Is a new dawn approaching for the mid-market?

Mid-market tech companies, firms with an annual revenue ranging from $50 million to $1 billion, are often overlooked in comparison to smaller and larger companies. This is due to what other competing markets of differing sizes can make available to them. While firms that boast an annual revenue of less than $50 million can access Software-as-a-Service (SaaS) features, which are free, much larger companies with annual revenues passing the $1 billion mark can make use of shared services and IT departments by financing them.

>See also: The rise of subscription billing in software and digital services

“Midsize enterprises occupy a tough spot and face very unique challenges,” explained founder and CEO of customer relationship management (CRM) firm Insightly Anthony Smith.

“They operate under the same customer expectations and pressures as large enterprises, but they don’t have the budget, staff or technical know-how of their larger counterparts.”

“Furthermore, since they operate at scale, they are more distant from the customer than a small business. Mid-market companies need to develop a few key capabilities to compete in this changing business environment.”

"Despite comprising nearly 100,000 companies in the U.S. and driving more than $700 billion in IT spend, technology vendors often do not understand or address the unique dynamics within the midsize enterprise segment." -Anthony Smith, CEO, Insightly
“Despite comprising nearly 100,000 companies in the U.S. and driving more than $700 billion in IT spend, technology vendors often do not understand or address the unique dynamics within the midsize enterprise segment.” -Anthony Smith, CEO, Insightly

Enterprise tech to the rescue?

However, the somewhat disregarded mid-market, within the realm of tech, may have a saviour of its own in the form of enterprise tech firms; more specifically the type of company looking to acquire mid-market firms.

Recent examples of this taking place include cloud computing firm SalesForce’s acquisition of mid-market software company MuleSoft back in March, and collaborative software platform Slack’s acquisition of automation app Missions, a subsection of Robots & Pencils back in July.

While SalesForce planned to integrate MuleSoft’s services into a cloud-based platform that allows businesses to have all of their systems accessible in one place, branded as SalesForce Integration Cloud, Slack’s acquisition of Missions allowed the former to establish a creative digital platform that’s easier to use for those who are not as tech savvy, with the absence of coding.

>See also: With unified communications simplicity is the ultimate sophistication

Similar to the Slack’s acquisition of Missions, the CEO of Canadian information management company OpenText, Mark Barrenechea, announced last month that the company, while ‘maniacally’ aiming their services at companies within the ‘Global 10,000’, will consider extending their services to mid-market firms through the utilisation of the public internet as opposed to private cloud platforms.

The proposed product, dubbed OT2, allows users to create applications for dealing with workflow and company data, without needing any knowledge of coding.

Insightly CEO Anthony Smith says that this is a sign that “vendors realised how lucrative this market is”.

“After fits and starts, they are starting to deliver relevant products for this segment.”

Unique dynamics

Smith referred to two unique dynamics that mid-market tech firms have that need to be considered.

“Firstly, midsize enterprises are not driven only by sticker price. Rather, they want value for money and a demonstrable ROI. Companies that try to address (or overlook) midsize enterprises purely from a price consideration are missing the opportunity they present.”

“Secondly, midsize enterprises are not simply stripped-down versions of larger enterprises. They have their own unique needs, often require verticalised or highly customisable offerings, and often want the tool to operate as a hub for their entire business. Many enterprise vendors make the mistake of simply offering a “lite” version of their product and dropping the price accordingly. That won’t resonate with midsize enterprises.”

>See also: The future of enterprise applications

“The power of relationships”

In terms of how enterprise tech companies are catering to the needs of mid-market partners, Smith says the key is “building customer relationships”, implementing his own company Insightly as an example.

“Amazon has already demonstrated the power of relationships via their Prime service. Insightly is focused on helping businesses capture every customer interaction and map the relationships they have with each individual customer, including the strength of each relationship over time.”

“By empowering businesses to take the right actions at the right time, Insightly helps businesses create unforgettable customer experiences that foster long-lasting relationships.”

Alternative solutions

It could be argued, however, that the cooperation of enterprise tech firms may not be the be-all and end-all, after all.

Going back over to Canada, for example, a recent study by Ernst & Young showed that mid-market executives throughout the country are witnessing growth through welcoming industry convergence emphasised by digitisation.

It found that 33% of respondents identified this ‘mega-trend’ as the most disruptive in relation to company growth, while 67% declared expectation of a yearly growth of 6-10% and 12% referred to investment in technology as a strategic priority going forward.

>See also: How can firms embrace the digital to achieve growth?

Also found from the study by EY was a seemingly synchronised ambition of ‘double digit growth’ among mid-market companies across China, southeast Asia and Australia, with four in ten companies throughout that particular region declaring this ambition, in comparison to the global average of 6%.

According to EY’s global growth markets leader Annette Kimmitt, this finding marks the first time that mid-market executives are showing evidence of embracing change by investing and expanding.

If enterprise technology companies acquiring the services of smaller mid-market firms isn’t a sign of the tide changing in the favour of the mid-market within technology, perhaps EY’s 2018 Growth Barometer could be.

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Aaron Hurst

Aaron Hurst is Information Age's senior reporter, providing news and features around the hottest trends across the tech industry.