Tag Archives: agent

Business of IT

Buyers and Sellers Agents in IT

Leave a comment

When dealing with real estate purchases, we have discrete roles defined legally as to when a real estate agent represents the seller or when they represent the buyer.  Each party gets clear documentation as to how they are being represented.  In both cases, the agent is bound by honesty and ethical limitations, but beyond that their obligations are to their represented party.

Outside of the real estate world, most of us do not deal with buyer’s agents very often.  Seller’s agents are everywhere, we just call them salespeople.  We deal with them at many stores and they are especially evident when we go to buy something large, like a car.

In business, buyer’s agents are actually pretty common and actually come in some interesting and unspoken forms.  Rarely does anyone actually talk about buyer’s agents in business terms, mostly because we are not talking about buying objects but about buying solutions, services or designs.  Identifying buyer’s and seller’s agents alone can become confusing and, often, companies may not even recognize when a transaction of this nature is taking place.

We mostly see the engagement of sellers – they are the vendors with products and services that they want us to purchase.  We can pretty readily identify the seller’s agents that are involved.  These include primarily the staff of the vendor itself and the sales people (which includes pre-sales engineering and any “technical” resource that gets compensation by means of the sale rather than being explicitly engaged and remunerated to represent your own interests) of the resellers (resellers being a blanket term for any company that is compensated for selling products, services or ideas that they themselves do not produce; this commonly includes value added resellers and stores.)  The seller’s side is easy.  Are they making money by somehow getting me to buy something?  If so… seller’s agent.

Buyer’s agents are more difficult to recognize.  So much so that it is common for businesses to forget to engage them, overlook them or confuse seller’s agents for them.  Sadly, outside of real estate, the strict codes of conduct and legal oversight do not exist and ensuring that seller’s agent is not engaged mistakenly where a buyer’s agent should be is purely up to the organization engaging said parties.

Buyer’s agents come in many forms but the most common, yet hardest to recognize, is the IT department or staff, themselves.  This may seem like a strange thought, but the IT department acts as a technical representative of the business and, because they are not the business themselves directly, an emotional stop gap that can aid in reducing the effects of marketing and sales tactics while helping to ensure that technical needs are met.  The IT team is the most important buyer’s agent in the IT supply chain and the last line of defense for companies to ensure that they are engaging well and getting the services, products and advice that they need.

Commonly  IT departments will engage consulting services to aid in decision making. The paid consulting firm is the most identifiable buyer’s agent in the process and the one that is most often skipped (or a seller’s agent is mistaken for the consultant.)  A consultant is hired by, paid by and has an ethical responsibility to represent the buyer.  Consultants have an additional air gap that helps to separate them from the emotional responses common of the business itself.  The business and its internal IT staff are easily motivated by having “cool solutions” or expensive “toys” or can be easily caused to panic through good marketing, but consultants have many advantages.

Consultants have the advantage that they are often specialists in the area in question or at least spend their time dealing with many vendors, resellers, products, ideas and customer needs.  They can more easily take a broad view of needs and bring a different type of experience to the decision table.

Consultants are not the ones who, at the end of the day, get to “own” the products, services or solutions in question and are generally judged on their ability to aid the business effectively.  Because of this they have a distinct advantage in being more emotionally distant and therefore more objective in deciding on recommendations.  The coolest, newest solutions have little effect on them while cost effectiveness and business viability do.  More importantly, consultants and internal IT working together provide an important balancing of biases, experience and business understandings that combine the broad experience across many vendors and customers of the one, and the deep understanding of the individual business of the other.

One can actually think of the Buyer’s and Seller’s Agent system as a “stack”.  When a business needs to acquire new services, products or to get advice, the ideal and full stack would look something like this: Business > IT Department > ITSP/Consultants <> Value Added Reseller < Distributor < Vendor.  The <> denotes the reflection point between the buyer’s side and the seller’s side.  Of course, many transactions will not involve and should not involve the entire stack.  But this visualization can be effective in understanding how these pieces are “designed” to interface with each other.  The business should ideally get the final options from IT (IT can be outsourced, of course), IT should interface through an ITSP consultant in many cases, and so forth.  An important part of the processes is keeping actors on the left side of the stack (or the bottom) from having direct contact with those high up in the stack (or on the right) because this can short circuit the protections that the system provides allowing vendors or sales staff to influence the business without the buyer’s agents being able to vet the information.

Identifying, understanding and leveraging the buyer’s and seller’s agent system is important to getting good, solid advice and sales for any business and is widely applicable far outside of IT.

