Big Ambitions 2

Small and midsize companies have the same technology needs, and the same goals, as large ones

Beth Bacheldor, Contributor

August 22, 2003

3 Min Read

Of course, the same question may be asked of the software vendors. As the economic environment improves, will a large enterprise software company that typically deals in million-dollar license and maintenance contracts be as quick and consistent in its response to customers that net a $50,000 commission?

Up to now, large enterprise applications vendors would contract with small and midsize businesses, "and then pull back their commitments when their revenues improved with Global 2,000 businesses," says Meta Group's Lehmann. "It's expensive to address the small and midsize market if you don't have the proper channels, pricing structures, or applications."

Things may be changing, but past performance has left the door open for Microsoft to make inroads with the accounting and ERP software it acquired from Great Plains and Navision, as well as the CRM application it built. Microsoft has a devoted midmarket base, well-acquainted with its operating systems, office software, and application-development tools, but it's not a sure bet those same customers will flock to all its new applications.

Call-center operator Alta Resources picked PeopleSoft's CRM software to use internally, even though it runs Microsoft's Great Plains software, says CIO Dave Coe. "We looked at a lot of midmarket products for CRM, but from a pricing perspective, there really wasn't that much difference. So why would we use a midmarket product that had limited capabilities?"

Coe reserves judgment on whether Alta will remain faithful to Microsoft's accounting and human-resources software, too. The $50 million-a-year company has "a strategy that includes a lot of growth," he says. "We need our finance and [HR] applications to grow with us, so our strategy to keep the Great Plains software depends on how Microsoft handles that software."

Some smaller enterprise applications vendors are using turmoil caused by consolidation among the big names to try to win over midmarket customers. On the other hand, big vendors with deep pockets say they can put more dollars into research and development, and they can use their experience with thousands of customers to refine business processes and best practices built into their software.

Market dynamics--new competitive threats, declining sales to big customers, and a small and midsize business sector that's ready to spend--indicate to Meta's Lehmann that some of the biggest names in enterprise software have made a commitment to the small and midsize space "that's here to stay." Some business-technology buyers say it seems that way to them, too. Years ago, Kvaerner Power's relationship with Oracle was very different, Muth says. "They sold us the stuff and then it was bye-bye." But now, "the local salespeople have all contacted me and are really aware of what we're up against. They're paying a lot more attention to companies like us."

Ferrotec's Blinn agrees: "I feel like I'm getting the proper attention. I'm happy." But he expresses concern. "It boils down to this: Don't forget about the little guys."

It appears the enterprise applications vendors won't have any choice. After all, the little guys are today's big business. --with Jennifer Zaino

Illustration by Alison Seiffer

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