Of SMB and B&C...

That, for the uninitiated, is the new mantra that IT vendors are chanting. Because the small and medium businesses in B&C category towns are 1.9 million organizations (IDC India numbers) across 100 plus towns and cities. Together they purchased 54% of the products and services last year. And their application areas span accounting and billing, inventory mangement, recruitments, customer service and much more. And what do they look for? As per IDC, their wish list includes reliable solutions, support and service, scalable, simple and easy-to-use solutions, pay for what they need–modular approach and value for money.

That by itself is not a problem. That is a wish list that all customers would look for. The problem is that this market has to be served through a sprawling channel network of dealers, resellers, VARs, system integrators–call them what you want. And this is an unstructured and as yet developing network–especially in the geographies being targeted. They are the front end which has to initiate, educate, buy in and service the customers. 

The problems being faced...

Start with the pre-sales part. Standard products like PCs are relatively easier. There is a reasonable amount of information available on the products and you can make a purchase decision based on this. But is it ideal? There are very few places that demonstrate different products and help you select the products. The channel sales staff are hardly capable of helping a customer make informed purchase decisions. And if you are an SMB looking for solutions that involve hardware, software, networking, applications the situation becomes worse. There are few decision support systems that you can turn to educate yourself, collect information and take informed decisions. So if you are a small 100-person company operating in Jhansi looking for an ERP there is a good chance that you will have to work hard to define what you need and take an informed decision on the parameters that you consider important. The channel consists of box pushers and VARs loosely speaking. But the number of true VARs is severely limited–especially in non-metro India. The line between box pushers and VARs is also fuzzy. 

Post sales comes the service. The service levels range from average to poor. There are no easily accessible service centers and no consistent policies. If you buy a desktop who will provide the service and the spares and in how much time? Part replacements take 4-6 weeks–no misprint here because there is inadequate stocking and parts have to be flown in from abroad.

So while the target is right the weapon is’nt. The sales infrastructure is coming up slowly and the channel community is poorly organized. Seventy percent plus of it is essentially a trading community. The others lack the finance–or the will–to set up efficient customer support systems.

The channels have their own bag of woes. They also have warranty concerns. Warranties exist but are tough to deliver. If products are dead on arrival there seems to be a constant replacement issues with the supplier. Companies force them to pick up products to ensure that quarterly sales targets are met. There are few service centers which they can turn to for repairs, replacements or even consultations. And, of course, the margins are thin.

All products that move through channels have the same issues. That is not new. But many industries have found solutions. That is not the case with IT. It is not that old an industry. It is also seeking to expand quickly into new geographies. It also launches new products every few weeks.

And all this calls for an organized effort–mainly by vendors–to ensure that adequate infrastructure is set up and adequate knowledge is imparted to the channel. This will be the crucial success factor for the growth of the SMB and B&C segments. 

Till then it is a bit of a jungle out there–growing rapidly with the rains. It desperately needs roads and a roadmap.

Shyam Malhotra

The author is Editor-in-Chief of Cyber Media, the publishers of Dataquest.