REDMOND, Wash. — May 26, 2009 — Small and midsize businesses (SMBs) are important contributors to the world economy. In fact, it’s estimated that SMBs employ 90 percent of the world’s work force, and account for more than 50 percent of gross domestic product worldwide.
Eduardo Rosini, corporate vice president, Small and Midmarket Solutions and Partners
In today’s economy, however, these companies face significant challenges including limited cash flow and reduced access to credit. Historically, SMBs are the first to be hit by recessions. The good news is they’re also typically the first to recover. Because of their size, SMBs can react quickly to market changes, employ innovative approaches in solving business challenges and better connect with customers locally.
Recently the 2009 Microsoft SMB Insight Report revealed that smaller companies recognize the strategic and competitive advantages that can be gained through technology. More than half of SMBs plan to invest as much or more in IT in 2009 as they did they did in 2008, and are looking at technology investments that directly benefit their bottom line.
To learn more about how SMBs are reacting to the recession and how they plan to adapt and compete in the current economy, PressPass spoke with Eduardo Rosini, corporate vice president of Microsoft’s Small and Midmarket Solutions and Partners organization.
PressPass: Let’s start with the basics. How do you define SMBs? Is it headcount? Revenue?
Rosini: The technology industry standard has been to look at the number of employees or PCs. Whether a company has 10, 50 or 250 PCs gives you a sense of size and technical sophistication. But what matters most is how they approach technology, rather than how many PCs they have. More telling is whether they have an IT department, whether they have servers, how their employees use information.
PressPass: What are the major trends you’re seeing, both in your research and your experience talking to customers in the small and midsize space?
Rosini: What is revealing about Microsoft’s recent research is that SMBs seem to be making an effort to balance today’s hardships with technology investments that will support future, sustainable growth. Companies are looking at technology that will directly benefit their bottom line by reducing operating costs, improving productivity, retaining customers and acquiring new ones.
Companies are also looking to expand their capabilities, so we see server consolidation and virtualization ranked as the top technologies for enabling growth in 2009. You might also be surprised to see business intelligence high on the list. SMBs are realizing how important those tools are for improving customer relationships and retention.
From our practical experience, certainly many small businesses are considering augmenting their on-premise software with software as a service, and looking at how it can support operations at lower cost and with more flexibility. Supporting remote and mobile workers has also emerged as a major trend, as SMBs increase the number of remote workers and look to empower employees in the field.
Ultimately, smart SMBs are making IT investments during this downturn that will not only protect and strengthen their business, but prepare them for success when economic conditions improve.
PressPass: Why is software as a service an attractive option for smaller companies?
Rosini: Now that software as a service is real as opposed to an abstract concept, it’s becoming a must-have if you want to start a business. The ability to run software on the premises, from the cloud, or more often a combination of the two — what we call “software plus services” — and be operational without having to make a significant upfront investment, is obviously very attractive for SMBs in particular.
For example, with the Microsoft Business Productivity Online Suite, SMBs can set up e-mail, collaboration tools, communication tools, Exchange, SharePoint and Office Live services — all for $15 a month per employee in the U.S. For a business with 200 employees, your monthly expense for those services would be around $3,000. And that’s all.
In the past, you had to set up your datacenter, your servers — basically a six figure upfront investment to get up and running. So the economics of software plus services are hugely favorable. Any size company can benefit from this approach, but for a small business that hasn’t invested in its own datacenters and doesn’t want to make that investment right now, software plus services is a good solution.
PressPass: How is the economy affecting the way Microsoft approaches the market?
Rosini: Even though the economy is going through a tough time, it’s leading us to the recovery process and new growth cycles — what Steve Ballmer has referred to as a total “reset.” We are looking forward to helping companies become more agile with technology, to get more from what they already have, as well as expand their capabilities in a cost-effective way.
The 2009 Microsoft SMB Insight report highlights areas of opportunity for customers and partners alike, and shows that Microsoft and our partners can really help small businesses survive the economic downturn and position themselves for success in the future. I truly believe that technology investment provides the best inoculation against business failure.
PressPass: Partners are a major factor in how Microsoft serves SMBs. Is their role changing with the software-as-services approach?
Rosini: We’ve been designing software for smaller businesses for many years and understand that it is only through a network of local partner experts that we can serve SMBs well. Even when we host the application, the value-added reseller has a significant role in technology customization, application selection and managing the relationship with local customers.
