have the distribution channel that MS has. SAP needs to build ecosystem.

Question:  Will MS look into buying SAP?  Tried. Jason: pragmatic approach: it won’t happen, if for no other reason, the fight with the  EU..

Question: What Open Source opp’s exist? 

Mark: Recently made two investments into companies that develop applications for the lamp stack.  Issue: IP ownership, integration.  Sales issue: agree with the Open Source effect on lead generation, but how to close sales?  What happens when you move to markets that people don’t understand?

Question: any Open Source  companies to go public?  

Jason:  Potentially MySQL.  Markets pay 10-times sales, 30-times cashflow. Fewer, but better , more sustainable companies.

Question (more a remark) on SAP’s new compensation plan. Hasso Plattner recently  announced he is aiming at doubling the market, if they achieve that, the top 100 execs will make 100′s of millions.  Is that a realistic objective? 

Amit: The announcement certainly helps: -) but the true driver for growth  is product innovation.  

MR askes the panelists for their final remark

Mark: We’re in the greatest disruptive times. Hummer Winblad invested more in the past few years than in the previous 17..

Sanjay: Software industry does not spend enough time with users. 

Larry: Fantastic time to be a software entrepreneur.  Small team , little $, reach to market – not possible 10 years ago

Zach: It’s a great time to start a software company, when you do it, remember  you need a great application to run the business. (audience laughter; good plug for NetSuite …possibly the last one before going into pre-IPO silent period?)

Amit: Customers matter. SAP needs to focus more on the ecosystem.

Jason: MS announced spending additional $2B on emerging areas. Look at areas they are spending… go in those "white spaces", since  they are good in seeing the  opportunities, but can’t exploit them properly.

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TiEcon 2006: From 0 to 60 : Ramp it Up with Low Bucks – Bootstrapping Startups

May 14, ’06 8:21 PM
Author Zoli Erdos Categories Development, Marketing/PR, SME-Blog, Sales, Start-Up

I spent Friday and Saturday at TiEcon 2006, a Silicon Valley gathering of close to 4000 Entrepreneurs and their "ecosystem".  I’m posting some of my notes on my personal blog, and in case I feel it fits the theme of The Small Business Blog, I will repost those notes here.

Jeff Clavier’s bootsrapping panel is certainly on of those: Small Business owners at several stages (early, established, already sold) and investors discussed startup issues.   (note: I am obviously publishing this, as well as other TiEcon posts after the fact, but have done only  very basic editing, and some linking, essentially posting my original live notes)

Panelists:

David Hornik: best way to grow a company is without VC money – now that’s something to hear a VC say…

Jeff Clavier: Agrees, but sometimes  competitors force the entrepreneur to want to accelerate business which in turn leads to a need for VC investment.  

David adds another case when you need VC investment, citing a  payroll company he invested in: in that type of business customers expect a robust infrastructure, not just a  program, and building out the infrastructure is capital intensive.

Toni:  Background:  Oddpost, Yahoo,  Automattic – this being his 4th startup now, and he’s just recently "switched sides" to True Ventures.   Classic bootstrapping worked for him better than VC funding.  Too much VC investment can create a "fat model", entrepreneurs may find themselves trying to use VC money to "create a market" where there is none.  Oddpost – could not raise money,  since  everyone thought they were crazy to be a "me-too" on the crowded email market.  They got some corporate customers (licencing deals) , eventually took VC money, but ended up not touching it, since Yahoo acquired them  4 months after the funding.   At Automattic they raised intentionally little, could have raised more, but does not favor that model.  Organic growth, go find customers, start revenue flow works better. 

Jeff:  Automattic is  going up against well-funded blogging companies, why is the "lean model" better?

Tony: WordPress is Open Source, combine that with the Silicon Valley effect: start an Open Source project, people will find you.  Want to be lean, organic, likes the craigslist approach: 15-8 people run a huge service.   Jeff Clavier compares them to MySQL’s Open Source – viral growth effect.   Tony: MySQL goes after the corporate market, it  needs Marketing,  while we have a consumer product, and our products are  blog-related, and bloggers are natural marketers.

Jeff: Often the original Founder is an engineer who needs a business savvy partner, or at least advisor, how do you get started in finding the right business guy?

David:  Teaches a class on IP at Stanford B-school.  Recently saw a flyer, showing the original Sun Founding Team.  It said: "Do you wanna be like them?  I am an engineer… looking for business partner"  Cool poster, but generally it’s safer to find them "organically", living your life, networking, having coffee.  
                      (Warning: this is the Commercial: I am   available )

Toni: more business people are looking for technical parners then the other way around, they tend to be better at networking, while the techies are sitting at home writing code.

Fred Durham:  Don’t start by looking for a patner. Go find customers first before partners, since you’ll never get it right on your own without customers. 

Tim Tuttle: Found his first business partner through determined search on job boards. 

After the warmup / introductory questions Jeff quickly switched to taking questions from the audience.

Question on picking the right business, focus on one out of several options:

Toni: Early in life he was a trainee at Autodesk.  They had 9 original Founders, all engineers, all with their own ideas. Since they could not predict which one would take off, they pursued all for a while, eventually dropping all but on.  But generally it’s good to have a singular focus.

Jeff, as moderator demonstrates the importance of focus when he forces the next questioner to pick only one of two questions he wanted to ask.  After all, that’s what entrepreneurs have to do, too.
Question: How much money/equity to give away to ?   

