The SMB Tipping Point
By Melisa LaBancz-Bleasdale
For the small- to mid-sized business (SMB), 2007 could be deemed "the year of plenty." With a new zeal, vendors once firmly entrenched in the Fortune 1000 market space are turning their attention to the SMB population. As vendors finetune their enterprise class solutions for the more nimble and volatile SMB, the previously underrated industry segment is pushing its way to the forefront. But feature rich, enterprise-class, messaging security for the SMB is no happy accident. Says Steve Lewis, CEO and co-founder of email continuity vendor Teneros, "There are precisely one thousand Fortune 1000's. There are a whole lot of SMBs."
The SMB typifies the "survival of the fittest" approach to efficiency. From a financial, personnel, and product perspective, they eke out maximum value for minimum outlay-in an effort to parlay their savings into realized gain. This resourcefulness has extended to analyzing and prioritizing core messaging requirements with an almost laser-focused precision. If they're going to spend the money on a product, it better do the job.
No strangers to creative problem solving, the SMB recognized long ago that employing innovative technology could produce greater benefits at a fraction of the cost of traditional means. For example, significantly less expensive than using a telephone to make long distance calls, instant messaging quickly found a home in the SMB market segment-long before it became a serious consideration in the enterprise.
Same Requirements, Different Size
The unfortunate stereotype of the SMB, however, is that they are less security conscious. In terms of security technology, enterprise customers are normally early adopters. SMBs tend to stay behind the curve, taking a wait-and-see approach to securing their messaging systems. "The adoption of technologies like the Web and IM are tools that expose the SMB to recognizable productivity gain. But, these same technologies also expose them to a lot of risk around the security pieces of their organization," explains David Hahn, director of product management for email and Web security vendor MessageLabs. "If I were a malware author, I really wouldn't discriminate between sending a virus to AT&T or to a 50-person SMB. The fact that the SMBs are typically less secure means it's a land of opportunity for the bad guys. The target of malware attacks is becoming more globally diverse in terms of industry size."
With respect to email and messaging security, federal regulations and state mandates extend across all types and sizes of organizations. More stringent requirements impose the same compliance and security concerns on the SMB as the large-scale enterprise. The difficulty is that the SMB has less personnel and financial resources with which to implement a comprehensive solution.
"In most cases, the SMB has the same operational requirements as a large organization. The Internet has changed their business model, the same way that it has for the enterprise. It's not limited to email requirements, it applies to a lot of other applications like IM, Skype and Web conferencing," notes Frank Cabri, vice president of marketing for solutions provider FaceTime Communications. "This introduces similar concerns around compliance. Certainly any small hedge fund or any small financial organization will be bound by the same federal regulations that larger banks are. Not only will federal financial regulations be important to that type of SMB, but also newer requirements like those regarding eDiscovery. These requirements aren't going to discriminate between the size of a business."
Lewis agrees that SMBs have the same IT pain and requirements, as the Fortune 1000, but notes there are differences in how those requirements get fulfilled. "First of all, they haven't got the money. Second, they haven't got the staff. The average SMB has well under 50 people, so for any given vendor's particular bag of tricks, there's less than half a guy assigned to that area."
If We Build It...
As Lewis sees it, there is an ocean of difference between companies that begin life solving the messaging needs of the SMB, and companies that make a decision to become SMB providers. "As a vendor you have to develop SMB products from the beginning. You can't just skinny down an enterprise class product and magically it'll be an SMB product. Everything has got to change. And it's got to require, quite literally, no IT. That's a profoundly different spec than for the enterprise."
The explosion of messaging security solutions for the SMB market has ushered in a bevy of targeted products from which to choose. It has also created the need for the careful analysis of an SMB's overall messaging needs. SMBs must ask whether deploying an in-house solution or opting for a managed service best fits their business type, operational needs, and budget.
Hahn believes that SMBs have come to recognize the benefits of a managed service model over the traditional in-house software and small appliance approach to messaging security. "There's been a step shift in terms of SMBs adopting security technology. We've seen it not only in our own customer base, but also across some of our competitors as well. Everybody is moving toward the SMB market. If you look at managed services, the industry is reaching a point of mass adoption. We're seeing SMBs, who previously used software coupled with small appliances to protect their email systems, recognize that these solutions have limitations," said Hahn. "We're experiencing what we're calling a managed services tipping point. Meaning more organizations are adopting a service-based approach to securing their messaging, because it provides more benefit than the previous delivery methods. That's why companies like MessageLabs have made a big play in the SMB space. The market is really maturing for our products and services."
Cabri, however, believes it depends on the business. He says the financial community, along with other types of organizations with specific government regulations, tends to be hands on. "They want to have access and integrate with backend storage systems. They want to monitor the outcome and have the functionality to produce reports. But, sometimes SMBs don't have the staff and IT resources to deploy their own inhouse solutions. In those cases, Face Time has strong partnerships with organizations that offer a complete service option," states Cabri.
Getting What You Paid For
The capital constraints of an SMB dictate the extent to which a positive or negative purchasing decision impacts the organization. Hahn equates SMB expenditure with ease-of-use. "Typically, SMBs have very little internal IT staff and are looking for turnkey solutions. That's why solutions like ours provide a natural fit. There is no software, hardware, or additional overhead that an SMB needs to maintain or monitor on its own dime. If an SMB were to set up an internal solution and provide the same level of redundancy, the same level of features and internal functionality, it would cost significantly more. From a capital perspective and labor perspective, it is less expensive to set up a managed service," concludes Hahn.
The SMB messaging vendors agree, when it comes to getting what you pay for, they want to exceed expectations. "We don't actually degrade or pull out features for any class or size of organization," reveals Cabri. "Our whole model is based on the number of users. We don't have "light" versions or "deluxe" versions. We provide the same enterprise class solution and feature sets to everyone. So the hedge fund with 100 users will receive the same interface, with the same class of features, as our Wachovia-sized customer."
Where SMBs often feel shortchanged, however, is the customer service they receive for their enterprise class purchases. "There are two separate issues here," agrees Lewis. "Features and attention. For all intents and purposes, the feature-fear says, 'I'm getting a profoundly crippled enterprise product' but I don't believe that's the case. In fact, I think the SMB is getting the exact opposite. They're getting an almost identical feature set to that of the enterprise for a fraction of the price."
But when it comes to attention, Lewis concedes it is an entirely different playing field. "If Citibank calls up and they've got a problem, 500 guys jump on that grenade. It doesn't matter if it is 3:00a.m. on a Sunday morning. But if you are the SMB who just bought the low-end, pick-yourvendor box, good luck!" Lewis believes many large-scale vendors haven't built response systems, or customer service systems, to address the tens of thousands of SMBs. "Teneros got around this by developing the world's first fully managed appliance. We manage it from the get go. We believe that the SMB IT department is already overburdened. That's our answer. The problem with buying a lot of the other vendors is that the SMB customer service fear is dead on. They're ultimately going to have to invest in additional IT resources and capabilities to support those products and possibly disproportionately so." MB/TMP