SMBs Prove Size Doesn’t Matter – A&S International



Small and medium-sized businesses (5MB) are anything but small and medium-sized in terms of their impact on a country’s economy. According to the US Small Business Administration (SBA), there are roughly 28 million small businesses, businesses with fewer than 500 employees, which make up 49.2 percent of private sector employment in the U.S. A statistical release by the UK Department for Business, Innovation & Skills (B IS) from October 2013 revealed that 99.9 percent of all private sector businesses in the U.K. fa ll under the category of a SMB defined by the European Commission (EC) as a business with 249 employees or less. The BIS release further noted that UK SMBs employ 14.1 million people and have a combined turnover of around US$2.6 trillion, which accounts for approximately 48.1 percent of private sector turnover. These numbers clearly show that although SMBs may be small in physical size, their economic impact is not to be underestimate d. For this reason, the security industry has taken more notice and begun focusing more of its energies on this important market sector.

Small or Medium?

What defines a SMB differs not only between country, but organization as well. The country with the broadest definition of what constitutes a SMB is the U.S. While the SBA defines small businesses as any enterprise with less than 500 employees, Gartner, an information technology research and advisory company, defines SMBs as businesses that have less than 999 employees and annual revenue of less than S 1 billion. Gartner further breaks down SMBs by categorizing small businesses as those with less than 100 employees and annual re venue of $50 million, and medium-sized businesses as those with 100 to 999 employees and annual revenue of more than $50 million but less than $1 billion.

On the other hand, the EC defines SMBs as enterprises with less than 250 employees and a turnover of less than $65.4 million. This definition is further broken down into three subcategories: micro (zero to nine employees) , small (10 to 49 employees), and medium (50 to 249 employees). Differently, in India , SMBs are divided into two categories – enterprises engaged in the manufacture, production, processing , or preservation of goods; and enterprises engaged in providing or rendering of services-based on the amount invested in plant, machinery, and/or equipment, according to the Micro, Small and Medium Enterprises Development Act 2006. Furthermore, according to the Indian Ministry of Micro, Small & Medium Enterprises, mic ro, small, and medium enterprises contribute nearly eight percent of the country’s GOP, 45 percent of the manufacturing output, and 40 percent of exports.

While many security companies use the above types of standards to define SMBs, some use their own definitions. “Traditionally, the market segments were defined by the employee numbers. But with more and more automation and technology evolving , a small company could generate more revenue than a medium size company. For the surveillance market, we would like to define SMB by the scale of the infrastructure or by the amount of data increasing or used per year- small businesses 50TB or fewer and mediums ized businesses 50TB to 1,OOOTB;’ said Daniel Lin, Sales Director at Qsan Technology.


SMB security spending in the U.S. alone is expected to surpass $5.6 billion in 2015, twice the rate of SMB IT spending over the same period, according to the International Data Corporation (IDC). When it comes to what SMBs want in terms of security, industry players note SMBs want the same level of security that both large commercial and government projects require. “The SMB is likely to be more agile and reach a buying decision quickly, yet they are demanding the same features and benefits of large corporations: performance, return on in vestment (ROI), lo wer cost of ownership and maintenance, and often a level of integration;’ said Jamie Barnfield, Senior Sales Manager at lOIS. Not only do SMBs want the same features and benefits that big enterprises want, they also want simplicity, according to Barnfield.

“They want something that works and does exactly what it says on the tin. They especially don’t want complexity:’ Barnfield attributes the desire for simplicity to the lack of resources SMBs have to deal with complicated systems. These needs also have an effect on SMB buying patterns. John Davies, MD of TDSi points out that the complexity of large commercial and government projects causes sales cycles to be 12 to 24 months or longer, which means that technology requests can be out of date by the time tenders get underway. SMBs, however, “have a much faster process, requesting the latest applicable technology and are looking for immediate results:’ SMBs are also looking for more bang for their buck. As a result, improving customer ROI is becoming ever more important. One factor that has increased awareness for better ROI was the global economic slowdown, which Barnfield named as a major reason for changes in SMB buying behaviors and expectations. “The tough global recession leaves a legacy of price-sensitivity and so demonstrating a clear ROI for us [IDIS] is priority:’ Total cost of ownership is another concern for SMBs. “SMBs are looking for solutions with the best price/performance ratio and the perfect balance between cost, speed, and reliability while remembering that these systems need to cope with data vo lume growth and hence offer an element of scalability;’ according to Lin.