Business of IT, IT Management

Explaining the Lack of Large Scale Studies in IT

10 Comments

IT practitioners ask for these every day and yet, none exist – large scale risk and performance studies for IT hardware and software.  This covers a wide array of possibilities, but common examples are failure rates between different server models, hard drives, operating systems, RAID array types, desktops, laptops, you name it.  And yet, regardless of the high demand for such data there is none available.  How can this be.

Not all cases are the same, of course, but by and large there are three really significant factors that come into play keeping this type of data from entering the field.  These are the high cost of conducting a study, the long time scale necessary for a study and a lack of incentive to produce and/or share this data with other companies.

Cost is by far the largest factor.  If the cost of large scale studies could be overcome, all other factors could have solutions found for them.  But sadly the nature of a large scale study is that it will be costly.  As an example we can look at server reliability rates.

In order to determine failure rates on a server we need a large number of servers in order to collect this data.  This may seem like an extreme example but server failure rates is one of the most commonly requested large scale study figures and so the example is an important one.  We would need perhaps a few hundred servers for a very small study but to get statistically significant data we would likely need thousands of servers.  If we assume that a single server is five thousand dollars, which would be a relatively entry level server, we are looking at easily twenty five million dollars of equipment!  And that is just enough to do a somewhat small scale test (just five thousand servers) of a rather low cost device.  If we were to talk about enterprise servers we would easily just to thirty or even fifty thousand dollars per server taking the cost even to a quarter of a billion dollars.

Now that cost, of course, is for testing a single configuration of a single model server.  Presumably for a study to be meaningful we would need many different models of servers.  Perhaps several from each vendor to compare different lines and features.  Perhaps many different vendors.  It is easy to see how quickly the cost of a study becomes impossibly large.

This is just the beginning of the cost, however.  To do a good study is going to require carefully controlled environments on par with the best datacenters to isolate environmental issues as much as possible.  This means highly reliable electric, cooling, airflow, humidity control, vibration and dust control.  Good facilities like this are very expensive and are why many companies do not pay for them, even for valuable production workloads.  In a large study this cost could easily exceed the cost of the equipment itself over the course of the study.

Then, of course, we must address the needs for special sensors and testing.  What exactly constitutes a failure?  Even in production systems there is often dispute on this.  Is a hard drive failing in an array a failure, even if the array does not fail?  Is predictive failure a failure? If dealing with drive failure in a study, how do you factor in human components such as drive replacement which may not be done in a uniform way?  There are ways to handle this, but they add complication and make the studies skew away from real world data to contrived data for a study.  Establishing study guidelines that are applicable and useful to end users is much harder than it seems.

And the biggest cost, manual labor.  Maintaining an environment for a large study will take human capital which may equal the cost of the study itself.  It takes a large number of people to maintain a study environment, run the study itself, monitor it and collect the data.  All in all, the cost are generally, simply impossible to do.

Of course we could greatly scale back the test, run only a handful of servers and only two or three models, but the value of the test rapidly drops and risks ending up with results that no one can use while still having spent a large sum of money.

The second insurmountable problem is time.  Most things need to be tested for failure rates over time and as equipment in IT is generally designed to work reliably for decades, collecting data on failure rates requires many years.  Mean Time to Failure numbers are only so valuable, Mean Time Between Failures and failure types, modes and statistics on that failure is very important in order for a study to be useful.  What this means is that for a study to be truly useful it must run for a very long time creating greater and greater cost.

But that is not the biggest problem.  The far larger issue is that for a study to have enough time to generate useful failure numbers, even if those numbers were coming out “live” as they happened it would already be too late.  The equipment in question would already be aging and nearing time for replacement in the production marketplace by the time the study was producing truly useful early results.  Often production equipment is only purchased for three to five years total lifespan.  Getting results even one year into this span would have little value.  And new products may replace those in the study even more rapidly than the products age naturally making the study only valuable from a historic context without any use in determining choices in a production decision role – the results would be too old to be useful by the time that they were available.

The final major factor is a lack of incentive to provide existing data to those who need it.  While few sources of data exists, a few do, but nearly all are incomplete and exist for large vendors to measure their own equipment quality, failure rates and such.  These are rarely done in controlled environments and often involve data collected from the field.  In many cases this data may even be private to customers and not legally able to be shared regardless.

But vendors who collect data do not collect it in an even, monitored way so sharing that data could be very detrimental to them because there is no assurance that equal data from their competitors would exist.  Uncontrolled statistics like that would offer no true benefit to the market nor do the vendors who have them so vendors are heavily incentivized to keep such data under tight wraps.

