Latin American economies are mostly comprised by SMEs (small and medium enterprises.) In Argentina, for example, they represent 80% of the productive base. Many of them seek to innovate and modernize in order to improve their competitiveness and adopt new technologies to increase their efficiency and operational productivity.

However, SMEs’ diverse customer base requires a different experience to that of large companies. Service providers capable of satisfying the demands of this segment have the opportunity to enter a very lucrative market.

How do suppliers think?

A recent publication from the telecom company Alcatel-Lucent stresses that service providers usually assume that it is too expensive to enter this market. According to the report, these presumptions overlook the significant business opportunities that they actually represent.

For example, suppliers should consider that in 2012 SMEs all over the world spent over U$ 544 billion in Information Technology (IT). This represents a growth rate of approximately 6% compared to the previous year. The report also estimates that the IT market for these companies will reach U$ 576 billion by the end of 2013.

Information provided by Acuative explains that failure to take full opportunity of this sector is due to the fact that reaching this market is not as simple as with larger companies. Although this is a highly profitable market with low technology costs, deployment and maintenance have resulted problematic for suppliers interested in expanding into this segment.

Challenges in developing this market

For telecom providers to successfully develop the SME market the supply needs to be simple and agile, it needs to include end-to-end customer service and should adapt to the needs of each SME. Repackaging the same solutions offered to large companies is not sufficient to adequately reach this market. SMEs are used to being close to their customers and expect the same from suppliers: the sale of any type of service must reflect SME values in the way they work.

•  Market size: in order for suppliers to successfully reach the SME market they must have the ability to provide support to customers that are widely dispersed throughout the territory. In contrast with large companies, who keep regional or centralized offices, SMEs are usually spread out through different neighborhoods, cities and countries. In many cases, suppliers do not have the resources or the staff to cover such a wide range.   

• Customers’ technical training level: SMEs usually do not have trained technicians to migrate obsolete technology to new one. Sometimes SMEs adopt advanced technology that requires setting up new systems, making relevant decisions and solid know-how. In order to retain customers and generate a good reputation it is key to have the necessary elements of support required to mitigate the lack of customer training. This can be achieved through explanatory material and in-house training of staff by experts from the supplier company.  

• Customized service for each customer: In contrast with large companies, most SMEs lack a developed technical management structure. This significantly complicates and slows down the process of adopting new technologies since the supplier must design the architecture of the process and the implementation schedule, accordingly. For the supplier this means an increase in deployment costs per customer since a different strategy has to be designed for each user.

The decrease in costs and the technologies and innovations that help enhance company management have prompted companies to invest in improving business administration, communications and other products to help inside and outside of the office. Service companies that understand SME business objectives and offer a broad portfolio of solutions can win a big portion of the market.