The mid-market conundrum: How do smaller companies get their tech supplier to care?

Bob Tarzey, Analyst and Director

Quocirca Comment October 2013

Recent Quocirca research shows that mid-market organisations face a conundrum when it comes to sourcing IT services. They realise, and mostly accept, that their organisations are not a priority for large system integrators. However, generally speaking they are more likely to find a better outsourcing experience if they do manage to engage with a large SI. The challenge is to find smaller IT service providers, with a mid-market focus, that can deliver best-in-class service levels. The research report, called the Mid-market conundrum, covered businesses with between 500 and 5,000 employees across a range of business sectors. It was sponsored by Attenda and is freely available at this link. The report shows the degree to which the UK mid-market relies on outsourcing. Most organisations are more likely to outsource a given application than they were two years ago, especially utility services such as email, voice and conferencing; it is also seen as the best way for many to achieve business continuity goals. Through doing so, mid-market organisations largely expect to procure the same service levels as their enterprise counterparts; this being true even for the smallest of organisations. In other words, second best is no longer good enough, the mid-market believes it should, and can, achieve access to best-in-class IT applications by seeking the right IT service providers. The drivers behind this are made clear by the new research: Over 70% of mid-market employees are hands-on IT users, this rises to almost 90% in financial services The need for reliable external interaction is paramount; the average mid-market organisation now transacts with 40 times as many external users as it does internal ones, the ratio ranges from 30 in manufacturing to 50 in financial services All this has to be achieved with limited internal resources. Smaller organisations have on average one IT headcount for every 45 employees, with the figure rising to 1 IT person per 112 employees at the upper end of the mid-market Most say that the resources they have available are not enough to support the demands placed on them; and that too much time is spent firefighting, for example, dealing with unexpected IT problems and compliance issues. Such distractions mean the most neglected areas are discussing IT requirements with the business, and planning innovation. The area where mid-market organisations are most likely to say the time spent is about right is working with IT service providers. In other words, the ideal is to off-load more of the mundane stuff to those with the skills to do it and in doing so, try to free more time to build value through IT for the business.

The mid-market conundrum: How do smaller companies get their tech supplier to care?

http://www.quocirca.com

2013 Quocirca Ltd

To achieve this, most say they must find the time and resources to focus on four key areas of innovation within IT: The use of public cloud services which is a logical extension of outsourcing The use of social media, especially to help drive all that external interaction The big data opportunity, a big part of which is making good use of the detailed data generated through transacting online Consumerisation, through the use of personal devices and web resources by both employees and external users Those mid-market organisations likely to achieve the most success will be those that find the right partners to ensure they maximise the benefits in all areas of IT deployment and deliver reliable applications for both external users and employees. Few expect to find one IT service provider that will deliver all their application needs; the average number of partners worked with in 2013 has increased compared to two years ago. Long term success will be found with IT service providers that have the necessary focus and experience. Mid-market buyers should look for proven ability to deliver guaranteed service levels for a given application; be it utility or bespoke. They should seek providers that focus on the partnership more than the contract and see the relationship as a long term investment. Find this Holy Grail and you may achieve something which only a select few report: a better than expected experience. Not many IT service providers stand out in a frothy market. Most mid-market buyers complain that it is hard to tell the difference between one provider and another during the procurement process. Once engaged, those midmarket organisations who say their providers focus on partnership are more likely to report a

better than expected experience, but only marginally so. Still, it is clear from the new research where the mid-market expects the focus on service providers to be. Primarily, it must be on ensuring the efficient use of IT resources whilst keeping costs under control; after this come delivering business outcomes and the ability to provide supplementary on-demand resources. Where the partnership between a mid-market organisation and IT service provider is a success, the net result is that both raise their game. The mid-market organisation will have better, more reliable applications and therefore provide better service levels to all its users; and through demonstrating success, the IT service provider will find it easier to win new contracts and grow its business: a win-win scenario for the select few that can find it. Quocircas report, The mid-market conundrum is freely available at this link: http://www.quocirca.com/reports/856/the-midmarket-conundrum
This article first appeared in Tech Republic http://www.techrepublic.com/blog/europeantechnology/the-mid-market-conundrum-how-dosmaller-companies-get-their-tech-supplier-tocare/

The mid-market conundrum: How do smaller companies get their tech supplier to care?

http://www.quocirca.com

2013 Quocirca Ltd

About Quocirca
Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of realworld practitioners with first-hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption the personal and political aspects of an organisations environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to advise on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocircas mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time. Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocircas clients include Oracle, IBM, CA, O2, T-Mobile, HP, Xerox, Ricoh and Symantec, along with other large and medium sized vendors, service providers and more specialist firms.

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The mid-market conundrum: How do smaller companies get their tech supplier to care?

http://www.quocirca.com

2013 Quocirca Ltd