1058RA Size Still Makes a Difference in Enterprise Goals, and Therefore in IT Buying Trends

What is Happening?  Saugatuck’s ongoing research with IT and business leaders regarding their business, Cloud, social and other IT-related plans and actions reveals that, while core business priorities remain very similar from the smallest firms to the largest mega-enterprises, significant differences exist based in part on the relative size of firms. These differences shape what, why, how and when firms acquire and use IT of all types and forms, whether suite-based, Cloud-based, traditional, or hybridized.

Our latest global survey research provides us with very useful data regarding how firms of varying size differ in their business goals. The key differences are illustrated in Figure 1, and analyzed in detail in research published this week for Saugatuck CRS clients (1057MKT, Varying Value Needs: SaaS and Business Priorities from SMBs to Mega-Enterprises in 2012, published 25April2012).

Figure 1: Saugatuck’s Heatmap of Enterprise Business Priorities by Size, 2012

Source: Saugatuck Technology Inc. 2012 global SaaS survey, n = 228

Key data points – and therefore indicators of IT plans and spending by enterprise size – include the following:

• Small firms (100 employee). The smallest firms worldwide exhibit the strongest emphasis on increasing sales revenue and reaching new customers, and they do this by a significant margin over all other sizes of firms.
• Mid-sized firms (100 – 999 employees). In this size band, we see much more of a gradual progression from top-line growth down through business improvement. There’s no big drop-off in emphasis until we reach the bottom three business priorities: Investor confidence, new geographies, and changing the business model – the latter two of which are among the most disruptive business changes possible.
• Large enterprises (1000-4999 employees). Large Enterprises indicate a much higher emphasis on two business improvement priorities (managing budgets, decreasing operating expenditures) and on two potentially disruptive business priorities (entering new geos and changing business models). Large enterprises also indicate relatively high prioritization across the entire “stack” of business goals listed. We think this means that many, possibly most, are likely to be stretched in more business activities than their resources will allow them to comfortably reach.
• Mega-enterprises (>5000 employees). With mega-enterprises, we see not only broad prioritization of business goals, but also significantly higher percentages across the board. This indicates that these largest firms intend to be much more aggressive in almost all areas of business improvement, investment, and change than their competitors. We can expect them to do more, and to spend more, but also to expect more (likely much more) in terms of results, from increased revenues to core business improvement.

Why is it Happening?  Our latest Strategic Perspective goes into great detail as to why such differences exist between the various size bands of firms. In fact, that Strategic Perspective is the first of a series that analyzes size-based differences in enterprise business, IT, SaaS, Cloud, social and mobile benefits, concerns, plans and experiences.

The differences in enterprises’ business goals come down to relative cash flow and resource availability. This is no surprise at all; smaller firms have less of both, therefore their business goals will tend to emphasize both in relatively greater numbers. Larger firms tend to have more of both, therefore their business goals will tend to emphasize more how to manage and improve both.

But we also need to understand why and how these differences are already affecting IT markets, and why they will continue to do so over the next year to three years. As we noted in March, there is relatively little year-to-year change in terms of specific business priorities; what changes we see tend to occur over several years, and are mostly in the patterns of prioritization, especially increased or decreased emphasis on types of business improvement (1037RA, Saugatuck 2012 SaaS Survey Shows Core Global Business Focus: Get Better, Change the Mission, Then Grow, 15March2012). So what we see today can be expected to indicate what we will see in 2013, if not beyond.

Market Impact  Through at least 2012, and likely into and through 2013, we expect no sudden or significant change in the business goals and priorities of enterprises based on their relative size. Smaller firms will continue to emphasize revenue/top-line growth; mid-sized firms will continue to emphasize improved management; larger enterprises will continue to emphasize widespread/enterprise-scale business awareness and management. Cloud-based IT (e.g., SaaS, IaaS) will increasingly enable much of what enterprise leaders need to accomplish, mostly through add-on/extended capabilities building on existing, legacy processes and systems through the next few years.

Where we see the greatest potential for impact or change is in how IT providers go to market and articulate or demonstrate their relative value based on enterprise size. As we noted in late 2010, many if not most SaaS providers have gone to market with a one-size-fits-all approach that ignores or marginalizes SMB business goals and priorities (787MKT Where’s the Value Proposition for SMB SaaS? Follow the Business Goals, 28Sept2010).

While we have seen the rise of a broad range of SMB-focused SaaS and Cloud solutions since then, providers’ go-to-market messaging remains very similar to what it was in 2010 – typically emphasizing the same types of business enablement and improvement that they have developed for larger enterprises, just in a package/offering scaled to and priced for smaller firms. Our data and analysis indicates very clearly that an approach based much more closely on buyers’ relative business priorities is much more likely to succeed. But to date, significant improvement in SaaS/Cloud provider go-to-market approaches is still needed, and will still be valued.

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