MMR: Midsize enterprises represent a large percentage of businesses in the United Kingdom (U.K). Can you tell us what makes this segment unique from the perspective of its IT needs?

Brown: Midsize businesses may not even identify themselves as such – many will feel that they have the same wants and needs of their large market brethren. But in reality, their technology buying decisions become critical choices due to their smaller size and lack of resources. Nor is the midsize segment monolithic. Segmentation (size, industry vertical, region, etc.) is a critical part of discovering the nuances of the market.

For example, while a midsize lending institution in Belfast may have radically different needs from a midsize insurance firm in London, the fact that both are characterized as “midsize” and “financial services” companies will elicit commonalties. The most important rule for vendors is – don’t just scale down large market offerings to meet the needs of midsize businesses, rather, consider their specific needs. Similarly, selling “vanilla”, one-size-fits-all IT products to the entire midsize market seldom results in much traction. As such, segmentation is a big part of the recipe for success.

MMR: How has the midmarket in the UK been affected by the global downturn in the economy? Do you see this changing for the better in ’04?

Brown: As the old adage goes: ‘when the US sneezes, the UK catches a cold’. Bromide aside, from 2001 to 2003, the UK witnessed a strong decline in spending on IT across the board. Most noticeably, spending to discrete projects like systems integration and applications development were the first to feel the slash-and-burn effect, especially since many British CEOs witnessed so little ROI from big ticket e-commerce and Y2K projects in the late `90s. IT managers in the UK – especially at perennially resource-constrained midsize businesses – have had to do more with less, precisely at a time when few could least afford it. Thus spending has really been at or near historic lows over the past couple of years. Although a rebound is in the works, it will be tempered from the boom years of the late ‘90s and into 2000.

MMR: How does the purchasing style of CIOs at midsize organizations differ from their larger or smaller counterparts in the UK?

Brown: Many midsize businesses have grown up from their days as truly small businesses, and their technology buying behaviour reflects the morphology of their IT department and function in the process. Midsize businesses tend to have more fully-fledged, capable internal IT departments than small businesses, and CIOs tend to make the majority of buying decisions, as opposed to CEOs or owners in small businesses. The IT departments at the upper end of the midsize business scale will be much more specialized, with units dedicated to networks, applications, help desk functions, etc. Small businesses tend to seek a quantum leap in IT performance from their IT purchases, while midsize businesses are more selective.

For example, midsize businesses are less likely to outsource vis-à-vis large and small businesses and those that do are highly selective and limited in their use. Nevertheless, the midsize sector is still the more desirable target market versus small due to its comparatively larger spending on IT.

MMR: How should IT Vendors tailor not only their products and services, but also their pre-sale and post-sale messaging and support for this marketplace?

Brown: Pre-sale messaging should emphasize how a vendor’s products or services can help midsize businesses’ IT managers to refocus on mission-critical, core functions while helping them to optimize delivery of back-office, day-to-day functions. Vendors should strive to use apples-to-apples comparisons when using case studies and testimonials to demonstrate proof of success among their midsize prospects. These references will be more effective than those that generalize about a vendor’s activities in the large market. Post-sales, vendors must strive to maintain client satisfaction. As midsize businesses reference each other as the biggest influencers in technology decision-making, existing clients in effect become a vendor’s sales force – for better or worse.

MMR: What will IT decision-makers at midsize enterprises look for in 2004 - 2005 to support business improvement?

Brown: IT managers at midsize businesses will increasingly search for the right metrics to increase their IT budgets. As a part of that, they’ll want to know how they compare relative to their peer group. The benefits of Windows over Linux to reduce TCO continues to be a pervasive theme – but most midsize business Linux users are still just dabbling in it. Finally, security, wireless, business intelligence, the worth of outsourcing and optimizing investments in business applications are garnering a significant amount of midsize businesses attention.

Do you have a question for Gartner analyst Robert Brown? E-mail him at midmarket@gartner.com.

To address the needs of midmarket CIOs and IT Directors with your IT solutions, join us at Midsize Enterprise Summit Europe. For details, call 603-471-4231 or +44 (0) 207 736 5026.