Enterprise Apps

SMBs Getting Picky About Their Software Choices

Small and medium-sized businesses — empowered by the range of applications developed with them in mind over the last few years — are getting more demanding about features and functionality, suggest two recent surveys.

SMBs have come to prefer having one supplier of an integrated software application in the interest of streamlined processes and simpler management, according to the Yankee Group research note, “Optimizing the Applications Delivery Model for the SMB and Mid-Market Enterprise.”

Having an integrated business application suite makes it easier for SMBs to aggregate the information required for compliance purposes, notes Sanjeev Aggarwal, author of the report.

“Yankee Group predicts that a high percentage of midsize and small businesses will adopt an integrated suite of business applications in five years,” he writes.

SMB Evolution

The evolutionary path of SMBs is not surprising, says NetSuite CEO Zach Nelson. Among the applications rated for several factors in the Yankee Group report, including customization, breadth of functionality and geographic coverage, NetSuite came in first or tied in most areas.

“SMBs have always been more complicated to run than larger companies,” Nelson told CRM Buyer. “They have just not had the tools until recently.”

Increasingly, smaller companies are operating in a distributed fashion, Nelson says. For example, they might maintain a contact center in one locale, a warehouse in another and a supplier relationship in yet another region — all in order to remain competitive with larger firms.

“The Internet has fostered much of this competition,” he notes, “but it has also delivered new tools for SMBs to handle this increased complexity.”

CRM Fueling Demand

The growing strength of SMB software buyers is quantified in a separate study by AMI-Partners, “2005-2006 U.S. SMB Applications & Solutions Market Overview and Assessment.”

SMBs are on track to spend US$2.2 billion on enterprise software this year, the study finds, up 10 percent from last year. Fueling this growth will be the continued demand for enterprise resource planning (ERP) and customer relationship management (CRM) applications, especially from medium-sized businesses.

The software-as-a-service (SaaS) model will be a key factor in product selection, the study predicts, despite the current low levels of adoption. Less than a fifth of small businesses and just 27 percent of medium-sized businesses use or plan to adopt SaaS and hosted applications at present.

“Pervasive high speed Internet access, growing awareness and wider availability of products will fuel future growth across many application areas,” says the report.

Salesforce.com, in particular, is gaining traction among both small and medium-sized businesses, AMI-Partners comments.

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