How Current Value Chains Fail SMEs

For small and medium enterprises, cost isn't just a consideration—it's a constraint that shapes every technology decision. Yet the economics of modern data platforms reveal a troubling reality: even when everything goes right, SMEs barely benefit from their investments. This isn't anecdotal frustration. PwC's 2025 Digital Trends in Operations survey found that 92% of operations and supply chain leaders cite at least one reason why their technology investments haven't fully delivered expected results. But here's what that statistic doesn't capture: the projects that technically succeed but economically fail the customer. Let me show you what I mean with a real example.

The "Perfect" Project

An SME invests in Microsoft Fabric F64 to modernise their analytics: Fabric F64 capacity: £45,000/year Azure storage and networking: £15,000/year Consulting firm implementation: £150,000 Training and change management: £20,000

Total Year 1 investment: £230,000

The project succeeds. The implementation is technically solid. Users adopt the platform. Automated reporting eliminates manual processes, data quality improves, and decision-making accelerates. The finance team calculates the efficiency gain at £250,000 annually. On paper, it's a success story. A £20,000 net benefit, 8% ROI. But look at where the value actually went.

The Value Chain Reality

Of that £250,000 in value created: Microsoft captured: £45,000 (18%) Cloud service provider: £15,000 (6%) Consulting firm: £150,000 (60%) Training partner: £20,000 (8%) Customer retained: £20,000 (8%) The customer generated the value—through their data, their processes, their people's time and expertise. Yet they kept just 8% of it. This isn't a failure of execution. The project was delivered on time, on spec, with good adoption. This is the value chain working exactly as designed.

The Systemic Problem

For enterprises with deep pockets, this model works. They have budget headroom, can absorb implementation costs, and benefit from scale effects across multiple business units. A £230,000 investment against a £50M revenue base is a rounding error. For SMEs, it's existential. Research shows SMEs typically invest 2-5% of annual revenue in technology transformation. That £230,000 might represent a significant portion of their budget—capital not invested in product development, sales headcount, or market expansion. And when 92% of the value you create flows upstream to vendors and consultancies, you're not building competitive advantage. You're subsidising someone else's margin. The value chain is optimised for value extraction, not value creation. Consider the broader context. According to Forrester, implementation services for enterprise data platforms typically range from 1-2x the annual software costs. For SMEs with budgets between £15,000-£50,000 annually for data platform solutions, adding traditional consulting at enterprise rates makes ROI nearly impossible to achieve in any meaningful timeframe.

Where Does That £150,000 Actually Go?

When you peel back the layers on that consulting fee, the economics become even more stark: Consultant PAYE (what consultants actually cost): £45,000 (30%) Overheads (office, systems, support staff): £45,000 (30%) Cost of sales (pre-sales, proposals, pursuit costs): £22,000 (15%) Partner profit (firm margin): £38,000 (25%) Of the £250,000 in value the customer created, only £45,000 actually went to the people doing the implementation work. The rest went to platforms, infrastructure, corporate overhead, and profit margins.

The Real Cost

The consequence isn't just poor ROI on individual projects. It's that SMEs either:

• Delay or avoid transformation entirely, falling behind competitors who can afford it

• Attempt DIY implementations that fail due to lack of expertise, creating technical debt

• Accept razor-thin returns and hope for compounding benefits in year 2, 3, 4

AWS research found that 52% of organisations expect major IT investments to pay for themselves in 7-12 months—which for many projects is simply not feasible given current value chain economics. This expectation-reality gap is particularly acute for SMEs who lack the scale to absorb multi-year payback periods. None of these outcomes serve the market well. And they're all systemic—built into how platform vendors, cloud providers, distributors, and traditional consultancies have structured their commercial models.

The Question

Here's what we're wrestling with: if an SME can generate £250,000 in measurable efficiency gains, why should they only retain £20,000 of it? The value chain doesn't have to work this way. But changing it requires rethinking how data platform services are delivered, priced, and partnered.

This is why Data Partners are re-thinking the commercial model. Developing a "Chambers" approach that provides customers with competitive pricing and senior consultants with appropriate rewards and long-term opportunity.

Let's Talk If you're keen to explore Data and AI but are worried about runaway costs, let's have a conversation. No hard sell. No massive proposals. Just an honest discussion about whether we can help you get value from Data and AI. Connect with us here using our Contact Form.

Sources:

PwC 2025 Digital Trends in Operations Survey AWS/ESG Technology ROI Research 2025 Forrester Total Economic Impact Studies Gartner Market Guide for Customer Data Platforms