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Doing IT Services Business with SMBs and Startups

Prathapan Sethu
Monday, August 2, 2010
 Prathapan Sethu
SMBs and startups are the engines of growth in advanced economies. The Fortune 500 companies will continue to dominate IT spends, but because IT has become much more affordable, its adoption is now happening at a faster rate among SMBs. If you are a small to medium IT services provider yourself, you will find it difficult to break into the Fortune 500 club as they are dominated by bigger and established vendors. So focusing on the SMB market makes sense and this sector has its own advantages. The sales cycle to close a deal with a Fortune 500 company is typically long. In comparison, SMBs and startups make quick decisions as there is less bureaucracy. However, successfully doing a project with SMBs and startups and making a profit on it is a challenge. SMBs count their beans and seek value. So how do you engage with them profitably? Below are some tips on how you can successfully conduct IT services business with SMBs.

Do Smaller Projects
Every one likes to win big projects and close big deals. With SMBs, however, you should look for smaller and longer engagements than bigger and shorter engagements. Do not try to do a large fixed-cost project with them. An SMB may want to IT-enable their entire operations at one go. Typically business owners want to get everything done within 6-9 months and then go into maintenance mode. In practice, this won’t work. It is prudent to break the big project into smaller ones. Finish each project, deploy it, get the business use it, get the payment, and then go for the next one.

Develop the Solution Iteratively
Adopt agile development methodologies (see http://agilemanifesto.org/) for delivering projects. Develop software iteratively with each iteration or sprint lasting for 2 to 3 weeks. During the initial days of a sprint, provide mocks to the client so they know what to expect. While executing the project, keep in touch with the client on a daily basis. Do not sign-off a requirements document, go away and develop software in an isolated environment without client involvement.

Deliver working software at the end of each iteration. Let the end-users use the application and provide feedback. Never force your solution on the client. You may be the IT expert, but they are the domain experts. Listen to them and take their viewpoints seriously.

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