About two-thirds of small businesses don’t have dedicated IT staff, so they are forced to manage IT in an ad-hoc fashion or rely on local specialists. And that’s important for us because a significant part of our approach to working with small businesses is our expansive network of resellers and integrators around the world, many of whom are themselves small businesses. Ultimately we’re talking about millions of small businesses that are relying on hundreds of thousands of our partners.
Microsoft’s global network of technology experts provides SMBs with local expertise and also provides critical insight into what tools and resources are having the greatest impact on our customers. We believe this model makes sense for Microsoft and our global partners and SMB customers.
PRESSPASS: What else can SMBs do to improve the way they use technology?
Rosini: Two of the most important ways are IT consolidation and virtualization. These strategies enable SMBs to simplify their network by consolidating functions such as e-mail, business intelligence and network management into a unified small or midsize server network, or to reduce overhead by creating virtual environments for key functions and applications with Windows Server 2008.
There are also companies that want to keep their existing servers, but can benefit from the added flexibility of software plus services.
In the end, choice is a huge part of our approach. It’s not all about the cloud or the datacenter, it’s about finding the right solutions for user needs. Different scenarios require different solutions. We provide a complete range of technologies and services that are fully integrated so that customers can choose the best fit for their business.
PressPass: It looks like communication, collaboration and mobility technologies are becoming more important for SMBs. Can you explain?
Rosini: For smaller companies, those technologies are really about supporting customers better and giving workers better information to work with. In fact, the 2009 Microsoft SMB Insight Report found that SMBs plan to invest in technology that helps to reduce costs, boost productivity and enhance customer engagement — all which can be achieved with communication, collaboration and mobility technologies.
The real advantage that SMBs have is their ability to stay connected to customers and employees in a tighter way, and managing customer relationships better than their larger competitors. We think our communication and collaboration products can help SMBs be even more effective there.
Mobility tools are unique in that they support those objectives, but also stand to increase worker productivity. It really is incredible how much money customers are saving just by being more productive with their existing tools. We take it for granted that today you can send e-mails from your phone, but that’s just the tip of the iceberg. You can share documents, share information, do workflows, be fully integrated with your core systems no matter where you are, all through your phone or remote computer connection. And certainly when you look at software plus services as well, by definition that allows you to access information from wherever you are.
PressPass: Will we see more mobile devices having access to the broader technology stack?
Rosini: Stay tuned here. We’re definitely moving to a world where we’ll view the same information from many screens. Whether it’s your phone, your PC, your TV, in your office or on an airplane, you want access to information. Most important is the ability to be connected to your information, your employees and your customers in real time, and you’re going to see more and more of that.
Microsoft today has the most integrated e-mail system across devices, and we provide the only system with the same security levels, the same Active Directory, and the same infrastructure behind it. There are a lot of things you can already do today, and we’re only going to make this more accessible and easy to use.
PressPass: Are we going to see more SMBs moving to hosted e-mail and Exchange services?
Rosini: Given the economics of doing that, I would say yes, and it’s certainly gaining ground. Because of this, we are providing customers with a full set of options — on-premise, partner-hosted or Microsoft-hosted — and each scenario has its benefits. As companies get larger, they start to have mixed environments, where a certain set of employees or a certain department is hosted and others are onsite.
The important thing is that no matter what scenario customers choose, they will have full access and compatibility with all their information. It’s clear that e-mail solutions are not just about e-mail, they’re about building the whole communications infrastructure. Our network of resellers and integrators can handle all these scenarios for SMBs, and help them to adapt as the company grows.
PressPass: What about social media? Are SMBs asking about blogs, podcasts and the like?
Rosini: You’re touching on a very important point. Everyone in the small-business space is looking at social media. This has become pervasive in our lives, and SMBs are looking at how they can use it for their businesses as well.
For our part, Microsoft is looking at incorporating more social networking paradigms into our products. In the end, SMBs want to have a tighter, more intimate relationship with customers and a more self-sustained way of managing information flow. These social media paradigms are going to make their way into the picture.
Ultimately, by investing in forward-looking technologies that lower costs, make employees more productive and bring businesses closer to their customers, SMBs are better equipped to weather challenges.