Vendors Increasingly Swayed by Smaller Customers` Demands

Vendors spend a lot of time trying to figure out how to best approach IT organizations that work for midmarket companies, which the industry typically defines as companies with between 100 and 1,000 employees.

As of late, these types of companies have become a major focus of the IT vendor community because collectively these types of companies now spend more on IT than companies that have over 1,000 employees. That reflects both the sheer volume of midmarket companies and the changing economic climate, which seems to have a more adverse impact on larger companies than smaller ones.

In fact, a study by AMI-Partners estimates that there are about 700,000 medium-sized companies in the world, with spending on IT products and services expected to grow about 7.4 percent annually.

But how midmarket companies think about spending their IT dollars differs substantially from much larger companies. The AMI-Partners study goes on to say that winning and losing customers is the primary concern of these companies. As such, their primary interest in technology is driven by the need to be more agile than the larger companies they are typically competing with. What that means, in terms of how they approach technology acquisitions, is that they are looking for suppliers of technology that make it easier for them to acquire and deploy products and services.

Like all the big vendors, Hewlett-Packard is trying to do a better job on that front. The company just rolled out new servers that can be pre-configured with CRM applications from Microsoft or Oracle. According to the AMI-Partners study, 60 percent of the midmarket companies surveyed think CRM is of strategic importance, but only 16 percent have actually implemented a CRM system.

According to Lisa Wolfe, midmarket strategy and marketing manager for the Technology Solutions Group at HP, this is one of the reasons that HP decided to work with Microsoft and Oracle to make it easier to adopt CRM. To that end, HP has been making an effort to get regional system integrators that are experts in CRM applications to work with solution providers that are experts in HP hardware.

What that represents is an improvement in cross-vendor cooperation. The issue that most vendors have yet to come to grips with is the diversity of the midmarket. The fact is that not all midmarket companies are created equal when it comes to IT. More than a few are very aggressive when it comes to IT and, as such, have a lot more servers and IT people than most vendors might expect. Others are definitely IT laggards that tend to be on the back end of the adoption curve when it comes to new technology. That doesn't mean they don't buy a lot of equipment. It just means that their appetite for emerging technology isn't quite as high as others.

So the good news is that the vendor community is at least trying harder. But in terms of the amount of finesse that needs to be brought to bear by the vendor community in this space, there is still much work to be done.

In the meantime, the next time a midmarket customer needs something from a vendor, don't be surprised by a better level of customer service now that midmarket IT spending is the new king of the market.