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Arlin Sorensen is no stranger to small and midsize businesses (SMBs). He started his own IT company, Heartland Technology Solutions, on his family's Harlan, Iowa, farm in 1985; thanks to both organic growth and acquisition, the company now employs 80 people in five states. And while Heartland now pursues larger clients as well, the company -- a Small Business Specialist and Gold Certified Partner -- remains deeply rooted in the SMB space.

In this conversation with RCP Executive Editor Anne Stuart, Sorensen discusses the transformation of today's SMBs -- and what those changes mean for partners looking to win their business.

Q: What's happening with SMBs right now?
A: We're seeing smaller customers become far more comfortable with technology and beginning to ask for things that we've traditionally implemented in the enterprise or upper midmarket space. They're not as afraid of some of these things as they were 12 to 18 months ago.

Q. For example?
A. IP telephony is something they're not afraid to talk about. Virtualization is on their radar. The latest thing we're starting to get some traction around is Office Communicator and business-class IM.

Q. What's the main factor driving that interest?
A. The age of the folks involved. Companies are starting to be managed at some level by kids that grew up with technology. There are still a lot of [executives] that aren't that comfortable with technology yet. But we're getting a more sophisticated user base as more younger people start to lead companies. It's going to be an interesting transition over the next 10 years or so as the leadership moves down a generation.

Q. How do the younger leaders differ from their predecessors?
A. We're already seeing some different approaches to things. Facebook and some [other social-networking sites] that we were blocking [for customers] 12 to 18 months ago -- now they're demanding it in the workplace. Before, owners and managers were scared to death of those things because of how they affected productivity. Even though there's still a concern about that, with these younger workers, it's how they work. It's all collaborative, it's all networking, it's all online.

Q. How else are SMBs changing?
A. Managed services are starting to catch on. We're able to offer it to our clients now, which is great in our rural markets where you can cut the drive time out of the equation. It also increases their satisfaction. People used to say, "I kind of like to see you come to my office every month." But now they're saying, "I like the fact that [when something goes wrong,] you're on my machine in five minutes, getting it fixed."

And small businesses are starting to understand that their data matters to them. For years, we battled to even get them to do a backup once in awhile. Now we're starting to have customers who not only want an onsite backup, but an offsite backup too. That's a big deal. That's a big shift in the way customers are looking at the marketplace and it gives us another opportunity to build a service for them.

Q. What's Microsoft's role in this new SMB marketplace?
A. They continue to drive a lot of their enterprise class functionality down into the masses -- things like SharePoint and the data-management tools that they've developed, some of the new features in Vista ... We've go the new Windows Server 2008 deployed at five of our client sites, and every version that they've released has better features.

The main thing that's changed is that they're now building products to meet small-business needs. Back in the late 1990s, they didn't care much about small businesses and didn't listen much to them outside of the Small Business Server product. Now we're constantly being pinged by Microsoft's engineering teams to get our input on product design. They get the idea that SMBs matter to their future and they're listening and building products for them.

Q. What should partners keep in mind when approaching these new SMBs?
A. Change is a big stumbling block. I tell my team that we sell technology, but our job is really change management. If we can help people adapt to change, we'll be far more successful in the industry.

About the Author

Anne Stuart, the former executive editor of Redmond Channel Partner, is a business technology freelance writer based in Boston, Mass.