There is a perception that selecting a large brand name software supplier is the safe choice; that there are fewer risks involved. I’m here to tell you that size does matter, but not in the way you might expect.
Let’s look at a large software supplier. In most cases, large suppliers mean large costs. Not because they necessarily can but because they have higher overheads – more staff, larger premises, bigger bills. As they grow – which they inevitably do – these overheads grow too. Somebody has to pay … The chances are it will be the customer.
And the cost isn’t only financial. Customer experience is also likely to suffer. Your agreement will ensure support services, but what will they look like? An auto-response mail or telephone call, speaking to a call centre who needs to refer to their superior, who needs to check with the manager, and good luck trying to call back and speak to the same call centre agent.
Having an account manager doesn’t really mean much, as bigger businesses are shifting constantly. Staff are moved around, not just between clients but between departments, and staff turnover is often high. There is no personal relationship between yourself and the brand.
And none of this takes into account the rate of large businesses acquiring each other, or merging, leading to entire brand ethos shifts. With no relationship, there is no personal responsibility and no real accountability.
I have been trying to figure out where the misconception lies with small businesses. Small doesn’t mean unestablished. Small isn’t a result of an inability to grow. Small doesn’t relate to the number or the quality of clients. ‘Small’ is usually a conscious decision by ownership to keep their business niche and consequently focused, resulting in high levels of product- and customer-centricity.
Smaller may mean fewer staff, but they are usually the best in their niche. They are experts and, more importantly, they understand their clients’ businesses. Instead of investing in diversifying their offering, they invest in constantly learning and improving on their current offering. Small can often mean a higher-quality product.
In a small, niche-focused business, whether you are dealing with the sales team, the developers, the account manager or even the CEO – they are generally only a call away, not hidden behind the mask of a faceless automated call centre routing machine! There is tight accountability with every person being personally invested in making the best product and providing the best service, because they are part of a team.
When managing risk, size definitely does matter, but the misconception of big is best I fundamentally believe is just that – a misconception!
KEY CONSIDERATIONS IN THE BIG/SMALL DECISION
- Thought leadership: Do they know their stuff? Will their product retain its relevance in a changing landscape?
- Client references: Big or small, find out who their clients are and how they deliver on their product or service.
- Longevity: While a new company is not inherently bad, the knowledge that your future partner has been around for more than a year or two does provide some comfort.
- Strategic partners: Who do they work with to ensure that you get the best version of everything you might need? Who invests in them and partners with them?
Author: Kevin Phillips CA(SA) is Managing Director of idu Software