Small business, which dominates Latin America, are looking for the right technology at the right price.
BY PETER WIEGANDT
For as long as there have been businesses, the bulk of them have been small. The smallest family-owned business of one type or another provide our communities with the services we need, be it a repaired shoe, a mended shirt or a great meal.
Indeed, small business—commonly defined as comprising 25 or fewer employees—is the engine driving nearly every economy on our planet. This is especially true in Latin America, where small businesses are fundamental to the region’s economical growth and employment. In Brazil, one of the world’s fastest-growing economies, small businesses represent 98 percent of the country’s 5.5 million companies, accounting for 60 percent of its jobs. In Colombia, small businesses are the largest sector in the country, representing 96 percent of the country’s companies, and generating 63 percent of the local jobs.
But the power of the small business has never been as great as it will be in the next decade. As the next billion Internet users come online (one billion are already connected to the Internet worldwide), they’ll exploit the potential that this Connected Era holds for their businesses, their families and communities, and ultimately for the global economy.
The International Council for Small Business estimates that more than 500 million new businesses will set up shop over the next five years. Many of these new enterprises will come from fast-growing economies such as Brazil, Russia, India and China (the BRIC countries), and others including Israel, Turkey, Indonesia, Vietnam, Poland and countries throughout Latin America.
For these businesses to succeed, they’ll need information technology. Small and medium businesses recognize this, and their IT spending growth has outpaced total corporate IT spending worldwide since 2002, and is expected to do so through 2010, according to analyst firm IDC.
PC PRICES FALL
It helps that computer prices have declined steadily and significantly over the past 10 years, according to IDC. The average cost of a desktop computer, for example, dropped 60 percent between 1997 and 2007. Laptops, which the next billion people online are increasingly choosing for their first PC, came down in price at nearly the same rate during that period. Infrastructure computing has become more affordable, too, with prices of computer servers that run networks and Web sites dropping 55 percent. And in line with Moore’s Law, computing power has nearly doubled every 18 months or so as computer prices fell.
This all bodes very well for small businesses. Armed with the right technology, they’re better able to compete not only with their peers, but to contend even with larger businesses, all around the world.
But providing technology to small businesses, both in the developed and developing economies, never has been about low price alone. It’s about providing the right technology and services at the right price. Technology that is affordable, reliable and easy to maintain. To accomplish this, computer makers must adapt quickly – as a small business does for its customers – to meet the evolving needs of emerging businesses. That means having direct conversations with customers and designing IT products and services specifically for their needs, including their budgets.
Right now, small businesses in emerging countries—as well as some schools and government customers — say they want simple, affordable business computing and connectivity features, without higher-end features they don’t require. They also want access to technical services and support small businesses often can’t afford today. According to IDC, only 15 percent of small businesses with 20 or fewer employees have a dedicated IT staff. That makes reliable, straight-forward service – from basic installation, to telephone diagnosis of problems, to next-business-day onsite support, as examples – incredibly important.
The enormous opportunity presented by both small and medium businesses and emerging countries ensures that the IT industry will continue developing tailored solutions for them. But we’ll need to do so keeping a few crucial things in mind.
First, many of these customers are starting with a clean slate. Today’s entrepreneurs want to build their businesses using the latest, most efficient standard technologies. They get to skip over the complicated systems based on proprietary technology that other businesses have grown up on for decades—and are increasingly trying to separate themselves from.
Second, we have to recognize the value that standards-based technology offers to customers and continue to develop innovative new products and services based on those standards. Data-storage systems using Internet-protocol technology (known as “iSCSI storage”) are a great example of this. They provide the advanced storage capabilities organizations in this data-saturated Connected Era need, but in a way that’s simpler to set up and use. Standards-based storage systems are also considerably less expensive than older versions. As a result, analysts predict a 76 percent increase in spending on iSCSI storage between 2005 and 2010.
Above all, we have to listen. The only way to understand and deliver on the specific needs of customers is to have regular conversations with them. That’s particularly true in serving the different, growing requirements of small businesses in emerging countries. The suppliers that earn the trust and spending of these customers will be those who listen, grasp the nuances of customer needs, and address those requirements with tailored solutions.
Peter Wiegandt serves as vice president of Dell’s operations in Latin America, responsible for driving the company’s growth within the region’s commercial sector. Of Mexican origin, he joined Dell in 2000 from Coca-Cola Femsa, where he served as Vice President and General Manager for the company’s Southeast operations. He graduated with honors from the Universidad Iberoamericana as a chemical engineer, and obtained his Master’s Degree in Business Administration from the Stanford Graduate School of Business.