Microsoft's Small Business Specialist Designation: What's in It for You?

Plenty -- as long as you combine it with a solid strategy to overcome SMBs' inherent fear of investing in IT.

At a recent networking mixer for the Chamber of Commerce in San Antonio, Texas, John Hill, head of a local consulting and systems integration company, got to chatting with Joe Pena, a branch vice president for an area bank.

Pena explained that his clients were mostly entrepreneurs, part of the burgeoning small business community springing up on San Antonio's South Side, where Toyota Motor Co. is building an $850 million manufacturing plant. In response, Hill mentioned that he'd just qualified for the new Microsoft Small Business Specialist (SBS) designation, which vets him as an IT expert schooled in the needs of start-ups and smaller enterprises.

Pena was thrilled. "You're just what a lot of my banking clients need," he said. The pair scheduled a follow-up meeting for a few days later.

The upshot: "He's going to take me around and introduce me to his clients," says Hill, whose company, Concepts for Creation Technology Innovations LLC (CFCTI), is a Microsoft Certified Partner. "He's got about 250 small-company clients that might benefit from using tech services but don't know enough about what could help. Specifically, it was the SBS designation with the Microsoft name that got Pena's attention." As a result, business looks pretty good for Hill and CFCTI.

Maybe you're taking similar meetings. Nationwide, as sales and services to large enterprises are noticeably slowing, the small and midsize business (SMB) market is throwing off serious heat. The country's six million small businesses now generate more than 75 percent of all new jobs, according to the U.S. Small Business Administration. Competitive corporations such as American Express Co. and MasterCard International Inc., Staples Inc. and Office Depot Inc., as well as FedEx Kinkos and United Parcel Service Inc. (UPS) are busy rewriting their rulebooks in order to win business from SMBs.

And IT is benefiting as well. According to Cambridge, Mass.-based Forrester Research Inc., SMB technology spending is expected to jump to $223 billion by 2008, up from $147 billion a couple of years ago.

Microsoft has taken notice. Last fall, in announcing the launch of Office Small Business 2006, Bill Gates, the company's chairman and chief software architect, summed up the company's approach this way: "We see small business as something that's a big opportunity for us, that's something you'll see us carry through in all the things that we do."

No kidding. Annual revenue to Microsoft from SMB customers in the United States alone now tops a whopping $1 billion, according to Cindy Bates, Microsoft general manager for U.S. Small Business.

"Last year, we saw double-digit growth in revenue from our core small business products in the United States, and we've increased our staff threefold in just two years," she says. Those numbers are even more impressive when you consider that Microsoft defines the SMB market more narrowly than most other businesses do. "A lot of companies, an IBM or SAP, for instance, might consider a small business as one with 1,000 employees," says Bates. But for Microsoft, a small business has no more than 50 employees. "It's an area that we feel Microsoft is unique in serving," Bates says.

The considerable upside of targeting small businesses is that the vast majority of those six million companies can't afford their own full-time, on-staff IT managers. Instead, they rely on consultants. Forrester reports that 43 percent of small U.S. businesses used IT consulting services in 2005. And, as you likely realize, every $1 of revenue in software represents about $6 in related support services.

Meanwhile, Microsoft is putting its money where its mouth is. With a ringing declaration that "small business is big business," the company has lately staked out deeper and wider territory in the SMB market. As part of that terrain, it has specifically developed the SBS designation in order to motivate partners to join the company in mining this new vein of targeted business. As enticement, Microsoft has filled the SBS toolbox with product rebates, services, promotions and special training.

Defining an SBS -- and Why it's Worth Becoming One
Of course, there's a downside. The SMB market remains a tough one to touch and pitch. Typically, you've got just one decision-maker, and that's a good thing. But just as typically, that key person is the business owner -- and entrepreneurs are known to be notoriously stubborn, time-starved personalities inclined to distrust or dismiss outside advice.

To its credit, Microsoft is working to meet the SMB challenge. The company has conducted extensive R&D into the needs of small and midsize companies, to the tune of $2 billion over the past few years. Using old-style surveys and focus groups, as well as newfangled consumer anthropologists and field interactions, Microsoft worked to get a handle on the market and learn how to soothe SMB "pain points" (see "Slicing and Dicing the Small Business Market").

"I was involved with the teams that developed the Small Business Specialist designation for about 18 months, starting in 2004," says Harry Brelsford, a Microsoft Certified Trainer (MCT) and CEO of SMB Nation Inc., a training and consulting service for SMBs based in Bainbridge Island, Wash. "The partners had been requesting something like this for a while -- a way to have a meaningful relationship with Microsoft without necessarily becoming certified. Part of the idea was to elevate sole practitioners and Registered Partners to the status of a real affinity group."

