SMEs beginning to scale up value chain: IBM

  • SMEs shifting from just focusing on operational efficiency to emphasis on growth and innovation
  • Outsourcing no longer about large transformational projects but selected, targeted ones

NEW technologies, including virtualization and cloud computing, have enabled small- and medium-sized enterprises (SMEs) to transform their businesses by focusing on reducing costs, improving IT utilization and taking advantage of new leads quicker, something normally only practised in larger enterprises, according to computing giant IBM.
Justin Gatlin, director of offering management & development for IBM Global Technology Services, said IBM has noticed a shift in SMEs' priorities from one that focused merely on operational efficiency and cost reduction in 2010 to a stronger emphasis on growth, customers, and innovation in 2012.
Speaking to the media in Kuala Lumpur on May 29, Gatlin said that every 18 months or so, IBM conducts a global survey its SME customers to track the sentiments on the ground. IBM defines SMEs as companies with fewer than 1,000 people.
"What we found was that in the latter half of 2011, SMEs were shifting away from IT optimization towards how they can improve their relationship with their customers, grow their business, and take advantage of their business opportunities in a better way.
"This is a trend that we [normally] see in large companies, where the emphasis is to identify how they as companies can capture new opportunities, he explained. "We also noticed that there is an increased willingness to partner with managed service providers (MSPs) aimed at taking care of their basic IT infrastructure."
SMEs beginning to scale up value chain: IBMGatlin (pic) noted that some of the new IT trends that have helped the SMEs catch up with their larger counterparts are virtualization, cloud computing and mobile devices, adding that most of the large enterprises IBM speak to today are concerned about the same issues SMEs are facing.
"The fundamental issues that drive our customers include managing the high performance workplace, mobility and the multitude of devices that are coming into their environment, managing risk, complexity and security. 
"Other issues are how to make a business case to upper management on these issues, how to optimize existing infrastructure, how to look at real business opportunities, how to move from a capex to opex model, and how to manage storage and analyze data within the organization."
Gatlin said that according to IBM's engagement with SMEs around the region, more customers, including SMEs, want companies like IBM to take over day-to-day operational responsibility for specific infrastructure pieces. 
IBM believes that rather than just having end users off-load burdensome tasks, managed services is becoming agents, which can enable SMEs to compete on par with their larger enterprise counterparts. This, Gatlin added, was in line with how Big Blue sees the evolution of the next stage of MSPs.
"Outsourcing of the past is really focused on big transformative projects, such as virtualization efforts, the consolidation of the data center and the inclusion of self help portals, desktop support etc.
"Some SMEs have [even] already optimized their resources and they don't feel that they need a big compelling relationship with vendors to achieve transformation anymore," he said, adding that SMEs today want to focus on specific areas.
Gatlin noted that for example, an SME might only want to outsource a portion of its network operation center to a vendor like IBM and only during graveyard or weekend shifts only in order that they may operate on a  24/7-, 365-day basis. 
"We've helped one SME based in India that wanted us to manage their storage for their video files and this is what we specifically did."
Asked if IBM Malaysia had any SME clients that have appointed it as an MSP, Wang Jack Jong, general manager for Global Technology Services said, "We don't have a referencable customer right now."
Wang noted that IBM Malaysia today has larger customers who are using its hosted services, such as the SAP hosted services, where its customers would access the application from IBM data centers.
"The managed services [model] consists of a whole spectrum of services that include managed services to strategic outsourcing," he said. "We are already engaged in the latter; so now we are working on offering these more specific managed services to SME clients."

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