Category: Emerging Enterprises

Paul Kedrosky writes:

With 37signals’ launch today of Highrise, its small-business CRM product, I got to thinking about 37signals and the small & medium business market for software. One of the hoariest and most accepted bits of wisdom about the SMB market is that it sucks. Not that it’s small, because it demonstrably isn’t, but because the market is full of tiny companies who don’t purchase enough to justify the sales/marketing to get to them.

Enter 37signals. What Jason et al., have done well is to recognize that the path to profitable SMB sales is to become the default choice of a new generation of companies. Their Basecamp, Backpack, and, now, Highrise, are part of a suite of hosted tools that are near-ubiquitous at startups, not just because they’re well done, but because they are what everyone else is using. Yes, they’re hosted, and yes they’re simple, but it helps to be everywhere in a self-referencing niche too.

Screenwerk writes:

Yahoo! Small Business has self-service templates (380 of em) that allow for a pseudo-customized site. What Ive argued to Yahoo! is that most businesses want simplification in terms of choices and only need customization at the margins. But they want true customization capabilities (i.e., logos, photos and some measure of control over formats and colors). Yahoo! has some of this but with its Flickr, mapping and other assets should be able to offer much more.
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Now that were in the realm of drag and drop functionality online with AJAX somebody is going to come along with a very simple application to enable SMEs to create sites in an intuitive way using simply WYSIWYG text editing and drag and drop widgets or modules.

Yahoo! is in a position to be that company. They have the resources and a trusted brand. Having domain registration, site building and hosting is a perfect channel for search and other online marketing.

Nicholas Carr writes: “Back when electric utilites first emerged, it was the smaller companies who led the way in hooking up to the shared grid. The prospect of avoiding big capital expenses and high labor costs, and all the associated headaches of owning a lot of specialized technology, outweighed the risks involved in moving to a new supply model. The same thing’s happening with IT today. Big companies, with lots of capital and lots of legacy systems, may be able to justify building their own internel IT utilities – they can gain considerable economies of scale on their own – but the equation’s very different for SMBs. As Berlind suggests, SMBs today would be well advised to approach their IT requirements – both hardware and software – with the assumption that they should be buying services, not assets. Sure, there’ll be plenty of exceptions, but that should be the going-in assumption. If IT isn’t your business, get out of the IT business.”

Business Week writes:

SAP is moving down the food chain. Its entry-level Business One software can be had for well under $10,000, installedthough more sophisticated packages may run to the hundreds of thousands of dollars. Along with a host of competitors including Microsoft and Britain’s Sage Group, SAP is making it possible for smaller businesses to enjoy some of the same efficiencies previously available only to the big guys. Soy Basics sales have grown to $20 million from $1 million in just four years, says Nicolaisen, adding, “We don’t think we’d have been able to do this without SAP.”
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SAP says it already has 19,000 customers with sales of less than $1 billion. That’s nothing compared with the estimated 56 million companies that could conceivably become customers someday.

Fred Wilson makes a great comment about the difference: “While big companies deliberate, small companies obliterate.”

The New York Times writes:

The second-generation Internet technologies combined with earlier tools like the Web itself and e-mail are drastically reducing the cost of communicating, finding things and distributing and receiving services online. That means a cost leveling that puts small companies on equal footing with big ones, making it easier for upstarts to innovate, disrupt industries and even get big fast.

The phenomenon is a big step in the democratization of information technology. Its imprint is evident well beyond business, in the social and cultural impact of everything from blogs to online role-playing games. Still, it seems that small businesses, and the marketplace they represent, will be affected the most in the overall economy. Long-held assumptions are suddenly under assault.

WSJ writes:

Thanks to new technologies small firms can look — and in many cases operate — like only larger firms could just a few years ago.

“You want to give the impression that you are efficient, creative and professional, and that you have access to all the resources and capabilities that a large business does,” says Bruce Judson, a faculty fellow at the Yale School of Management and the founder of three Web-based small businesses. “Certain technologies can help you do this.”

In the effort to look bigger than they are, small businesses can start with the Internet. In the past, hiring a Web designer to launch a site with the necessary links, animation, stereo sound and interactive navigation was prohibitively expensive for many start-ups. They could create a Web site — but it would look as small-time as they were.

New technology, however, makes it easy for pretty much anybody to offer a Web site to rival the big guys. ImpactBuilder.com offers industry-specific multimedia templates that let an enterprise build a complex Web site or deliver Web-based presentations.

Hal Varian writes: “When we think about the economic impact of information technology, the first companies to spring to mind are the industry giants like Amazon, eBay, Google and Yahoo. But the biggest impact on the economy may well show up in small and medium-size enterprises…The reason is that information technology is a great leveler. As computers get cheaper, more powerful and more connected, technologies that were only available to the Wal-Marts of the world become available to the small fry.”

PortalsMag writes: “Let’s take a look at a virtual office built out of the following elements: Webmail; IM; personal calendars; an online group; and a home page to serve as a lightweight portal to aggregate these and other services. The goal of the office is to provide a basic (and free) communications and collaboration platform for geographically separated employees.”

The Economic Times had an article yesterday which had a few quotes from me:

If you were an SME, you almost certainly managed all your business processes manually, the way it has been done very smoothly thank you very much for almost a century.

But now, it is almost safe to say that IT is becoming mandatory even for SMEs. There is a lot to gain by doing it with IT, and IT is becoming affordable.

But like every other investment, one needs to understand the ‘WHY’ and ‘HOW’ and whether ‘WHY’ is greater than the ‘HOW’ meaning whether ‘returns’ justify the ‘investments’.

How would you manage your operations differently if everybody in your organisation had a computer, is the question that Rajesh Jain, MD, Netcore, wants every SME to ask itself. It is not just the automation of flawed processes, but the potential to re-engineer every business processes and the benefits that come along that needs to be considered.

Rajesh points out that there are almost 4m SMEs in India and they employ close to 40m people. But the number of computers in the SME sector is hardly 4m. This means only one in 10 personnel in the sector has a computer.

This hinders collaborative use of IT. Rajesh strongly believes that intense deployment of information technology will help small organisations to grow business and become mid-sized organisations.

And mid-sized organisations, on their part, could deploy information technology to bring in efficiency and cut costs.

One should choose a technology that delivers required functionality at the lowest cost. SMEs should deploy CRM type applications to grow their business, advises Rajesh.

He says that ERP companies are realising that their next growth potential is in small and middle level enterprises and, hence, are tailoring their offerings to suit the SME sector. These typically cost as low as Rs 5 lakh and are certainly affordable.

Vendors, both hardware and software, are gearing up their offerings so that SMEs can spend on IT as if it is an operating expense and not a capital expense. Of course, SMEs have an option to get software developed by an independent software vendor too.

When getting customised applications developed, the focus, Rajesh advises, should be to get the information on the change happening, and not report the norm. The need is to distil information and get the right kind of information. Another good examples of keeping IT costs on the lower side is Crossroads mall and Piramyd group of stores.

Rajesh says that the vendors should gear themselves up to provide hosted IT services to SME clients. SMEs should be able to receive one bill that includes the use of hardware, software and communications.

He says that while the ASP (application service provider) model failed a few years ago, as it focused on organisations that already had IT infrastructure, there is a clear case for redeploying ASP.