Business Classifications for IT Management

SOHO, SMB, Enterprise—Which one describes your organization?

Introduction

The capabilities and pricing for information technology (IT) products and services can vary greatly depending on the type of business they were designed and marketed for. In the IT industry, these market segments have been categorized into the following broad classifications:

• Home/Consumer
• Small Office / Home Office (SOHO)
• Small/Medium Business (SMB)
• Enterprise

Buying the wrong device or paying for an inappropriate service, of course, will diminish the value you get for your budget. This is amplified when you're putting together a system with products from different manufacturers—if they don't match, then features you paid for can go unused, or some features you need won't work, possibly leading to a disastrous project failure.

How each manufacturer or service provider segments their products is interesting, but not controlling. A large enterprise can be just fine with a product marketed for SMB; conversely, a company that we intuitively consider a small business might need enterprise-grade products in certain cases. To make the right investments, you must understand the business factors to address, and the properties of the products and services that match them.

It's not just picking the right products—your IT management strategy and service providers should be capable of supporting the products you do buy.

You can find articles on other sites by tech writers or IT management consultants defining these business categories. Sometimes they authoritatively, but absurdly, write strict definitions defining segments by number of employees (under 10, then 10-49, then 50-249, as if things change drastically when you hire your 250th), but don't discuss how business structure, objectives, number of customers, and IT system capacity and capabilities apply, which we'll explore below. Other authors have written about how the definitions are changing and transitioning, and leave it at that, offering no practical understanding. Many product manufacturers and software publishers separate their product catalogs by business type, while others also define them simplistically by employee count (under or over 500, for example).

So, in this article, we're going to define these classifications comprehensively to help you determinine whether your current management approach, and your selection of products, are appropriate. At the end, we'll provide some tips on what you can do if you find a mismatch.