The rare exception are some hardware studies from vendors such as Google and BackBlaze who have large numbers of consumer class hard drives in relatively controlled environments and collect failure rates for their own purposes but have little or no risk from their own competitors leveraging that data but do have public relations value in doing so and so, occasionally, will release a study of hardware reliability on a limited scale.  These studies are hungrily devoured by the industry even though they generally contain relatively little value as their data is old and under unknown conditions and thresholds, and often do not contain statistically meaningful data for product comparison and, at best, contain general industry wide statistical trends that are somewhat useful for predicting future reliability paths at best.

Most other companies large enough to have internal reliability statistics have them on a narrow range of equipment and consider that information to be proprietary, a potential risk if divulged (it would give out important details of architectural implementations) and a competitive advantage.  So for these reasons they are not shared.

I have actually been fortunate enough to have been involved and run a large scale storage reliability test that was conducted somewhat informally, but very valuably on over ten thousand enterprise servers over eight years resulting in eighty thousand server years of study, a rare opportunity.  But what was concluded in that study was that while it was extremely valuable what it primarily showed is that on a set so large we were still unable to observe a single failure!  The lack of failures was, itself, very valuable.  But we were unable to produce any standard statistic like Mean Time to Failure.  To produce the kind of data that people expect we know that we would have needed hundreds of thousands of server years, at a minimum, to get any kind of statistical significance but we cannot reliably state that even that would have been enough.  Perhaps millions of servers years would have been necessary.  There is no way to truly know.

Where this leaves us is that large scale studies in IT simply do not exist and will never, likely, exist.  When they do they will be isolated and almost certainly crippled by the necessities of reality.  There is no means of monetizing studies on the scale necessary to be useful, mostly because failure rates of enterprise gear is so low while the equipment is so expensive, so third party firms can never cover the cost of providing this research.  As an industry we must accept that this type of data does not exist and actively pursue alternatives to having access to such data.  It is surprising that so many people in the field expect this type of data to be available when it never has been historically.

Our only real options, considering this vacuum, are to collect what anecdotal evidence exists (a very dangerous thing to do which requires careful consideration of context) and the application of logic to assess reliability approaches and techniques.  This is a broad situation where observation necessarily fails us and only logic and intuition can be used to fill the resulting gap in knowledge.

Best Practices, Business of IT

Never Get Advice from a Reseller (or Vendor)

5 Comments

This is general business advice that often applies to IT but is certainly not limited to that realm alone.  Outside support in IT comes from two main sources: firms who are paid (by you) to advise you and firms paid (by you) to sell you something.  The first are what we generally consider consultants.  The second are what we call resellers.

The simple rule of thumb is – never, ever get advice from a reseller.  At least not general advice, at best very specific advice centered purely around only the products that that reseller sells.  This isn’t to say that resellers are bad, far from it.  In fact, the reason that you can’t get advice from a reseller is not because of them but is because of you – let me explain.

When we go to a company to get advice we must pay for that advice.  One way or another, nothing is ever free.  Resellers traditionally earn their money by providing whatever free advice we desire and then making their money by selling us a product that has been marked up to cover their costs and to provide for their profit.  This is fine, but as the customer we need to understand that we are only compensating that reseller if they convince us to buy a product or a service that they sell and we compensate them better the more of that product that they convince us to buy.  The reseller isn’t at fault here, we need resellers and we need them to make money in this manner.  The issue is going to them and attempting to get free, general advice – we are forcing them to either work for us for free or to sell us something whether it is the right thing for us or not.  We’ve backed them into the proverbial corner and the only reasonable response is for them to attempt to sell us what they offer.  That is, after all, their job.

This leads to an additional problem, of course, which is that resellers don’t have skilled, professional, general-consultants on staff – at least not as a rule.  So if you go to a reseller and ask for advice, that reseller is almost assuredly only trained and knowledgeable on the products that they sell themselves.  They may not even be aware of what other solutions are on the market or, if they do, they do not know them to the same depth as their own products and may be unaware of advantages and caveats that you might need to know to make a truly informed decision.  Even if they did, it is not in their interest to tell you about them – you are only going to compensate them if they sell you something.

This is not to say that resellers are not good, honest, hard-working folk with value for our industry.  They are, but they aren’t magically free consultants like many people expect them to be.  Resellers are there to add consulting and selection assistance, as well as warehousing, repair, logistics and other value-adds, solely around the products that they represent.  Trying to get general consulting from a reseller is like asking your Chevy dealer to advise you as to what vehicle to buy and hoping that they equally consider all major makes, models and types of transportation as well as the regulations and limitations of all of these and are able to apply this to your unique situation – including knowing when to tell you that you don’t need to buy anything at all.  Of course, all they will do is try to sell you the best Chevy that meets your needs whether the best option for you is to just walk, buy an Impala, take a cab or to buy a fifty foot deep-sea fishing trawler.  Even if they did have the expertise to look at the big scope of your transportation needs you aren’t willing to pay them unless they give a specific answer.  So we can expect that the answer we pay for is the one that we will get.