Thousands of partners expressed interest in enhanced training for small business consulting in the months leading up to the official SBS announcement, says Microsoft's Bates.

Finally, in July 2005, the curtain went up during the annual Microsoft Worldwide Partner Conference in Minneapolis, an event that attracted an unprecedented 6,500 attendees.

"The Small Business Specialist Community was created to provide easy access to software, training and resources to help partners meet the needs of small business customers," Allison Watson, vice president of Microsoft's Worldwide Partner Group & Worldwide Small Business Group, said at the conference.

Not coincidentally, the SBS debut came hard on the heels of the June release of Service Pack 1 for Microsoft's enormously successful Small Business Server 2003, and mere weeks before the official launch of Microsoft Small Business Accounting 2006, the new software destined to go mano a mano with Intuit Inc.'s best-selling Quickbooks. Microsoft Office Small Business 2006 has also just come to market.

Slicing and Dicing the Small Business Market

If you plan on moving into the small business space, beware of the biggest myth about this market: that all small businesses are pretty much the same.

"Doctor's offices and dry cleaners are both part of the small business market, but they don't buy technology the same way," notes Joe Wilcox, a senior analyst at New York-based JupiterResearch. In fact, you're likely to find a wide variety of needs and approaches even among SMBs in the same industry.

However, a study conducted for Microsoft by AMI-Partners Inc., a New York-based SMB research and consulting firm, identified four main types of technology users among U.S. small businesses. They are:

Innovators: This largest segment includes companies that usually have server systems. They're hardly early adopters, but they realize that technology can make them more competitive. "On average, the innovators are growing 14 percent annually, compared to about 6 percent for all small businesses,"says Arjun Mehra, an AMI-Partners research analyst. This group is your prime small business prospect.

Pragmatists: A cautious lot, the companies in this segment can be summed up in two words: "Show me." They tend toward peer-to-peer systems and require clear evidence of ROI before doing any IT spending. This is your next-best segment to pitch.

Minimalists: These are the laggards. They'll get by on whatever's around and, typically, are not likely prospects.

Integrators: These are your cutting-edge, can't-get-enough technology mavens. They're fast adopters, but account for only 15 percent or so of the total market, according to Mehra. So not only are they few and far between, they're likely already ahead of the curve.

-- Joanna L. Krotz

Awkwardly dubbed "a competency-like designation," SBS is a hybrid in the partner pantheon, a cross between a competency rating and a certification. It requires two tests. The technical exam is based on a stripped-down version of the MCSE certification. You must also pass something called the "Small Business Sales and Marketing Assessment." A multiple-choice exam that can be taken online, the assessment takes you through a series of small business operations and growth scenarios, asking how you'd approach solutions. It specifically tests which Microsoft products you'd harness to satisfy the stated goals of a business owner.

Essentially, as you work through the questions, you reach the conclusion that one-size design is never the right answer. You can't implement scaled-down enterprise solutions to manage the IT needs of small companies. "The SBS certification focuses on consulting with the small business owner and recommending the correct type of solution based on their existing technology," says Andrew Abrams, president and CEO of ABA Consulting LLC in Glendale, Wisc., an IT consulting service.

Abrams, who mostly works with small retailers, earned his SBS designation in September 2005, after undergoing training at the annual SMB Nation conference in Redmond. ÒI think I was the third or fourth Small Business Specialist," he says. (The SMB Nation training is now collected in a "fast-cram" $40 book, Microsoft Small Business Specialist Primer, co-authored by Brelsford.) Back home, Abrams displayed the new Microsoft SBS logo on his Web site and marketing materials, and he noticed an immediate impact.

"It's given me credibility," he says. "When calling on potential customers, it's helped me to differentiate my consulting practice from other midlevel-to-enterprise consultants, which has already allowed me to double my sales. The small business client wants to work with one person directly on their technology needs." Abrams is further forecasting a hefty 50 percent bump in his business over the next year, fueled largely by the SBS designation -- based on the response I've received from small business owners who now use, or are moving to use, Small Business Server."

Overall, Microsoft is touting SBS as a lucrative channel for Registered Partners, which make up the lion's share of the 300,000 U.S. partners, and as standout branding for the Certified and Gold Certified Partners that already serve small businesses. Microsoft expects to enroll 5,000 U.S. partners in the SBS program within the first few months of this year and 20,000 worldwide within the next 18 months, Bates says.

