RELEVANCE OF SME’S IN NEW GEOSPATIAL BUSINESS ORDER The evolution of geospatial industry brought in the necessary technical, managerial and financial capabilities. However, this evolution brought in by the buyouts had huge impact on the prevailing conditions in the market, taking the 'middle men' (SMEs) by surprise. They also brought in a set of opportunities and challenges for SMEs, unique to different regions and verticals. Ironically, there is no single pattern here. Let us analyse the changing role of SMEs in the new business order of geospatial industry. Affect on the partner network The recent mergers and acquisitions disturbed the SME applecart significantly. The partner network of the acquired company got impacted as per the acquirer's strategic plan and on whether the acquired company is allowed to operate as an independent business unit after acquisition or not. A few trading SMEs were confused and finding it challenging to quickly reorient themselves to the new business reality while others were buoyant with the prospective gain in terms of economies of scale as the cost on extensive R&D for vertical integration is being borne by the principal technology companies. For instance, the Topcon-Sokkia deal and the Hexagon-Intergraph deal had tremendous impact on the existing alignment and partnership network of the industry.
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There is an increasing expectation on SME partners to innovate and develop solutions by eir expertise in their respective applying the domains to add value and better exploit the technology, tools and functionality advances that geospatial products now offer - Raghu Ganeshan President Avineon India Pvt Ltd.
These deals left the distributors and resellers confused as competitors turned into allies overnight. Distributors were at a loss understanding the nature of future association with the partner until a clear picture emerged. This was the case in regions like Middle East, Africa, South East Asia and Latin America, where a majority of SMEs are trading SMEs as depicted in Table 2. To avoid such situations, SMEs favour a participative, consultative approach by the principal companies to alleviate the affects of the situation. Increased value proposition Prior to the consolidation of geospatial industry, the partner network was primarily reselling the products and was instrumental in implementing the solutions. While these objectives continue, there is an increasing expectation on SME partners to innovate and develop solutions by applying their expertise in their respective domains to add value and better exploit the technology, tools and functionality advances that geospatial products now offer, says Raghu Ganeshan, President, Avineon India Pvt Ltd. For some, the mergers were an advantage. Geoscope, a distributor in UAE, who was earlier selling Ashtech products, is now dealing with a wider range of products in his portfolio after the acquisition of Ashtech by Trimble. However, the distributor is now facing increased competition resulting in lower margins. To avoid internal competition, technology companies are segmenting their dealers by verticals (GIS, surveying, construction etc). This is enabling the companies to minimise the monopoly of the dealers
GeospatialWorld I March 2012