More than half of mid-sized businesses prefer to deal with vendors directly for services 20 May, 2008 By Chris Talbot

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According to the study, "Customer Insight Into How to Develop, Sell, and Deliver IT Services to the Midmarket," less than 30 per cent of mid-sized businesses surveyed said their preferred delivery method of IT services is having the services sold by the vendor and delivered by a local channel partner, a little over 10 per cent would prefer to have the services sold and delivered by a local channel partner, and a little over five per cent would prefer to have services sold by a local channel partner and delivered by the vendor.

"I was surprised because conventional widsom is that mid-market companies want to work with a local firm," said Rebecca Segal, vice president of global services markets and trends at IDC.

When making other IT purchases through channel partners, why would more than half of mid-sized businesses prefer to deal directly with vendors? Segal said there is some inconsistency in service delivery provided by the channel, so some businesses may feel the vendor might be more accountable, knowledgeable and be able to offer better expertise.

"The reality is that the mid-market is still going to be served by the channel. There aren't that many technology vendors that want to invest in a labor base to serve the mid-market," Segal said.

However, when it comes to services delivered in the online cloud, mid-market businesses are open to having something labeled with a vendor's name, she said.

Mid-market businesses did stress an interest in working with channel partners in general that have strong vendor relationships and appropriate certifications.

"I think the key point of the study is preference number one [is] have a direct relationship with the vendor, and they would consider an online model for that. If that can't happen, channel, but a very tight partner with the vendor," Segal said.

Unfortunately, service providers still don't really understand the mid-market, Segal said. Although services firms have talked about the big mid-market opportunity for years, they haven't done much about it, she said. They've tried to address it with a labor-based model and with standardized offerings, but IDC study found that mid-market businesses expect at least a certain level of customizability and flexibility in the services they purchase.

Some service providers have figured this out and offer services that are 75 to 90 per cent standard, with the rest offering a level of customizability and flexibility, Segal said. She used SAP as an example of a vendor already doing that.