Resellers are useful only after the decision to buy the products that they sell has already been made.  A reseller can then help you choose the right product from the range that they have.  For example, if you are buying a server from a reseller, that reseller can help you to choose which options like drive types and sizes, out of band management and other add-ons you might want.  But even then, be wary that they are likely earning more to upsell you and will recommend unneeded extras or may advise making configuration changes without understanding the entire scope of the project and how those changes from your original requirements might affect you.

Attempt to limit the advice that you receive to very concrete items such as “does this particular model offer this particular feature that I am seeking?” and avoid subjective valuations between products “is this one fast enough or should I buy the bigger one?” or “how does this compare to your competitor’s product?”

When asking subjective questions you are actually pressuring the reseller into either making more money overselling to you or losing money while trying to find the most appropriate product.  Not only do they make more money (generally) selling you the more expensive item but it also mitigates their risk that they didn’t get you what you needed.  There is no reason for them to take on risk, they’ll just try to sell you as much as possible and, if you come back unhappy, they can say “well, we tried to convince you to get a bigger, faster model but you wanted to save money and this is what happens.”  So it is not in their interest in any way to size to your needs but always to pad for safety and profit.  A position that they are put in, again, by their customers.

In most cases, principal vendors are themselves a reseller so can be considered in exactly the same way.  If you call Dell to buy a product, they will sell you a Dell no matter what your needs are.  This is not their fault, they only have one job, to sell you Dell products and if you call them for advice they can only assume that you did so because you wanted to buy a Dell.  They are no more going to consult on what IBM product to buy as they are on what car to drive or if its a good time to sell your house and move to Florida.  But they are very helpful in making sure that the Dell product that you order is going to be the one that you wanted and that the extra parts that you are getting will work with that model.  That’s what they are there for.  They will figure out how long it will take to arrive, go over warranty terms as well as give you pricing and financing options.  These are all things that your general consultant cannot do.  The two roles are complimentary, not competitive.

A perfect example of this entire scenario is one that I see happen in the real world time and time again.  With the recent explosion in virtualization businesses are turning, en masse, to vendors to find out what they need in order to dip their toes into the world of virtualization.  What I see, over and over, is instead of being sold a reasonable virtualization setup they are often sold entire systems including storage and software that in no way meets their needs and, often, actually works against their needs while costing as much as ten to twenty times what a better performing, more reliable system would have cost.  Often they are upsold into a completely unreasonable category of product for their project and then caught by budget limitations and stuck skimping – leaving them with a crippled virtualization project that could have been completed successfully for a fraction of the money spent and leaving good room for growth over time as needed.

The issue, of course, is that turning to a vendor and asking for advice on virtualization products is exactly like saying “I have no idea what I’m doing, let’s see what you can sell me on.”  And honestly, once the vendor knows you don’t even have your architectural elements worked out before contacting them, they know that the sky is the limit.  The goose has arrived and all they have to do is wait for that golden egg to be delivered.

I’ve heard this exact scenario so many times, I can’t count.  Your vendor is not your friend.  They have one job to do – sell you as many products as possible.  If you ask them what you should buy they will tell you whatever you want to hear.  They will cut corners on safety items or management items that they feel you will not find flashy or cool and will sell you what they think you will get excited about or confused about.  They know their jobs well – they have to, it is a tough market.  A great example is vendors cutting storage costs by selling smaller than appropriate storage arrays and using risky array configurations to make the capacity cost less.  That the client is at heightened risk to a failing array doesn’t impact the vendor and is a very hard issue to quantify, so once the product is sold it is the customer’s concern not the vendor’s.

The answer to this is to leverage a general consultant.  A general consultant gets compensated by delivering good advice and not for selling you a product.  In theory a general consultant will earn a similar amount regardless of whether they convince you to install millions of dollars of products or to do nothing and use what you currently own.  A general consultant should be far more intimate with your environment than a vendor or reseller could ever be and should be able to speak to your technical staff, make presentations to the business and put their advice into the proper context for your business with insight into how the costs, risks and other factors will impact you specifically and advise on what they feel is more appropriate for your specific needs.

In reality you still have to consider the complete role of your general consultant.  Most often a general consulting firm will also offer broad support and implementation services.  These are loosely tied to their recommendations so caveat emptor applies as always, but since they are compensated in a far more direct manner (paid for their effort) they have a very real reason to deliver you what you are buying.  Even general consultants who have some ties to reselling often make a very small fraction on the resold goods as they do on the consulting so anything that puts their consulting work at risk is a major liability to them.  Make sure that any general consultant, if offering resold services, is not tied to them and works with other resellers or vendors as well.  Sometimes general consultants offer low cost reseller services as a loss leader or at minimal profit just to keep customers from feeling that they must turn to another company but would prefer if their customers did not use  that service – profits are often higher not reselling.

