Have you ever wondered how an entire line of shops on a particular street deal in the same commodity? Is there any science to this phenomenon or is it merely a herd approach? In business, one comes across certain localities that specialise in a particular trade.

Referred to as clusters, these businesses are a group of companies and organisations in related industries that have economic links. This could be because they buy and sell from each other, or because they use the same skills and infrastructure in a local area.

Clusters have resulted in more organized innovation systems, be it on the local, regional or the national level. Typically, a cluster consists of a group of small to medium business enterprises. Clusters are representatives of a growing economy and as economies expand, development and upgradation of clusters becomes an important agenda for both governments and companies alike. Such SMB clusters account for business conditions and an open economy have aided the emergence of a significant number of clusters in India. Scattered across the country, the more popular ones are auto ancillary units in Pune and Chennai, textiles and garments in Tirupur and gems and jewellery in Surat.

However, India's SMBs still have a long way to go. A recent AMI survey estimates that only 21% have PCs, 20% have Internet access, and 13% have local area networks.Furthermore, only 16% of all Indian PC-owning small businesses have high-speed Internet access. This is in sharp contrast with its Asian counterparts China and Korea, enjoying 46% and 92% broadband penetration, respectively.

With such dismal IT penetration rates, one would assume that SMBs are a long way off from complex networking architectures. However, having realised the business benefits behind new generation networks that offer converged data, voice and multimedia, Indian SMBs today are forging ahead in the adoption of newer networking technologies. The increase in broadband usage particularly is expected to be an important factor enhancing usage of IP-based technologies like IP PBX, IP Centrex, VoIP and even Internet access through cellular phones and handhelds.

According to a Frost & Sullivan survey of more than 100 SMBs across APAC, they are moving away from broadly generalised solutions to primary-vendor solutions targeted at specific vertical applications.

SMBs specialising in verticals such as manufacturing, retail, healthcare and textiles are rapidly adopting networking technologies. One of the overriding trends is the need for smaller organisations to equip themselves with technology that will allow them to partner with larger companies.

Even through most major technology players look at tapping the Indian SMB potential, there is a need for them to chalk out a sub-verticalisation strategy to be able to drill deeper into markets. While the key motivator and restraining factor across SMBs considering IT investments is undoubtedly price, but the vendors should not ignore the primary business drivers of these organisations.

By focusing and understanding cluster dynamics, vendors will get a deeper perspective of the business pain SMBs face and make them better equipped to deliver customised solutions.

Source: http://www.financialexpress.com/fe_full_story.php?content_id=127124