In terms of brand purchasing, limited budgets and lack of in-house IT have typically caused SMBs to invest in lower cost and lesser known brands. However, SMBs are getting smarter, realizing that low prices can often mean low quality, which ends up costing more in the long run. On the smaller end of the SMB spectrum, deployment of major brands is still not high; this according to Davies is due to tighter budgets and less stringent security concerns. However, a growing number of medium sized businesses- such as health care, financial services and insurance, clothing retailers, manufacturing and production, professional services, and construction and real estate- are looking to major brand names depending on budget, losses incurred, and specific needs, according to David Ly, Chairman and CEO of Iveda. “Based on our own experiences, a lot of SMBs have relied on their traditional security integrators or consults, peddling what they are most comfortable with- typically these are the major brands. Aside from cost, consideration of a major brand is influenced by your own experience and comfort working with a particular brand or recommendations from your security integrator or consultants;’ said Ly. Furthermore, “For the most part, they don’t have time to experiment with unknown names and products. The risk of things not panning out to their expectations is what keeps most medium-sized businesses from implementing new [brands], even if what’s new has obvious benefits and value:’ Other reasons SMBs are choosing major brands include the demand for simplicity of operation, fast implementation, and longer system life cycle, which often equal major brands they can trust, according to Barnfield.


First generation IP-enabled and HD surveillance left a sour taste in the mouth of many SMBs, as explained by Barnfield. “Projects ran over time and budget, performance was limited by bandwidth restrictions, full HD across simultaneous operations was rarely the reality, while the installation process and day-to-day operation were complex, requiring a certain leve l of network knowledge:’ However, SMBs have learned from these early experiences, now demanding full-HD across simultaneous live viewing, recording, and playback, as well as hassle -free implementation and simple day-to-day operations, according to Barnfield. Despite increased demand for more “advanced” functions, not every SMB requires such intense functionality. So who does? Small SMBs contracted to manage government or financialoperations may need to have highly efficient and scrutinized audit trails in its security measures, which may involve monitoring of staff movement and activities, informed Davies. “In this case, the SMB may want to be seen or indeed might be contractually mandated to be using the most modern and stringent security measures:’ Furthermore, insurers may even require that SMBs prove that measures are in place to mitigate risk, which might result in reduced insurance premiums. It is in cases like this, that more advanced functions, such as full HD and live viewing, may not prove to just be useful, but possibly required. Integration and “advanced ” features can also be of particular benefit to SMBs in the retail market.

“We’re seeing these demands across a range of SMBs such as retail, where the benefits of HD are obvious to detect and prevent shrinkage and improve health and safety, while a net wo rked system enables a re mote and/or centralized monitoring capability;’ according to Barnfield. He further added, “Although not as sophisticated as the large commercial projects, SMBs wan t to realize the benefits derived from integration with other security systems such as access control or with other systems such as ATMs and POS:’ Whil emigration from analog to IP -based systems in the SMB sector is expected to be steady and gradual, as previously reported by a&s International, now with more experience and savvy, the declining price of IP -based devices has opened a door for SMBs. “I n the past, it was mainly them in SMB or IT and technology businesses that really wanted IP-based security systems;’ said Davies. “How ever, things have very much changed in the last few years with all businesses aspiring to have well integrated IP-based systems that are easier to install and operate:’ Similarly, Ly pointed out, “All types and levels of SMBs have been considering IP-based security systems for faster deployment, ease of use, and flexibility: ‘Ly attributes rapid advances in virtualization, provisioning, and automation technology as drivers for SMB IP-based system growth. Additonally, an increasing number of apps being developed specifically for IP-based products and cloud service delivery are also making the cloud and IP-based products a more viable alternative.

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