Your general consultant should be able to interface with your resellers or vendors directly or allow you to do so.  Having a consultant handle the transaction can be beneficial because it provides an integrated procedure and consultants are very unlikely to be persuaded to make snap decisions based on sales, “special deals” or to be sold on a different approach by a salesperson who has a specific product to push that month.  The consultant has little emotional tie to the purchasing process and so can be much more methodical and calculating.

Of course we must consider the opposite situation as well – how do we treat our service providers?  For example, if we go to a reseller over and over again asking for advice, making them generate quotes and generally spin their wheels and then buy nothing from them or very little we will, sooner or later, force them to either refuse to work with us at all or do something drastic like supplying less than accurate data or raising prices.  A good vendor or reseller will provide you with the best value when you treat them well.  Loyalty may seem to be dead in business transactions today, but this is not at all true.  Good relationships still pay off.

With consultants the need to treat them well is somewhat built into the equation – you generally pay for what you get so other than being friendly and respectful you don’t normally have too much to worry about as far as how you are structuring your relationship.  But even with a consultant there are still concerns.  If you pay for an “unlimited” service plan, use it well but don’t abuse it, for example.  Always make your consultant happy that you are their customer and, most likely, they will work hard to make sure that you are happy to be their customer too.

The most important concept to take away from this is that with any company with whom you do business, you should have some empathy for them.  Put yourself in their shoes and think about how your relationship with them is structured.  Are your goals mutually aligned?  Is it in both companies’ interests to act in the interest of the other?  Or have you arranged for an adversarial relationship where they can only win at your expense?

Keep in mind that you are the customer so, very likely, your consultant or reseller is, to some degree, at your mercy to make sure that your relationship is a healthy one.  In order to obtain clients they are often pressured into a position of accepting a less than ideal arrangement.  As the client, you have the opportunity to be the client that that consultant or reseller is excited to work for and will go out of their way to make happy.  The choice is very much yours to make in most cases.  Choose well because good relationships can work wonders for your business.

Ask a jeweler what to get your wife for your anniversary and he will say: “You can’t go wrong with jewelry.”

Ask a florist what to get your wife and he will tell you: “Women always love flowers.”

Ask a chocolatier and he will tell you that nothing makes a woman happier than chocolate.

Ask a consultant he will ask you: “What does your wife like?”

Business of IT, IT Management

The SMB IT and Vendor Relationship Dilemma

2 Comments

When most people compare enterprise IT and the small business IT markets they generally think about size and scale.  Enterprise environments are huge and small business IT often consists of just one or a few IT professionals holding a company together.  The differences between these two classes of environments are much deeper than just size.  Thinking of the small and medium business market as being small-scaled enterprises is a great way to misunderstand what this market is all about.   There are fundamental behavioral differences between these organizational types and I would put forth that this behavior is likely a far better determinant between what constitutes a small or medium business and what constitutes an enterprise business from an IT perspective.

One of the places in which this difference in behavior is most visible is in vendor relationships.  In the enterprise space, as well as in large businesses, vendors act very much as a partner with the corporate IT department.  Often vendors will have dedicated representatives who spend some or possibly all of their time at the customer site and are available to answer questions, make contact with support, provide input and guidance – whatever is needed by the IT department as it relates to that vendor’s products and in some rare cases even outside of the scope of the vendor’s own products.  In exchange the vendor has nearly constant access to the “ears” of IT and management in order to inform them and to sway their opinion in favor of said vendor’s products.  This also gives the vendor direct access, in many cases, to the “on the ground” IT people who are using their products and providing them with critical, non-management feedback.

In many ways this relationship causes “the conversation” between the vendor and the “market”, as proposed by Levine, Locke, Searls and Weinberger in their groundbreaking 1999 tome “The Cluetrain Manifesto”, to take place in-person, in real-time in a way that is very traditional and effective.  When the company wants product information it simply contacts its vendor representative and that rep will provide samples, get documentation, give a presentation, organize training sessions, obtain roadmaps and more.  If the products do not meet the company’s needs the feedback is immediate and meaningful.  The relationship is symbiotic and everyone gains from the tight communication channel that is created between the enterprise IT department and their vendors.

The small business market sees none of this.  There are many reasons for this.  The scale on which the SMB IT department operates does not allow a vendor to dedicate a sales resource, let alone a technical resource, to a single client.  This one, simple difference breaks the communication channel leaving SMB IT departments in a far different position than their enterprise counterparts.  Any conversation held between an SMB IT manager and a vendor is an ad-hoc, temporary conversation.  Vendors do not get to know their clients.  They don’t have a deep understanding of their business.  They don’t see their clients as individuals but as a pool of consumers more akin to the standard, personal consumer market than to the enterprise where each customer is well known and appreciated individually.

