SME / SMB Have Become Obsolete Acronyms

Software Industry analysts seem to have a fun time coming up with three-letter combinations.. throw out any random letters and chances are it means a new product, technology, industry trend, market segment. It's the latter I am having a problem with: the term SMB / SME describes Small – Midsize Businesses (Enterprises), but it has become obsolete. Why? It used to collectively refer to companies too small to be attractive for the major Enterprise Software providers – and of course the same held true vice versa: I assume most readers of this blog are in small businesses, and for you the rule has been that "enterprise software" is too expensive. Well, that's changing: Oracle, SAP are now catering for the mid-market, and there are a number of innovative new software solutions affordably available for the really small businesses. Hence the problem with the SMB / SME acronyms: they were sufficient to describe the "crowd to be ignored", but now that the software industry can actually address the needs of this very heterogeneous segment, it turns out this really isn't one segment at all, but at least two … perhaps three.

• SAP, Oracle may consider a $100-200M million business small, but it really is midsized, the "M" in SME, with a few hundred employees and a dedicated IT department that will likely need help with software implementation, but will cope with the ongoing maintenance themselves.
• One could define the "S" part, i.e. small businesses in terms of revenue or headcount, but to me a more important criteria is that they typically do not have permanent IT staff on hand. This by definition makes any software products that are implemented and ran at the customer's premises a poor choice – a potential maintenance nightmare. There is simply no better choice for this group than SaaS – Software as a Service.
• The third category in my mind is the very-very small business, possibly with 1-5 employees, who are likely all do-it-all types, focus on their core product / service, and may be struggling with not only IT, but some of the standard processes of running a business. This category needs more help than just technology, and in my mind WinWeb is quite unique in offering a combination of hosted software as well as "Live" services, i.e. expert advisors in various aspects of business.

I'll devote the next few post to talking more about changes in the Software industry and how Small Businesses can take advantage of those changes.

(Key thoughts in this article were used for a post on my personal blog)

Tags: smb, sme, small business, SaaS, On-Demand, WinWeb

Tags: On-demand, SaaS, small business, smb, sme, WinWeb

4 Responses to “ SME / SMB Have Become Obsolete Acronyms ”

1. Stefan Töpfer
   
   Said on May 10th, 2006 at 2:46 pm

   Hi Zoli,

   Thank you for your time to write here. I am looking forward to your posts in the future.

2. THE SMALL BUSINESS BLOG » Blog Archive » SaaS for Very Small Businesses - Show Me the Money
   
   Said on May 31st, 2006 at 4:50 pm

   [...] Recently, in  SME / SMB Have Become Obsolete Acronyms I discussed how now, that business software and services have become affordably available to small businesses, the SME term has become inadequate to describe this market, especially from the software industry’s point of view.  Simply because the needs of a $100M company, which SAP and Oracle consider a "small" business are not even comparable to a 6-10 person company – traditionally referred to as SOHO, while recently a new term is popping up: VSB – very small business, the absolute "S" part of SMB. [...]

3. Timmy - Construction Crane guy
   
   Said on August 31st, 2008 at 6:01 pm

   SaaS is also known as cloud computing i guess!
   Seems to me that a lot more SME are using google services now. E.g. google documents, calendars, etc…just one example of the changing trends…

4. Baseball Bats For Sale
   
   Said on November 12th, 2008 at 2:40 pm

   I think that it is interesting that many businesses like SAP and Oracle had some of their early success rooted in “Medium” sized businesses. As these companies evolved and grew their software offerings and business models changed as well. Evolving to focus more on “Enterprise” type businesses and all but ignoring much of the rest of the potential markets. There are many companies out there that can be slated as small or medium businesses based on employee head count or Gross profit dollar amounts, but really have enterprise “like” needs. For example, many hedge funds run their entire operation with only ten to twenty employees. But, the accounting needs for many hedge funds is that of a large firm.

   Where i think WinWeb really excells is offering services to companies that have needs similar to larger businesses but do not have the transactions to justify using SAP or Oracle. WinWeb seems to really fill the huge gap between business and enterprise.

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