The SMB market is huge and, until recently, has not invested a great deal in IT; nor has it been on the receiving end of much vendor attention, particularly from those providers targeting large enterprises and multinationals. To give an idea of the scale of the sector, there are 19 million SMBs in the EU and in most of the member states they make up more than 99% of enterprises. SMBs generate a substantial share of European GDP and are a key source of new jobs and business ideas. IT offers significant benefits to SMBs - as it does other, larger organisations - but it has to be the right fit for their size and structure. ‘The SMB Market Opportunity’ report examines why the SMB sector is currently the focus of attention for vendors that have traditionally targeted the enterprise sector and what SMBs are looking for from an IT solution. We explore the SMB market opportunity for the ERP, SCM, CRM, security and contact centers technologies and services. In addition, the report profiles the main vendors targeting the SMB IT opportunity and their SMB strategy going forward. The SMB Market Opportunity report is of interest to any IT vendor or services provider wanting to target its offering to the SMB sector. It will be of equal interest to SMB- and mid-market-focused vendors as it will to large enterprise vendors eager to snatch some market share in what is still a highly fragmented market. The report will be of interest to providers in the enterprise application, IT security and contact centers markets. Although we do not examine the SMB market opportunity for hardware, we profile the efforts of hardware vendors in the final chapter as they target this sector. Given the importance of partnerships and the channel to selling solutions to SMBs, the report will also be of interest to VARS, systems integrators, resellers and third-party service providers.

Table of Contents
The SMB Market Opportunity
Executive Summary 10
Market context 10
Targeting your message 10
The ERP SMB market opportunity 12
The CRM SMB market opportunity 13
The security SMB market opportunity 13
The contact center SMB market opportunity 14
Vendors to watch 15
Chapter 1 Introduction 18
What is this report about? 18
Who is the target reader? 18
Defining the SMB market 19
Chapter 2 Market context 22
Summary 22
Introduction 23
The dynamics of the SMB space 25
Development of the SMB IT market 27
Initiatives to increase ICT uptake among SMBs 29
On demand 29
Open source 31
Vertical opportunities amongst European SMBs 33
Focus on financial services, public sector and manufacturing SMBs 37
Telecoms is the single biggest area of SMB ICT spend 37
The UK, Germany and France are the biggest geographic targets 38
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Chapter 3 Targeting your message 40
Summary 40
Introduction 40
SMB drivers behind IT spending 41
Simplicity and ease of use 41
Value for money and a fast and visible return on investment 42
Bundled solutions 43
Reliability and flexibility 43
Broadband access technologies 43
Inhibitors to conducting business online 44
Investment concerns still hinder IT uptake 44
Lack of IT staffing 45
Localization means cultural and language restrictions 45
SMBs are notoriously cautious 45
Security is becoming a bigger issue for small firms 46
Strategies for success 46
ROI and TCO 47
Understanding small businesses 48
How to target small businesses 48
Understanding medium businesses 48
How to target medium-sized businesses 49
Taking a channel approach 49
Reconsider a direct approach 52
Web-based support 52
Choosing the right media for messaging 53
Effective incentivization of the channel is important 53
Examine the development of service-based models 55
Chapter 4 The ERP SMB market opportunity 58
Summary 58
Introduction 58
Market outlook 59
The SMB market opportunity for ERP 60
Hosted and on demand ERP 61
Enterprise application services 62
Making enterprise application services relevant to SMBs 64
Key success factors 64
Hosted SMB enterprise application services 65
Conclusions 66
SCM market opportunity for SMBs 67
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Chapter 5 The CRM SMB market
opportunity 70
Summary 70
Introduction 70
Market outlook 71
Global forecast 72
1 – 9 headcount 73
10 – 49 headcount 73
50 – 250 headcount 74
251 – 1000 headcount 74
Market drivers 74
CRM evolution 75
Functionality and cost in the SMB space 75
One-size-fits-all 76
Sales and channels 77
Hosted and onsite CRM solutions 77
Vendor recommendations 80
ISVs and VARs develop customized applications 81
Vendor competition 81
Traditional enterprise application vendors 82
Small and mid-market vendors 83
Microsoft enters the battle 84
Chapter 6 The security SMB market
opportunity 86
Summary 86
Introduction 87
Targeting the security message for SMBs 87
Firewall and VPN technologies 89
Multi-function security appliances / UTM 89
Vendor actions 90
Authentication 92
Email security 93
Chapter 7 The contact center SMB market
opportunity 96
Summary 96
Introduction 97
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The SMB market opportunity 97
Market drivers 98
Technologies in the contact center 98
Fulfilling SMBs’ requirements 101
Hosted solutions 103
Market growth 105
Attractions of a hosted solution 105
Market drivers 106
Concerns about hosted solutions 109
Security 109
Cost 109
Existing arrangements 110
Where does IP feature? 110
Chapter 8 Vendors to watch 112
Summary 112
Introduction 112
Traditional enterprise vendors 113
Oracle 113
Channel and partner strategy 113
Acquisitions 115
SAP 116
Sector-specific vendors 118
ERP 118
International Business Systems (IBS) 118
SSA Global Technologies 119
IFS 120
CRM 123
Salesforce.com 123
Talisma 124
Contact centers 125
Cincom 125
Contactual 125
Echopass 126
Five9 126
UCN 127
Hardware suppliers 128
Cisco Systems 128
Hewlett-Packard (HP) 130
IBM 131
EMC 132
SMB- and mid-market-focused vendors 133
Microsoft 133
ERP 135
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Project Green 135
CRM 137
Strategy for success 139
Lawson Software 141
Sage 144
Intuit 146
QAD 147
Index 148
List of Figures
Figure 2.1: Global CRM, ERP and SCM SMB application software opportunity by company size,
2004-2010 24
Figure 2.2: Segmenting the SMB sector 27
Figure 2.3: SMB IT spend split by verticals in Benelux ($m), 2004 33
Figure 2.4: SMB IT spend split by verticals in France ($m), 2004 34
Figure 2.5: SMB IT spend split by verticals in Germany ($m), 2004 34
Figure 2.6: SMB IT spend split by verticals in Italy ($m), 2004 35
Figure 2.7: SMB IT spend split by verticals in Scandinavia ($m), 2004 35
Figure 2.8: SMB IT spend split by verticals in Spain ($m), 2004 36
Figure 2.9: SMB IT spend split by verticals in UK ($m), 2004 36
Figure 4.10: Enterprise application service investment by sizeband, 2004 - 2008 63
Figure 5.11: Global SMB CRM application revenues and as a percentage of overall global CRM
application revenues, 2003-2008 72
Figure 5.12: SMB CRM competitive landscape 82
Figure 7.13: Evolution and size-bands of US hosted contact center services 104
Figure 7.14: How would you rather pay for a hosted contact center service? 107
Figure 8.15: Project Green combines all four ERP products into one 136
List of Tables
Table 4.1: Global ERP investment by company sizeband (%), 2003-2008 60
Table 4.2: On demand ERP market by sizeband, 2004 - 2009 62
Table 4.3: Global SCM investment by company sizeband (%), 2003-2008 68
Table 5.4: On demand CRM market by sizeband, 2004 - 2009 77
Table 7.5: US contact centers by size-band 97
Table 7.6: US small contact center technology spend 99
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