The differences in interaction are not solely from the vendor’s perspective.  In the enterprise the IT department typically has resources with time to dedicate to interacting with vendor representatives.  Technical support roles such as server administrators may work directly with sales and engineering resources for support issues and purchasing recommendations while architectural professionals may use vendor representatives to assist in capacity planning, system design or to establish performance metrics.  In the SMB there do not exist these dedicated internal roles and the available IT resources are often overworked and spread too thinly between many different tasks leaving little or no available time to focus on single issues such as these even if the vendors were to provide such resources.  Enterprise departments often manage to even allow regular, “in the trenches” technical staff to attend sales luncheons and other vendor-sponsored events only loosely tied to their job functions.  In the SMB space this is all but unheard of.

Another key difference between the SMB and enterprise markets is in the way that they purchase for IT.  Enterprises generally view their purchasing process in terms of services.  These may include warranty services, datacenter management, software customization, hardware leases, software customization, etc.  The small business market generally sees purchasing in terms of products – either hardware or software.  Small businesses think in terms of buying desktops, monitors, servers, software licenses, etc.  Small businesses purchase the same whether buying directly from their vendor, from the channel or from the local store.  The transactions are very simple.  Enterprises think of a server in terms of its monthly support cost and total lifespan while SMBs simply see a price tag.  This does not mean that SMBs never purchases services – only that they do so typically in a very up-front, set price sort of way although they typically purchase far fewer services than do enterprise IT departments.

Enterprise IT environments have the distinct advantage of large scale peer interaction both internally and externally.  IT professionals working in large environments are constantly learning about new products, technologies and techniques from their counterparts within their own organization as well as from peers in competing organizations in their market verticals.   This gives enterprise staff an advantage in working with their vendors because they see how these vendors interact with their peers locally and elsewhere and get feedback on how other vendors in competing areas work with their clients.  This creates a competitive market for vendors based on their level of service to their clients.  In small and medium business there is very little insight into these relationships at other, similar companies.  SMBs naturally do not get interaction with a direct peer group.  At best they can hope for peer support groups for organizations of similar size, but even that is extremely rare.  Vendor relationships with the SMB market are very much isolated from peer review and market pressures.

SMB IT professionals seldom get a chance to attend industry events like their enterprise counterparts either.  They often do attend some but few by comparison.  This provides fewer opportunities for SMBs to learn about vendors with whom they do not already have a relationship.  This is very beneficial to big vendors like HP, Dell, IBM and Microsoft who need no introduction to any IT professional, but smaller vendors, new vendors and niche vendors will often find it hard to make SMBs aware of their existence let alone find an opportunity to discuss their products and services directly with them.  Making connections between SMBs and vendors capable of meeting their needs is a significant challenge in most cases.

SMBs also suffer from not having industry publications and other vertical resources available to them in most cases.  SMB IT managers may use general resources from the IT field such as technology publications and online magazines to investigate what others in their peer group are doing, but targeted materials designed specifically for their technology needs are rare if not non-existent.

Another difference in how SMB and enterprise IT departments behave is in their driving force behind purchasing.  Enterprise customers typically purchase products strategically.  This purchasing may be driven by a desire for datacenter consolidation, power reduction, features, easing administrative burdens, market pricing advantages and more.  Careful cost analysis will often cause them to buy opportunistically and a tightly coupled vendor relationship helps to enable this.  SMBs, on the contrary, are typically tactical (demand-driven.)  They purchase new products when the old are no longer serviceable, no longer meeting demand, no longer supported or additional capacity is needed.  They will seldom buy when market pressures make purchasing most advantageous but will do so quite suddenly with relatively little research leading up to the point of spending.

The SMB market is very likely to be keenly aware of the bottom line of any purchase.  This seems obvious but in the enterprise space there is normally much more room for a technical specialist to ask for features that carry extra cost because they simply feel confident that they will be beneficial.  Enterprises are often more likely to trust the hunches of their technical staff and to pay for “soft benefits” that are not easily quantifiable.  SMBs will almost always look at the bottom line and if a feature does not meet a clear requirement or provide a rather certain return on investment then they will typically opt for the lower priced option.

The final difference that I would like to address is in how prices are determined.  Enterprise customers typically negotiate a blanket discount rate that applies to everything that they purchase from their vendor.  Getting pricing on new products or price comparing many products is easy.  Very easy.  Pricing for the enterprise is quite transparent making it very simple to do cost analysis on one solution over another.

