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New IT Services Let Middle Market Firms Compete With Large Rivals

Ethernet cable connected to laptop computer.
Paul Eekhoff | Photographer's Choice RF | Getty Images
Ethernet cable connected to laptop computer.

Emerging technologies and marketing channels have created new possibilities for all types of businesses.

But for middle market companies, these tools are proving indispensable for helping them compete in ways that just a few years ago seemed impossible.

By providing companies with easier access to previously unaffordable resources, cloud computing and the similarly structured software as a service, or SaaS, are helping middle market organizations narrow the gap with their larger competitors. And through social media, middle market firms can build their brands without a deep marketing budget.

Software at Your Service

By moving day-to-day IT chores such as server and storage management to the cloud, IT managers at middle market firms not only eliminate the expense of maintaining those systems, they can focus on leveraging technology to meet the company's strategic goals.

Salesforce.com, the cloud-based salesforce automation tool, is a prime example. Not only can companies tailor the program to fit their needs, but it provides their sales staffs with tools that were previously only available to larger companies.

“What cloud computing has done is enabled companies to get capabilities they probably couldn’t have gotten previously,” says Robert Desisto, an analyst at Gartner (IT). “Not only because of the expense to install it, but the expense of configuring it and making it work like you want it to work to gain some level of differentiation in your processes.”

Desisto adds that on-demand software can also help middle market companies expand their business opportunities.

“Without automation, a salesperson may only be able to handle ten opportunities at a time,” Desisto explains. “Now they can handle many more opportunities, which means they can compete in more deals.”

In many cases, SaaS means providing remote workers with the tools they previously could only access at the office.

The Middle Market - A CNBC Special Report
The Middle Market - A CNBC Special Report

“Let me make sure my sales folk have access to account information and inventory information so they can close the deal at a customer’s site,” says Raymond Boggs, an analyst at IDC. “Now I’m pushing resources into the hands of folks that don’t have to be in the office to gain access to those resources.”

SaaS also enables middle market companies to challenge larger competitors in new areas. Desisto says tools like RightNow can help middle market companies compete on customer service. And Boggs notes that cloud computing also enables firms to scale IT capabilities up and down as needed, particularly in data storage.

“Right now I’m gearing up for a strong Q4 holiday season,” Boggs says. “I’m already adding more people in the call center, but I know I’m going to need more storage capacity. Let me make use of VMware’s Mozy and be able to take advantage of that.”

Although cloud computing and SaaS eliminate the initial capital expense associated with adding new technology, analysts say that over time the ongoing operating expense puts the costs on par with on-premise solutions. But the flexibility the technology offers makes it attractive, particularly in a challenging economic environment.

“It’s more of a shifting than a reduction,” Desisto says. “With the tight economy, SaaS enables a flow of spending to continue because you don’t have that initial high capital hurdle.”

Social Studies

Just as cloud computing has put powerful technology in the hands of middle market companies, social media has opened the door for marketing departments to compete with larger brands.

Forget expensive focus groups to determine what customers think of you and your competitors. Companies can communicate directly with customers on Facebook and Twitter.

“The crux of this is, How do I want people talking about my brand and recommending my brand so that they will lead to purchases?” says Paul Rand, chief executive officer at Zócalo Group, a Chicago-based social media and word-of-mouth marketing agency. “Whether I’ve got $100 million or $50,000 to spend, my ability to impact that is no longer dictated by the size of my advertising budget.”

One of Zócalo’s clients is , maker of GUM Brand dental products. Although the company competes with much larger brands from Procter & Gamble and Colgate-Palmolive, it can’t match their marketing budgets. Instead, Sunstar took to Facebook and Twitter and developed relationships with bloggers to drive the discussion of oral health.

“Even though there are brands out there spending hundreds of millions of dollars on all sorts of advertising in this area, this company is now actively driving all the conversations around why it’s so critical to do between-teeth cleaning and all the ways to do it, and how using nutriceuticals and probiotics help maintain good oral health,” Rand says.

According to Rand, sales of Sunstar’s PerioBalance probiotic lozenges more than doubled due to its social media efforts, making it the company’s top-selling product.

“Midmarket organizations that figure out how to capitalize and use social media and word of mouth have an opportunity to gain a significant competitive advantage,” Rand says. “Those that aren’t getting it, large or small, will find themselves at a disadvantage.”

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