SMBs See No Advantage In Big Brand Licensed Offerings: Report

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A report commissioned by Scale Computing shows a move away from licence-based model by cash-strapped SMBs

Small to medium businesses, striving to find a “competitive edge”, have become disenchanted with licensed software, especially at a time when budgets are diminishing rather than growing.

A study of 200 senior IT personnel, conducted by leading market research specialist Vanson Bourne on behalf of Scale Computing, found that SMBs are facing daunting, often business-defining, IT decision making. The way the majority of businesses buy, deploy and manage software and infrastructure systems is not sustainable, the survey revealed.

Lack of funds

Half (48%) of the respondents who contributed to the research in “The End of The Traditional IT Model” report claimed their budgets were insufficient to cover the needs of their businesses and just 33 percent said they were able to support growth during the economic recovery.

SMBs see even greater challenges as they struggle to afford what are traditionally perceived as the “right” technologies. Almost all (99%) of respondents agree to some extent, with 60 percent agreeing outright, that large organisations have a reputation for buying big name brands and that IT decision-makers believe they will become more employable if they do so.

Jeff Ready, CEO of Scale which sells its hyperconverged virtualised server systems to the SMB market, pointed out that this is not the industry’s vision of IT as a strategic enabler within the business. “The old IT sa ying goes that you won’t get sacked for buying ‘the big name brand’. The worrying thing, for an IT manager in an SMB, is that, while you may not get sacked for buying the big established brand, will you have a job at all?”

The financial crisis has forced a change of attitude, with a third of the applications being used by firms with between 200 and 1,000 employees being non-licence-based compared with 16 percent before the crisis. The trend looks set to continue with respondents saying they expected 36 percent of applications in use will be non-licence-based by 2015.

This situation has grown against a backdrop of disillusionment with the gains achievable with licence-based offerings. A massive response of 97 percent of SMBs agreed, at least “to some extent”, that they could not get a competitive edge from license-based software and systems.

“IT professionals have been brainwashed into thinking that paying more money for big brand names is value for their business… We see the shift away from big name brands, and the significant move to non-traditional solutions, as a sign that IT strategy in smaller businesses is maturing. The more that UK SMBs feel empowered to make the right decisions for their particular business, and aren’t pressured to align to the status quo, the better their chances for growth. The reality is that there is a new breed of IT emerging, which is savvy enough to understand that the alternatives are good enough, and they no longer have to pay for licences,” Ready commented.

One of the biggest concerns expressed related to the complexity of procurement rather than the technical knowledge required. Over two thirds (69%) consider their job has made more demands on them as they struggle to co-ordinate a greater mix of vendors’ products, pushing down the ability to consider strategic improvements to the business.

Judging by the report, there appears to be a demand for trusted advisors to move in and help bail out the embattled SMBs.


Author: Eric Doyle
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