In the SMB market prices are generally negotiated on a purchase by purchase basis.  Because of this SMB IT departments generally have only a very general idea of the price differences between two different solutions – especially if those products come from two different vendors.  Gathering enough data to do a large cost analysis study is both time prohibitive and ineffectual as prices continuously change and vendors will change discounts regularly based on other factors and behaviors.  SMB IT managers cannot simply go to a single web site and look up many different discounted prices and do a quick comparison of many different products giving them a strategic disadvantage over their enterprise counterparts.

This leaves us with a significant challenge.  Now that we see why small and medium businesses are fundamentally and behaviorally different than large enterprise businesses we have the obvious question of “how are vendors and SMB customers going to overcome their natural barriers?”

To some degree there is no simple answer.  Both vendors and small business IT managers need to be aware of how vendors and their customers behave and think so that they can begin moving toward each other in a meaningful way, but this is only the first step.

Vendors need to have dedicated small and medium business representatives who specialize in the needs of this market.  These need to be professionals who have truly studied the market and understand how very small and moderately small businesses behave, what products are generally in use, what their architectures normally look like and more.  Vendors often think that SMB IT managers spend their day thinking about ERP, CRM, rapid disaster recovery planning and datacenter consolidation problems as do enterprise CIOs but, in fact, most are concerned with desktop management, virtualization, basic security and maybe even purchasing their very first server!  Vendors need empathy with the small business market in order to service it well.  Even vendors with amazing products that are perfect for this market often fail to inform their potential customers on when these products may make sense for them or may lack the ability to support them in the configurations that make the most sense.

Most importantly vendors need to find a way to join the conversation (as put forth in “The Cluetrain Manifesto”). In the enterprise space the conversation takes place inside the organization as well as in peer groups and conferences.  It is everywhere and finding it is simple.  Small businesses struggle with joining the conversation themselves – mostly because they cannot always find it, but it is there.

A perfect example of where this conversation is beginning to emerge is in online technology social media platforms like the SpiceWorks Community.  This online community has hundreds of thousands of small and medium business IT professionals and managers online and engaged in ongoing discussions on everything from low level technical problems and architecture concerns to product selection and vendor relationship management.  A few progressive vendors have joined the community and are interfacing with their customers and potential customers in a mode that, in many ways, mimics the behavior found in the enterprise.  Suddenly vendors and customers have an opportunity for personal interaction and open dialogue.

Through this conversation between vendors and customers there is a real opportunity for vendors to learn about the needs and desires of their customers, interact with customer peers, share resources and, most importantly, simply have an open discussion where concerns and needs can be exposed and addressed.  Customers have questions, often a lot of them.  There is not time during a sales call requesting pricing for the customer and the vendor to get to know one another and become acquainted with each other’s needs and offerings.  Through ongoing conversations, not only when a customer is considering an immediate purchase but on a regular basis, the relationship between vendor and customer can be formed allowing them to understand one another, feel comfortable reaching out with questions and suggestions and more.

Vendors have more than simply the chance to answer product questions when they are part of a larger conversation.  They can also provide input into conversations that are not necessarily directly related to their own products.  They can provide insight into larger architectural and design decisions.  In many cases they can take the time to explain how their products work or why they are valuable to their customers.  It is not uncommon, especially in the SMB space, for potential customers to have no previous knowledge of products that are available to them or if products would apply to them, work in their environment or integrate with their architecture.

Because the conversation is an opt-in experience vendors can talk with customers or potential customers without the need for a sales or marketing interface.  The customers are ready to hear about products.  They want know and they want to learn.  This is a marketplace where sales lead generation is already done simply by the fact that the customers are present.  They have already given the vendor their ear.

Learning how to behave in this open conversation marketplace is difficult for many vendors – especially those that are very well established large businesses. Adapting is critical as those companies that are perceived as caring about their customers will have a significant advantage over those companies who appear to find it a burden to stoop to interacting with small clients.

Large businesses are accustomed to keeping the SMB market at arm’s length often arguing that the “channel” – the reseller and system integration market – was their interface to small business.  The channel, however, acts as a chasm keeping small businesses from ever speaking directly to their vendors causing both to rely on a third party, who may not share any common interest with either, to broker any semblance of a conversation.  The channel is not incentivized to act in the interest of either party and will likely only present products and services that they themselves support and those with the greatest profit margins rather than exploring niche product options and exotic solutions that may be a better fit.  The interest of the customers are then not passed back to the vendors leaving the vendors guessing blindly what products and services would be useful to the SMB marketplace.  The lack of experience with SMBs often means that vendors are completely unknowledgeable about their customers or in many cases simply do not even have those customers.

