Thursday, July 02, 2015

Avoiding the hype trap

ICT vendors often oversell a product or service by preying on the insecurities of SMEs, but there are ways to avoid falling for the hype.

When it comes to technology, SMEs straddle a fine line. It is very easy to fall behind the and lose market share by failing to take advantage of the latest offerings. However, it is equally possible to fall into the trap of purchasing technology the company does not need or cannot afford, simply because of the manner in which the vendor markets it.

Tight budgets mean the failure of a supposedly fantastic new technology can compromise an SME’s survival. This makes it crucial for the business owner to ensure that hard questions are asked of the supplier before pen is put to paper.

, CEO of Soltura Group Holdings, says that customers looking at new ICT technology should first and foremost determine whether their business is driven by technology and whether the technology in question is a key performance driver within the organisation.

“In many instances this is not the case and the SME is able to operate its business efficiently using only basic technology requirements, such as a standard telephone and e-mail solution. Additionally, they should ask the vendor questions like why they need to replace what they already have, what the defined business benefits are and whether market research can be provided to support this,” he says.

“They should also enquire as to the exact return on investment and just how much money it can save the business, as well as finding out whether the vendor is prepared to both formulate a business case to justify the replacement and to guarantee its success. Finally, the SME should ensure that the vendor has the skills to support the solution.”

Scare tactics

, MD of , says that there are two common scare tactics used by vendors to close a sale. These are based on competitive edge and obsolescence.

Julian Morelis“The main tactic used is that of suggesting that since your competition is already using this technology, you will be left behind if you don’t also purchase it. The other angle vendors often take is to intimate that the technology you are currently using is obsolete and will therefore not be supported for much longer,” says Goldstuck.

“Basically any tactic designed to close a sale can be regarded as hype. For example, another tactic used by salespeople is to suggest there is a limited supply or a change in price coming, in order to convince you to immediately make the purchase. This sort of thing is nothing more than simple scare tactics.”

According to Greg Wilson, MD of Reflex Solutions, another ploy that is often utilised to push through a sale stresses the issues of licensing and . He says that vendors will play on the SME’s fears that their licences are out of date and that they could be fined for this.

“Additionally, because many SMEs are unsure of exactly what they require in terms of security, they can be easily led into buying security solutions that may not even address the real risk. Vendors also often oversell solutions – Reflex has seen environments where the business may only have 50 employees, yet it has been sold a solution designed to support maybe 5 000 people,” Wilson says.

“The answer to this is to build a long-term relationship with your vendor so that you can trust them to look after your best interests. After all, any ICT vendor worth their salt will know that you only get away with scare tactics once.”

Wilson says a vendor should be prepared to be completely open with a client regarding its financials, skills sets and client base. It should also be willing to take a prospective customer to any one of its existing clients to discuss previous implementations. “If the vendor is not prepared to be open on any one of these issues, my advice would be to steer clear of them,” he says.

Staying abreast

Morelis says it is possible to stay abreast of the latest technologies without falling for hype. Once again, he says, it is imperative that the customer understands the four fundamentals.

“Firstly, the SME should know whether the company depends on technology to drive the business. It should also be aware of whether its ICT infrastructure is aligned with the business strategy, and whether enough information is available outlining the infrastructure that is already in place. Finally, the SME needs to have clear visibility and a consolidated view of all its ICT costs.”

If the above principles are clearly understood by the SME, then it needs to ensure that the vendor provides it with a business case upfront that can be used as the benchmark to measure the success of the project. There should also be clearly defined penalties, should the vendor have been dishonest in its approach.

“Make sure your vendor can offer you a turn-key solution too, as this is definitely one area that can reduce costs and improve efficiencies significantly. After all, while the convergence of technologies unlocks value, the consolidation of vendors can further compliment this objective,” he says.

Goldstuck adds that it is imperative that the small business owner stays up to date with the latest technology trends by reading both local and international IT publications regularly. “This is very easy to do online, and there are many specialist publications around the world that focus on particular vertical markets, so it should be relatively simple to not only stay informed of the broader ICT space, but also your particular market niche.”

A fine line

“Obviously it is a fine line that these SMEs tread, between avoiding the scare tactics, while still ensuring they implement necessary technologies. Sometimes SMEs will hold onto the old way of doing things simply because they are scared of change. Remember that if your own customers are struggling to do business with you because of technology problems, then it is probably time you upgraded your technology,” Goldstuck says.

Wilson suggests that because the line is incredibly fine, SMEs really shouldn’t be making the decisions at all. “Outsourcing the company’s ICT requirements is a good answer, but this is once again reliant on having the kind of long-term relationship in place that inspires trust.”

Ultimately, Morelis says, it boils down to being focused. “Ask the right questions and do your homework upfront. If you do not have the internal expertise to accomplish this, then spend the money to outsource this process. It could save you a fortune in the long run.”

Bytesize 2011 | Contents

Thought leadership

BI little for the little guy
Focus on the customer
A new era in mobile communication
A new way of doing business

Solution profile

Attracting , training and retaining the brightest talent
Greener and leaner
Telkom’s Cybernest solution
Cybernest grows into adulthood
Core business communication
A business-to-bank back bone
Get the basics right
HP’s P4000: Meeting the storage requirements of SMEs
Managed Infrastructure Hosting: less complexity, more efficiency

Case studies

Telkom helps Mnquma Local Municipality deliver to the people
Telkom VPN reduces downtime, boosts corporate growth
Technology distributor chooses Telkom VPN
Telkom delivers a sweet solution for TSB Sugar
Telkom Hosted IP Contact Centre – Flexibility on an unprecedented scale
Marrying fashion with financial efficiency
Fast food, faster transactions
The Kit Group kits up with Telkom VPN
Telkom Metro LAN powers remote contact centre specialist
Bandwidth on tap for Logwin Air and Ocean
Managing a monolith
Recession demands dynamic thinking
Telkom partners GUD to help it maintain market leadership

Editorial profile

The 2011 SME – Facing Teenage Angst
SMEs and the law – do you comply?
Guards and gates vs geeks and technology
SME IT : outsource or in-house?
Managing the supply chain
SME IT in the real world
Think before you print
Avoiding the hype trap
SMEs should capitalise on convergence
Getting the most from voice and data access
Mobile communications – pipe dream or sustainable solution
Hardware : incidental or indispensable?
Tabula rasa
Smarter than phones
Servers and small business success
Starting out with a small business server
Containing the data explosion
When will SMEs open up to the source?
3-OS battle for SME desktop
Business applications – the time is now
SMEs slow to get onto the cloud
Social media platforms and tools for SMEs
Open Your Cellphone