In the small-and medium-sized enterprise (SME) segment, there has been a co-ordination failure in getting solutions to SMEs. Across the world, while IT has penetrated large companies broadly and deeply, in the SME space, usage has been thin and shallow. Even today, as the various IT players see the SME segment, it is seen as one which almost no one has succeeded in conquering. Yes, there have been the occasional successes like Intuit for accounting. But if one compares the promise of technology and its usage in SMEs, there is a huge gap which needs be bridged.
To build this digital bridge requires two elements: first, an entity which can co-ordinate the actions of many and provide a single, integrated set of solutions to SMEs, and second, do the delivery through a physical presence close to the SMEs. In other words, SMEs need a cross between IBM and Wal-mart.
Consider IBM and how it transformed itself under Lou Gerstner in the 1990s into a solutions and services provider for enterprises. Writes Gerstner in his book Who Says Elephants Cant Dance? in the chapter entitled Making the Big Bets:
Our bet was this: Over the next decade, customers would increasingly value companies that could provide solutions solutions that integrated technology from various suppliers, and more important, integrated technology into the process of an enterprise. We bet that the historical preoccupations with chip speeds, software versions, proprietary systems, and the like would wane, and that over time the information technology industry would be services-led, not technology-led.
If customers were going to look for an end-to-end integrator to helpthem envision, design, and build end-to-end solutions, then the companies playing that role would exert tremendous influence over the full range of technology decisions from architecture and applications to hardware and software choices.
This would be a historic shift in customer buying behavior. For the first time, services companies, not technology firms, would be the tail wagging the dog.
What does such a business take? Gerstner again: The skills required in managing services processes are very different from those that drive successful product companiesIn a services business, you dont make a product and then sell it. You sell a capability. You see knowledge. You create it at the same time you deliver it. The business model is different. The economics are different.
The ideas that IBM put together a decade ago now need to be applied to the SME market. There is a need for an IBM for SMEs an integrated solutions and services provider, but one which can do at much lower price points, because the focus is on the SMEs in the emerging markets.
The next question is on how to provision these services to SMEs. For this, there is a need for a physical presence close to the customer. Think about Wal-mart, the worlds largest company in terms of revenues, and how its scale and proximity provides affordable products for its customers.
Tomorrow: IT Wal-mart