Congratulations! You're an SBS! Now What?
With those aggressive targets, it's no wonder that as soon as you qualify, Microsoft gets busy helping you make hay out of SBS. You can use the new SBS logo on all advertising and branding materials. You can subscribe to a customized SBS Action Pack to get targeted marketing materials and offers.

"It's worth taking time to read through the guides in the Action Pack," says IT consultant Beatrice Mulzer, an MCSE and MCT with a law firm clientele in Melbourne, Fla. "There's a lot of useful information to apply so you don't have to reinvent the wheel," says Mulzer, co-author of the SMB Nation training book. "There are prepared press releases, contracts for partners, marketing materials, PowerPoint presentations. All you have to do is slap on a logo and mail it out."

To help drive business, your company is listed as an SBS expert in the Microsoft Resource Directory and the Small Business Partner Finder, which is promoted on the homepage of the Microsoft Small Business Center.

"We average one million unique users a month to the Small Business Center," says Bates. "It's a significant number to take advantage of." Additionally, there are a Partner Resource telephone line for pre-sales technical assistance (800-426-9400; staffed 6:00 a.m. to 6:00 p.m. Pacific), a business-critical phone support line (staffed 24x7) and exclusive access to training and webcasts about using Microsoft products for small business.

There's also the newly formed Partner Community Manager network. Piloted by Eric Ligman, Community Engagement Manager for Small Business, and based in Redmond, this network has 14 regional managers around the country who act as hands-on, on-call resources for SBS Partners. In San Antonio, for instance, CFCTI's Hill regularly confers with Charles Ramirez, an Austin-based Microsoft Community Manager who oversees a four-state region.

"I've asked him to come down to go with me into businesses I'm pitching, which has been a big help," Hill says. He's also called Ramirez for information about client licenses, promotions and the financial resources behind certain Microsoft deals, such as the recently announced Single SKU Solution for Small Businesses, which runs through March 2006 and offers partners rebates of up to $10,000, depending on the number of licenses sold.

Before putting the regional network into place, Ligman worked in the Chicago area for two years, shaping the idea and fine-tuning how Microsoft could best support SBS partners.

"Navigating Microsoft is hard," says Ligman. "There are so many resources that you often don't know where or how to engage. The Community Manager network helps the SBS Partner stand out and put skills on the table." You can identify your region's manager on the SBS Partner Web site.

While evaluating the benefits of SBS, don't overlook access to the new fleet of Microsoft Across America trucks and vans. Having figured out that small business owners won't often travel long distances to attend conferences and seminars, Microsoft decided instead to bring the demo to them. These slick mobile labs are each outfitted with five to 10 workstations that showcase customized solutions and software designed for SMBs. Partners can team with Microsoft Across America for appearances at trade shows or one of the dozens of Microsoft Connections small business seminars nationwide. Your regional Partner Community Manager can help you arrange using the vans for the occasional individual appearance.

Adding to the SBS arsenal is the fact that Microsoft is putting muscle and thought behind its widely publicized Accounting 2006 launch, making sure the new software is Office-intuitive and SMB-friendly.

"Software needs to come in and get to work right away," Gates said in September, talking about meeting the needs of SMBs at the launch of Microsoft Office Small Business 2006. "There isn't a specialist who wants to spend his time reading a 500-page manual about that particular product and thinking through how they're going to connect all the different pieces together." Most small businesses rely on Microsoft Excel and Word to track finances and cash flow, says Bates, referring to Microsoft research. Less than half of all small companies use any accounting software at all. By integrating Accounting into Office, the company is banking on the small business comfort factor with Office to sell the accounting application.

Clearly, Microsoft is putting down roots in the small business arena and anticipating growth. While the initiative is still in its early days, many partners say that, so far, they're finding both merit and support in the SBS program.

"I see a great need out there for people to delve into the business aspect of solutions and not just the technical angle," says Chris Fraser, business consulting manager at Cherry, Bekaert & Holland, a Richmond, Va.-based small business tax and accounting consulting firm with some 20 offices throughout the Southeast. Both a Certified Public Accountant and Certified Information Technology Professional, Fraser still decided to earn an SBS shortly after it was announced. He believes his new label will boost his company's business. "Clients depend on me to educate them about what they need," says Fraser. "I'm more of a partner than a technician."

And that's exactly why Microsoft created the new SBS designation.

About the Author

Joanna L. Krotz writes about marketing, philanthropy, technology and management issues. She has just published "The Guide to Intelligent Giving," is co-author of the "Microsoft Small Business Kit" and founder of Muse2Muse Productions, a New York custom content provider.