David: Equity is a zero-sum game.  Early stage entrepreneur normally forgets this,tends to give away too much.  Raising money is a market mechanism  If the market is one, i.e. only one source is willing to fund you, that one source will determin the price.  Price of equity is  more easily determined in an investment situation then with partners.  What’s the value of participation? Depends… Give away as little equity as possible without feeling a jerk.

Fred: interrupts: Give away less than that, it’s  OK to feel a jerk. 

Kanwal: Don’t give partners / employees what you feel they’re worth  upfront, you can always do that later.

Tim: Don’t take money from friends.  Business and Friendship rarely match. (Oops, I know .. been there, done that...)

Question:  When do you give up pursuing a dead business? 

Fred: I failed many times, walked away relatively unharmed. Advice: run early. Get on a different horse. 

Tim: When you and the children need  a tent to live in, it’s a pretty good infication that it’s time to give up.

Question:  Specifically to Tim and Fred. How did you get initial traction once you have the product?

Tim: Raised little money, spent most of it on viral marketing.. 

Fred: Co-founder sent 100 invitations (spam) to random webmasters.  He got 20% response rate.

David:  A portfolio-company used quizzes. 

Toni : design product to be word-of-mouth compatible.

Question:  Entrepreneur ended up "in the tent" in 2002 starting again now.  Trying to release little bits of software to get customer feedback instead of writing plans. Is that a good approach?

Tony: Just be careful that the core is polished enough to put in front of  people without turning them off.

David: Don’t ask me as a VC what to do.. If your VC knows more about your business than you do, than one of you is an idiot.

Fred: Switching cost is huge, don’t easily jump to the next more attractive idea.

Question:  Inventor of ready-to-launch web application to save marriages. (huge audience laughter, apparently the entrepreneur crowd is in need of being saved….  Hey, if I am not married, what can you do for me?)  Finalist of Berkeley Business Plan Competition..  He just needs a VP Marketing to launch, but listening here made him realise he should be hunting for a CEO (Wow!).

David: You don’t want my money NOW, get it out, launch, create buzz, displayt ads – you will get called by VC’s.

Toni: You don’t need a VP Marketing to launch a product. You will need one later to take it above $10M.

Question on chances of a little startup vs. established players.

Kanwal  Uses Cisco as example: they won’t pay attention until you’re large, then buy you. 

Tim: Truveo: big guys wanted to build better video search, but they couldn’t, so they bought us.   Now that I am part of a big com I understand why.  (Audience laughter…. someone on the panel remarks Tim probably missed  AOL’s PR training )

Question:  Legal issues., when to involve lawyers.

David: Cites strory of a great business, raised big interest in the Valley.  Later it turned out the Founder built the products on his employer’s computer and time – BAAAAD.  Advice: get lawywers involved early – try to find ones who are excited about the business and pre-fund their contribution until you can pay later.

Tim:  Strongly disagree, lawyers are a pain in the ass, put it off as long as you can.  

I don’t remember the context but two notable quotes from Fred:

"The only thing you want to do is to separate people from their money."

"Nothing will focus your mind razor sharp better than losing money, especially your own"

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SME / SMB Have Become Obsolete Acronyms

May 10, ’06 4:44 PM
Author Zoli Erdos Categories Office - IT, SME-Blog, Software as a Service, Start-Up, Virtual Assistants, WinWeb

Software Industry analysts seem to have a fun time coming up with three-letter combinations.. throw out any random letters and chances are it means a new product, technology, industry trend, market segment. It's the latter I am having a problem with: the term SMB / SME describes Small – Midsize Businesses (Enterprises), but it has become obsolete. Why? It used to collectively refer to companies too small to be attractive for the major Enterprise Software providers – and of course the same held true vice versa: I assume most readers of this blog are in small businesses, and for you the rule has been that "enterprise software" is too expensive. Well, that's changing: Oracle, SAP are now catering for the mid-market, and there are a number of innovative new software solutions affordably available for the really small businesses. Hence the problem with the SMB / SME acronyms: they were sufficient to describe the "crowd to be ignored", but now that the software industry can actually address the needs of this very heterogeneous segment, it turns out this really isn't one segment at all, but at least two … perhaps three.

  • SAP, Oracle may consider a $100-200M million business small, but it really is midsized, the "M" in SME, with a few hundred employees and a dedicated IT department that will likely need help with software implementation, but will cope with the ongoing maintenance themselves.
  • One could define the "S" part, i.e. small businesses in terms of revenue or headcount, but to me a more important criteria is that they typically do not have permanent IT staff on hand. This by definition makes any software products that are implemented and ran at the customer's premises a poor choice – a potential maintenance nightmare. There is simply no better choice for this group than SaaS – Software as a Service.
  • The third category in my mind is the very-very small business, possibly with 1-5 employees, who are likely all do-it-all types, focus on their core product / service, and may be struggling with not only IT, but some of the standard processes of running a business. This category needs more help than just technology, and in my mind WinWeb is quite unique in offering a combination of hosted software as well as "Live" services, i.e. expert advisors in various aspects of business.

I'll devote the next few post to talking more about changes in the Software industry and how Small Businesses can take advantage of those changes.

(Key thoughts in this article were used for a post on my personal blog)

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