“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.”
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.”