A perfect example of this breakdown in communications is with IBM.  I watched an active online conversation involving IBM where a large group of heavily experience SMB IT professionals were discussing IBM and its place in the SMB space – what products it offered, how they would compete with other vendors and IBM’s specific relationship with small businesses.  In this conversation I heard repeatedly people speak about IBM’s only SMB focused offerings being its desktops and laptops.  I was shocked, as I suppose was IBM itself, since IBM stopped manufacturing these products many years ago having sold that division to Lenovo.  Even experienced IT professionals taking an interest in IBM, enough to participate in what evolved into a virtual panel discussion on their role in the market, were kept so far removed from IBM itself that they were unaware of even who IBM was and what they offered in the market.  A significant eye opener for everyone.  Likely this breakdown in market communications has been caused by IBM’s reliance on the channel to provide them an interface to their customers and that channel finding it better to sell Lenovo products as IBM products to customers who know the name IBM but do not know Lenovo than to take the time to educate their customers.

IBM is certainly not alone here but with their relatively recent divestment of their desktop and laptop business to Lenovo has created a unique and dramatic challenge in their interface to the SMB market.  IBM’s key competitors, Hewlett-Packard and Dell, use their desktop, laptop, display, networking and printer products as their key “in” with SMB customers and then, once chosen as a vendor, are able to make the relatively rare server sales to this market as well.  IBM has the challenge of selling servers and services to a market that is guaranteed to be buying its desktops and other products from a competing vendor.

Sun (now a part of Oracle) has long faced this same challenge in this market.  SMB IT managers understand desktops and laptops well – this is their bread and butter, what they deal with primarily every day.  Most SMB concerns are desktop related and the bulk of their purchasing is done there.  SMBs do not buy servers in large quantities with rare exception and using a different vendor for infrequent server purchases, which would involve separate vendor relationships and managing different support contracts, is not something that SMB IT managers are going to seek out.  Companies like IBM and Sun need to be involved directly with these customers and make them aware of their unique product offerings, such as Power and Sparc platforms in this example, to even have customers understand who they are and what they may offer.

This issue, hardly unique to IBM and Sun, is exacerbated by the use of the channel.  SMB IT shops will generally only turn to one system integrator, managed service provider or vendor to supply them with hardware.  Since PCs drive SMB IT this means that SMB shops will, by necessity, be turning to managed service providers who are partnered with someone who supplies desktops.  That then makes it rather unlikely that those service providers would additionally be partnered with someone like IBM or Sun.  This then, in turn, causes that service provider to automatically recommend products only from the vendor(s) with whom they are partnered further isolating customers from potential solutions from alternative vendors.  This isolation can be mitigated through direct vendor to customer relationships even if purchasing itself is still handled through a channel provider.  It is in both the vendor and the customer’s interests to interface directly and to engage in a conversation.

It is not uncommon to see IT managers choose a vendor based primarily upon that vendor’s willingness to engage in an open conversation.  Customers like vendors with whom they have a relationship.  They really like knowing that when something goes wrong or when a great new, but not entirely understood, opportunity arises that they can turn to a vendor representative, especially in an open community like SpiceWorks, and ask them for assistance or guidance.  No one expects the representative themselves to have all, or even any, of the answers.  They expect that person to have the resources necessary to reach out internally at the vendor and engage the right people.  Not only is this method friendly and cost effective but it is also very low stress.  Customers often don’t know where the problem may reside and do not have contacts internal to the vendor, unlike enterprise customers who often deal with specific issues so often that they know the necessary resources at the vendor, and without a representative to whom they could turn they may be left without the necessary contact information or channels to get the assistance that they need.  In some cases this may result in customers feeling that the product is poorly supported or just does not work and in others could result in new opportunities being lost or the customer turning to another vendor whom they know offers a workable solution.

While the online SpiceWorks community is hardly the only venue for vendor to customer interactions it is rapidly becoming a unique place, do to its scale, reach and unique SMB focus, where vendors and customers can make connections, join in open discussions, create relationships and get support.  The community is extremely large, over 700,000 IT professionals all from the SMB ranks and is rapidly expanding both with its online presence but also with local users groups and regional SMB IT conferences – all of which present opportunities for vendors to interact with the SMB marketplace in new and exciting ways.  SpiceWorks represents, I feel, a key component in the future of vendor relationships in the SMB IT market.  SpiceWorks acts as a broker to the conversation providing the venue and framework necessary to make customer/vendor interactions as simple and valuable as possible.  As the community continues to grow and as more vendors decide to become a part of the conversation I expect to see the value of this forum expand exponentially.  It is in communities like this that those vendors serious about the SMB IT market will succeed in differentiating themselves and engaging current and potential customers.