Albert's Analysis

Small Business E-commerce Starts Now!

We've all heard statistics from the market researchers predicting the explosive growth of small and medium businesses in the early years of the new millennium. More than lofty guesses, these projections are already translating to reality.

Billions of dollars are being spent by small businesses every year. But sheer numbers don't always translate into influence. We know that to be true, because many of the largest corporations and conglomerates continue to pack the greatest punch when it comes to reaching and influencing their customers--primarily because they have bigger dollars to spend.

It's worth noting too, that owners of small and medium businesses are generally more receptive to the Internet and e-commerce (as a means to expand business growth) than their larger, more staid counterparts. That's wise, because the Internet--strategically used--can go a long way toward equalizing opportunities for every size business; from the do-it-yourselfer, to the husband and wife team, to the company of 10, and so on. (I call this "leveling the playing field.")

To help the small players along (and incidentally position their own growth going forward), IBM and a few major competitors have begun offering e-commerce products and services with affordable prices and financing options. IBM, for example, just launched its e-business Start Now Program.

IBM hopes to score big with Start Now (which comes packaged with one of three IBM servers--AS/400, RS/6000 or Netfinity) on several levels: It's affordable to customers, it represents an expanded market for IBM and it presents a wealth of new selling opportunities for IBM's distributors and business partners.

Wally Casey, VP of small and medium business marketing for IBM explained, "Our value added resellers and distributors are critical to the product's success. The small and medium business customers now represent more than 50 percent of the market, and growing. If IBM's not getting its fair share of this segment, somebody else is."

"Somebody else" includes hardware providers such as Compaq, Sun, and Hewlett Packard, and software providers such as Microsoft. But from where I sit, no one company rules the day when it comes to offering affordable e-commerce applications to small businesses. That's probably not a bad thing, because with opportunities so vast, customers can rightfully expect solution providers to work hard to best each other on every level--from services and training, to integration with existing hardware, software and Web connection servers.

In IBM's case, its business partners don't have to worry about providing integration services; IBM has done the work for them. The partners can focus instead on providing customization services, which is where much of their profit undoubtedly lies. Another advantage is that Start Now packages offer optional add-on security features to combat what Casey calls the "fear factor" that many still have relative to doing business over the Internet.

With Start Now, companies can finance less than $2,000 per month (total costs start at about $35,000), and in turn gain access to the same technology used by the larger companies. "The small company can use the exact same technology we've sold to Macy's and Schwab. It's all the same product," says Casey.

The Start Now line is one part of a larger SMB program relaunched by IBM in late September. And newer offerings are continually on the way. Already, AT&T (which I wrote about in my last column), KeyLink Systems, Hall-Mark, Access Graphics, Savoir Technology and Pinacor have all announced their participation in the program.

More good news: Because small and medium businesses are increasingly receptive to the vast opportunities that e-commerce can provide, any competitor that gets into the game now has picked a winning strategy. And that includes IBM.

The Small and Medium Business segment has now become a large target of opportunity for all vendors, big and small alike. So watch this space to see more innovative programs by all in the Year 2000 and beyond!