More and more enterprise software providers are discovering an attractive market in SMEs. Smaller companies used to be a less profitable target group. Modern technology and developments since the pandemic have changed that.
The cloud makes remote implementation and maintenance possible and eliminates the need for specially trained on-site IT staff. New business models, such as subscriptions, ensure regular revenue, and practical self-service approaches reduce support costs.
Target Group SMEs: Software Providers Recognize The Potential
Small and medium-sized enterprises (SMEs) are essential in German and global economies. Companies with fewer than 500 employees make up 99.5 percent of all companies,58.3 percent of employees are subject to compulsory insurance work in SMEs.
Small firms generate 55% of GDP in developing countries and account for around 90% of all businesses worldwide. They are also an essential engine for innovation in the global economy.
SMEs And Technology
At the latest, since the corona pandemic and the digital transformation that was “forced” with it, even particularly skeptical small companies have recognized how important it is to digitize their processes. Since then, SMBs have been significant buyers of IT products and services. The International Data Corporation (IDC) forecasts IT spending in 2021 at $684 billion in small and medium-sized businesses worldwide.
So SMEs undoubtedly offer an attractive market for tech companies. However, many providers of enterprise solutions also have problems serving this market. In the past, small businesses often didn’t buy a particular piece of software because they felt it was too expensive—both in terms of the cost of the product or service and the cost of implementation and maintenance.
At the same time, many providers ignored smaller companies for economic and logistical reasons:
- Cost of Selling: A sales team, solution engineers, and support staff fee required deals on a scale that small businesses could not afford.
- Too many deals needed: Many smaller values were required to ensure profitability and continue to grow the business.
- Know-how and resources: SMEs usually do not have the required data centers, IT infrastructure, or expertise to implement more complex IT solutions.
However, times have changed. SMBs benefit from the digital transformation and new business models of providers that make their technologies more affordable and easier to implement and use. Sales, deployment, and support are more profitable. Companies that offer software solutions for companies are now putting a focus on the SME market.
Cheaper Software Through The Cloud
The cloud has transformed and vastly improved how SMBs access, use, and afford the software. Cloud-based solutions make on-site data centers and highly qualified in-house IT specialists superfluous. Software updates and maintenance are performed remotely by the provider and almost seamlessly for the customer.
Cloud services are primarily subscription-based, meaning there are no significant upfront costs, and SMBs can also afford software that can adapt to changing requirements through monthly payments. Cloud-based subscription models also enable smaller companies to have a level of security and data protection that was previously only available to large companies.
For providers, subscription-based business models are secure and have a regular income. You no longer have to deal with expensive on-site implementation and maintenance. Their software works on various devices and operating systems thanks to browser-based interfaces.
And even outside of cloud-based solutions, providers are helping SMBs with scalable pricing models that depend on the number of users, devices, and other factors.
This makes business software affordable for small and medium-sized businesses. Another option is to offer software with different functionality, for example, “Standard” and “Pro” versions. This allows vendors to deliver cheaper versions while still meeting large enterprises’ needs or power users with specific software needs.
Self-Service Is Part Of The Business Model
An essential prerequisite for opening up the SME market is self-service. With the numbers and smaller orders, vendors need to create affordable yet attractive ways for smaller businesses to see, test, and buy their products—and get helpful technical support when needed.
An easy-to-use IT solution certainly helps reduce the need for technical support.
In addition, providers must ensure that they offer SME customers the right content that enables cost-efficient self-service in the first place. Software vendors must develop and continuously improve comprehensive know-how databases so that frequently asked questions are answered directly on their websites. “How-to” blogs, editorial articles, tutorials, and training videos help corporate customers to learn independently.
The content must be short and to the point – and focus on typical, frequently occurring problems of professional users. User forums are another powerful approach as they allow users to independently share and learn from each other.
Small and medium-sized companies today have the opportunity to use modern technologies to optimize their processes and increase profitability and growth. As enterprise software vendors continually improve and adapt their products, services, and support to serve the needs of the SMB market, this opportunity will only increase.