commentary Most companies trying to sell software to small business need to rethink the way they do things if they are to have any hope of succeeding.
Firstly, does a small company need HR software at all? An HR consultant the RMIT Labs spoke to said many businesses of up to 200 employees do all their HR work on an Excel spreadsheet. In many cases, the consultant said, HR software may not contribute enough value over a well-designed Excel spreadsheet to be worth the price.
|Will larger software vendors realise that in order to properly target small business they'll need to change not only the software, but also the way they sell it? Or will they find enough Charlies to spend money they don't have on software and consulting they don't need?|
Fortunately, the developers of these kinds of software are just as lackadaisical at selling the software as they are at writing it. Of the dozen or so local developers of "small business" HR software we could find, not one responded to our e-mail or phone inquiries.
At the big end of the market, we came across the large enterprise software vendors like SAP, PeopleSoft, and Oracle, as well as Microsoft and several mid-size ERP vendors. Analysts say the enterprise software vendors have saturated big business and need to start selling to smaller companies if they want to find new customers. Microsoft is believed to be a big challenger in this space because of its expertise in the smaller end of the market. So is a 200-person business small enough?
According to the most recent Australian Bureau of Statistics data, in 2000-01 there were 39,300 businesses in Australia with between 20 and 200 staff; they employ 1.8 million people, or a quarter of the workforce. By contrast, there are only 2800 businesses with more than 200 employees, but they account for another quarter of the workforce.
You would think the enterprise software vendors would jump at the thought of 40,000-odd new customers. Do any of them have a product that's suitable? Not on your life.
No matter how hard we tried, we couldn't convince any of the larger vendors to let us review their products. Either the products for this scale of business don't exist, or the vendors are extremely reluctant to put them up to scrutiny.
The standard response was along the lines of "We don't offer a software package as much as a framework. We'd go in and talk about your business needs, put together a package, and then work with you to build in your business processes." They might as well have added "It costs around AU$500,000... we think. It might end up being more. Of course, we can't guarantee it will work."
Will larger software vendors realise that in order to properly target small business they'll need to change not only the software, but also the way they sell it? Or will they find enough Charlies to spend money they don't have on software and consulting they don't need?
Eliminate the small and ugly, and the big and uglier, and you're left with the few companies we could find that sit in the middle: they're big enough to have developed customised, flexible, useful products, but small enough to price and implement their products suitably for small businesses. With an approach like that, we can only hope they succeed.
This article was first published in Technology & Business magazine.
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