The midmarket is growing up. After years of being the poor second cousin to enterprises in terms of attention from technology vendors, companies of 100 to 1,000 employees are more likely than ever to demand individualized attention from their vendors, eschewing resellers in the process.The midmarket is growing up. After years of being the poor second cousin to enterprises in terms of attention from technology vendors, companies of 100 to 1,000 employees are more likely than ever to demand individualized attention from their vendors, eschewing resellers in the process.
That was the somewhat surprising finding from IDC’s new study, which interviewed more than 500 midsized companies about their preferences for vendor- and service-provider interaction. The study defined a service as anything within the IT lifecycle, from consulting to deployment and support.
The study found that about 50 percent of companies with 100 to 1,000 employees preferred services to be sold and delivered by the vendor; less than 30 percent preferred services sold by the vendor and delivered by a local firm; about 12 percent preferred services sold and delivered by a local firm; and only about 7 percent preferred services sold by a local firm and delivered by a vendor.
“Most of the time people think of the midmarket served by resellers, so when we asked them who they wanted to sell and deliver services to them, we were surprised that the biggest chunk said they want the technology vendor to provide the services, as opposed to the reseller,” said Rebecca Segal, a vice president at IDC and the study’s author.
Vendors clearly know that midmarket customers are good for business; major companies such as HP, IBM and SAP have been spending a lot of time and money targeting the sector. And apparently, midmarket companies have been paying attention. The preference for midmarket customers to have the level of attention from vendors that enterprises have long enjoyed is a clear sign that these companies know they have clout.
But the fact remains: Large enterprises spend more money, and vendors are more likely to spend individualized attention on them. Therefore, Segal said, the best way for midmarket companies to get some level of interaction with vendors is through the burgeoning world of online services.
“The only way they are going to have a direct relationship with the vendor is through online services, because there is no way that an IBM is going to send IBM-badged people out to midmarket companies,” she said. With the online model, many more services can be delivered to midmarket companies directly from the vendor.
“This way, a midmarket company can buy direct from HP or IBM,” she said. “They are thinking, they might not be coming to see me directly, but they have enough of a strong brand that I’m pretty confident that they will do a good job."
Another factor on the plus side for midmarket companies engaging in the online model is their growing preference to consolidate on a handful of vendors.
“Theoretically, if you can get storage, security and some applications from the same provider, that’s a model that will resonate well with the midmarket,” Segal said.
On the flip side, midmarket companies expressed a strong preference for solutions that are customizable to some extent. Today, however, most online offerings are standardized, prompting Segal to comment that vendors that want to be successful in the midmarket with the online model will have to rework their offerings to provide more flexibility and customization.
“[Vendors] need to find different ways for customers to choose what their service package will look like,” she said. “At the application layer, for example, the vendor should be able to say to the customer, ‘We understand that you don’t want to conform to how we think your business process should look, so we’ll make some tweaks or make it easy for you to make adjustments.’”
