Vendors who want to promote sales in this fast-growing business segment have to focus on two issues—ensure that adequate support infrastructure is set up and adequate knowledge is imparted to the channel.

Vendors are chanting a new mantra these days. And this is ‘Target SMB and B and C’. It is not surprising, if you consider that there are are 1.9 million small and medium businesses (IDC India numbers) across 100-plus towns and cities. 

Together they purchased 54% of products and services last year. And their application areas span accounting and billing, inventory management, recruitment, 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 need­modular approach and value for money.

That by itself is not a problem. It 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. 

SELLING TO THE SMB
Let’s start with the pre-sales part. Standard products like PCs are relatively easier to sell. There is a reasonable amount of information available on these products and buyers can make a purchase decision based on this. 

But is it ideal? There are very few places that demonstrate different products and help in the selection of these products. The channel sales staff are hardly capable of helping a customer make informed purchase decisions. 

Imagine, if you are an SMB looking for solutions that involve hardware, software, networking and 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. 

SERVICE NEEDS STRENGTHENING 
The business transaction does not end once the sale is completed and finished. Post-sales comes service. The service levels range from average to poor. There are no easily accessible service centers and no consistent policies. 

If a customer buys a desktop, the pertinent question for him is who will provide the service and spares and how soon? Part replacements take four to six — you read that right — because there is inadequate stocking and parts have to be flown in from abroad.

So while the target is right the weapon isn’t. The sales infrastructure is coming up slowly and the channel community is poorly organized. Over 70% of it is essentially a trading community. The others lack the finance, or the will, to set up efficient customer support systems.

The channel 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. 

Vendors 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, margins are thin.

WHAT LIES BENEATH
All products that move through channels have the same issues. It 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 seeking to expand quickly into new geographies and launches new products every few weeks.

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 is Editor-in-Chief of Cyber Media India Ltd.

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