Hooking small businesses up

My company has been doing b2b stuff in a variety of industries (health care, real estate, insurance) for the last several months. Not the old “lets build an emarketplace and hope for the best” kind of b2b stuff that was popular during the bubble, but the real, hard work of helping companies build electronic bridges with their close business partners.
As an engineer with a web services background, I’m surprised at how much of this work is UI related. Wasn’t XML and SOAP supposed to be a magic elixir that let companies integrate seamlessly with their partners?

Reality check: small businesses are a huge part of the American economy, and play a key role in much of the work that big businesses do (not only as suppliers, but more importantly as the primary sales channel for a host of goods and services). A ten-person office is not going to go in for a web services integration: they don’t really even have a back-end to integrate with, just a promotional web site that provides lead generation and a file server to save stuff on.
The big enterprise trying to integrate with small businesses realize this, and so the first thing they try to do is build a web site (or “portal”) that the small business can use to interact with the big enterprise. And that’s when the trouble starts.
Just because one party is a small business and the other is a large enterprise doesn’t mean that the mega-corp can dictate terms. If a site doesn’t provide an substantial, immediate benefit to the small business, then the default response to the site is to ignore it and continue doing business as before. This is due to several factors.
Time pressure: Small businesses don’t have staff to invest in learning something that will be useful next month. In general, they have all kinds of things that are due today. So an offering basically has to provide ROI with a non-existent learning curve in order to be effective. Once initial ROI has been provided, small businesses will be willing to spend additional effort to use the system more effectively. Google add-words are a good example of this, and proof that the small business is not afraid of new technology, just extremely choosy.
Attention Deficit: Many small businesses that interact with large enterprises serve as intermediaries between the large enterprise and the public. As such, they often represent the goods and services of several large enterprises (think of a corner-shop owner, or an insurance broker). Most web solutions presented by the large enterprises assume that the user only does business with that particular large enterprise. For example, they will provide bookkeeping or contact management functionality on the site. Contact management is useless if it only has 1/3 of your contacts. A small business that sells the services of 3 firms is not about to learn how to perform complicated tasks on three separate websites.
Motivation: The efficiency that is brought about by electronic integration is typically of greater benefit to large corporations than small ones. A half-hour of lost productivity a day will only harm a small business if it’s running at full capacity. On the other hand, the equivalent loss in productivity can cause a fortune 500 company to miss earnings.
Pre-Existing Relationships: Small businesses rely on the personal, one-to-one relationships they’ve built up over time. This includes relationships with members of the enterprise who can do favors for them, get them critical information when they need it, etc. Will pushing all communications through an impersonal website mean flushing that relationship capital down the toilet? If so, you can expect a backlash from your partners.
So what can big enterprises do to automate their communications with small business partners? There aren’t any simple answers, but the upshot is that you need to spend the same kind of effort that you typically spend understanding your customers. The web site that you are asking your partners to use is a product, whether you think of it that way or not, and it requires at least some market research to determine whether or not it will work before you build it.
Anyone else working on projects that involve integrating communications between large organizations and their smaller partners? Any insights, as always, are welcome in the space below.

3 thoughts on “Hooking small businesses up

  1. Manu Sharma January 21, 2005 / 2:23 pm

    Just writing in to say that this is perhaps the best piece on this blog so far. Excellent, excellent analysis. Would love to see how you try solve this problem.
    Geez, I’m inspired to come work for you!

  2. jon January 25, 2005 / 11:27 pm

    Thanks for your kind words! I’ve been trying to work on my writing more lately. With the work that Uzanto has been doing lately, I feel like I’ve gotten a lot of insight into the challenges that companies trying to deploy technology into the small business arena face.
    And that’s in America! In Delhi I was unable to find someone capable of doing the most basic networking jobs (setting up a firewall and punching some holes through it for source control, voice chat, etc). Big companies have full-time staff, small firms do without.
    A lot of it comes down to business, not technology or usability issues. If a technology solution really gives value to a small-time businessman, they’ll adopt it in a heart beat. Witness the success of google add-words in the US, or of echoupal in India. Too often, the reason technology isn’t adopted is that it really doesn’t solve any problems the small-timer has.

  3. Manu Sharma January 27, 2005 / 10:04 am

    > Too often, the reason technology isn’t adopted is that it really doesn’t solve any problems…
    This reminds me of something Steve Jobs once said:
    “I used to think when I was in my twenties that technology was the solution to most of the world’s problems, but unfortunately it just ain’t so. […] It is so much more hopeful to think that technology can solve the problems that are more human and more organizational and more political in nature, and it ain’t so.”
    We’re facing this problem in ICT4D area in India. India is probably the only country in the world that is running hundreds of government sponsored ICT4D projects. There’s a massive push in “e-government” right from the President’s level to the state level.
    But as all govt. projects go, there’s little accountability and no measurement of what works and what doesn’t. Barring echoupal, which as you know is a corporate inititaive, and probably some other success stories, most of these aren’t well thought and well planned. What’s common across all the projects however is a belief that technology will solve the problems of the villager. There’s no recognition of the wisdom that exists in small communities. Just a blind subservience to the technology demi-god.
    I first became aware of this through an interview of Kenneth Keniston [MIT prof] in Technology Review where he warns of impending dangers:
    “Billions of dollars are being spent on ICT4D — but if it crashes, people may feel that the money is better spent on something else. To prevent that we need to know what works and what doesn’t work, how costly it is, and who can pay for it.”

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