With recent announcements from Microsoft, Oracle, Amazon, Coinbase, Twitter, and Meta (among others) indicating that there would be cuts to staffing in the coming weeks and months, it’s clear that the recession is in full force. As outlined in my previous blog, we discouraged organizations from making drastic changes to the muscle (the workforce) and bone (the facilities) of their organizations. Yet, many of the big-tech powerhouses (like the ones mentioned above) have been announcing job cuts to curb recessionary pressures. Cutting costs and managing value through downturns can be a far tougher challenge for SME’s than their large Enterprise brethren, with far fewer options to remedy.
Small-Medium Business IT Spend (in Billions).
With seemingly ever-increasing inflation, sustained supply chain issues, and now unemployment on the rise, cost savings is becoming imperative for the C-Suite going into 2023. It’s safe to say that Small and Mid-size Enterprises (SMEs) are feeling as much, if not more of a pinch in the market. With SMEs feeling the pains of the economy, some have turned to technology enablement to realize cost savings as well as better managing cash flows.
The fact is, larger enterprises are better able to absorb rising input costs. But with limited resources, SMEs are faced with the challenge of balancing limited financial means while also staying competitive with bigger players in the market. As recently as April 2022, 1 in 5 organizations said they were planning on halting any further investment into the business due to high inflation, while another 13% were scrapping investment plans altogether. Unfortunately for Small and Midsize enterprises, big-tech corporations can stomach the recession and high inflation rates, whereas SMEs like yourselves need to focus on retaining 100 percent of your business value (or as close to that number as you can) in addition to finding “hidden” costs that can be cut.
Typical cost-cutting initiatives like Cutting employee benefits, slashing your workforce, closing your physical locations (offices), and shutting down plans for further business investment for the future will all decrease business valuation, and therefore hurt all parties involved. It’s a clear message to competitors and consumers alike that your organization is taking steps backward… a message we all want to avoid.
The unfortunate reality of the IT Cost market is that SMEs bear a disproportionate amount of burden. While it certainly doesn’t seem fair, suppliers like Oracle, Microsoft, and Salesforce typically incentivize enterprise level accounts with larger discounts (compared to SMEs) for a few reasons:
- Annual Spend
- While it might seem obvious that enterprise level clients are going to spend more on technology each year, its important to understand that we live in a volume-based climate, the more technology a client demands, the larger the discounts suppliers are willing to give in order to get the business.
- Financial Stability
- When in a tough financial climate (like we are currently), SMEs are more likely to “feel the pinch” compared to enterprise level clients. Sky high inflation rates, rising input costs, and an increasing interest rate, all contribute to decisions about organizational investment. Yet, it’s clear that enterprise level clients will feel less of an impact (compared to SMEs), and thus will be much more likely to sign that 3-year extension when a recession is in full force.
- Lean Operating Procedures
- SMEs typically run their organizations far leaner than enterprise clients. Thus, SMEs tend to pay significantly more attention to entitlements, contract terminology, and other deal factors. Technology suppliers in turn are focused in getting maximum value from Mid-Market organizations during the lifecycle of their agreement, whereas compared to enterprise clients, suppliers typically make much more of their profit on the back end (renewals).
To help alleviate Mid-Market organizations struggles with current market conditions, NET(net) is offering a special promotion to small and midsize enterprises (Under $1 Billion per year in revenue) from now until the end of the year (December 31, 2022). This special promotion (derived from our Savings Cloud model), features an over 99.9% reduction in up-front fee and “No Cure, No Pay” Model (virtually zero up-front risk). The latent value in IT Cost savings among SME organizations is present, and NET(net)’s experience with virtually every technology supplier offers organizations the chance to harness IT Cost Savings more than we ever have before with the additional focus on the SME market.
If you have any questions about our program, need assistance with a supplier renewal, or are considering a new technology purchase, please contact me directly.
Founded in 2002, NET(net) is the world’s leading IT Investment Optimization firm, helping clients find, get, and keep more economic and strategic value in their technology supply chains. With over 2,500 clients around the world in nearly all industries and geographies, and with the experience of over 25,000 field engagements with over 250 technology suppliers in XaaS, Cloud, Hardware, Software, Services, Healthcare, Outsourcing, Infrastructure, Telecommunications, and other areas of IT spend, NET(net) has the expertise you need, the experience you want, and delivers the performance you demand, resulting in incremental client captured value in excess of $250 billion since 2002. Contact us today at email@example.com, visit us online at www.netnetweb.com, or call us at +1-616-546-3100 to see if we can help you capture more value in your IT investments, agreements, and relationships.
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