Techaisle Blog

Xerox, an innovative technology company, was among the early pioneers of PC and ethernet technologies, which are indispensable in today's digital transformation. 3D printing and digital manufacturing are some newer areas of modernization. Among the more critical innovation focus areas is CareAR, which enables live visual interaction and contextual self-guided instructions. From an augmented reality standpoint, it empowers an agent to see what the customer is seeing and walks them through how to resolve customer support issues.

Unbeknownst to many, Xerox IT services is part of the next innovation cycle within the organization. Formed out of three wholly-owned companies, ESI, Lewan, and RK Dixon, Xerox aims to expand its IT services footprint, especially in the SMB segment, which Xerox defines from 25 employees to 2500 employees. Xerox has a growing SMB-focused IT services business, working either as an outsourced provider or in conjunction with existing IT teams to provide hardware and managed IT solutions to SMB clients through Xerox locations in the US, UK, and Canada. Xerox has aspirations to be the leading provider of professional IT solutions to the SMB Market. It is a challenging aspiration, but having deep partnerships with major IT manufacturers, being brand agnostic positions Xerox well in providing solutions that fit SMB customers' needs and budget. Xerox's uniqueness and differentiation lie in its ability to listen to the voice of the customer, offering the best technology solution possible with discipline, uniformity, and consistency.

SMB portfolio of services offerings – device procurement to complex consulting

As we had written in our 2021 predictions, SMB executive and corporate interest in digital transformation is a unique business driver for IT services' scale-up. The fear of digital inequality is acute. To accelerate migration to support a mobile workforce, anxious SMBs prioritize automation, application bandwidth, and analytics, each of which requires outlay services. SMBs increasingly need support for hybrid IT environments spanning conventional and cloud infrastructure, which strains the IT staff necessitating professional services skills. There is an urgent need to provide business consulting aligning cloud capabilities with SMB's business requirements, map specific cloud services to these needs, integrate cloud services with existing infrastructure and each other, and provide ongoing support. SMB issues in servicing hardware at home are demanding home office software/hardware packs for service.

Xerox has developed an entire portfolio of offerings that address each of the above.

• IT Hardware and Software - trusted advisor to source and support all foundational hardware and software needs
• IT product support services – deployment, installation and configuration, PC imaging and asset tagging, depot repair, warranty services
• IT Professional Engineering Services - Cybersecurity & device security, policy-writing, and threat assessment, Cloud technologies and migration, Data Center and network design, staffing
• Managed IT Services - Help desk support, Virtual CIO, network admin, remote monitoring & management, data Backup & Recovery

Techaisle expects strong growth for services spend. Techaisle market sizing data shows that the US SMB and Midmarket spend on IT services will be US$244B in 2023. Data also shows that 97% of SMBs have become more dependent on technology over the last three years because technology delivers enormous productivity, efficiency, reach, and related advantages. However, these benefits are not always readily accessible to SMBs with limited resources. Moreover, the complexity associated with advanced technology can discourage firms from investing in new technologies – to the extent that 61% of midmarket firms admit to ignoring technologies even though they may be helpful to the business. And the issue is unlikely to disappear in the future: more than half of midmarket firms believe that technology adoption is becoming more complex.

SMBs seeking to keep pace with global enterprises boasting far more extensive IT resources – are increasingly reliant on technology but have a limited pool of skilled IT staff members capable of delivering the services their operations require. Techaisle's research shows that many small and midmarket firms are making extensive use of external assistance – IT services provided by suppliers, rather than internal staff – and that use of service suppliers correlates directly with IT sophistication. Techaisle's research divides midmarket operators into three groups: basic IT or firms that are "focused on delivering core IT capabilities to internal users, but lack ability to expand into more sophisticated applications and technology categories;" advanced IT, businesses that have "progressed beyond core applications and are actively working with more sophisticated solutions;" and organizations with enterprise IT operations, in which "IT is run as a business, providing enterprise-grade support to all aspects of the organization. Roughly 60% of firms in the more sophisticated groups use managed services today, compared with less than half that number for organizations with only "basic IT." And even those that aren't already capitalizing on external services are moving in that direction: more than half of sophisticated IT user organizations who are not currently using managed services plan to do so soon. Xerox is aiming to bridge the gap between fully outsourced and on-staff capabilities to reduce the digital divide.

Xerox trains its sales personnel to sell products that fit the SMBs' needs and are not limited to Xerox's portfolio. As Rich Artese, General Manager, Xerox IT Services, says, "our brand agnostic approach to IT Services enables us to design the right solution for customers while taking into account their brand preferences and budget requirements."

Not a box pusher, not a copier supplier only – but an eight-story building

Xerox is not a box pusher. It is far from it. Besides deploying and managing laptops and desktops, Xerox serves cloud subscriptions. Its in-house solution architects design complex solutions for SMB customers, whether cloud migration or cloud technologies in general or data center solutions and wireless networking.

Xerox illustrates its portfolio of offerings in an eight-story building, representing a typical technology stack, technologies that SMBs require – and require integration across – to support current and emerging business requirements. Partnerships with Acer, Dell, HP, Lenovo for computing devices fit into the bottom floor. Moving up the building takes one to managed services requiring a specific skill set, managing software, and licensing for Microsoft, VMware and Cisco. Middle of the building are infrastructure technology solutions such as data centers, networking, storage, unified communications, security, and at the top are cloud solutions. The Xerox IT Services team holds many industry certifications. In fact, one of their engineers holds the prestigious HPE Aruba Ambassador designation, which is granted to only a limited number of people.

Small businesses are increasingly dependent on information technology. 78% of small (1-99 employees) businesses consider technology critical to their success. These small businesses are dealing with an ever-expanding portfolio of increasingly complex applications and platform technologies. Techaisle's small business research data shows that 73% prefer to purchase from a supplier who provides business issues focused technology advisory guidance and 64% want an IT supplier vested in customer success. In an IT environment that is already very complex and likely to become more so, trusted advisors are essential to small businesses. Launched in May 2016, Dell Technologies' Small business Advisor program has been consistently simplifying the technology complexity and removing the friction from purchase decision inertia.

There is a perception that Dell advisors only sell PCs. Reality is quite different than perception. The advisors advise and sell end-to-end solutions. For complex needs, such as digital transformation, Dell has a clear second-level escalation path. The front-line advisors can raise the small business needs to large order specialists or technical resources to work on complex solutions. These specialists have the depth to look over the needs and the entire customer account from an end-to-end perspective, provide infrastructure guidance, including VMware products, and configure solutions based on the customer's requirements.

The advisors are not sales agents. Instead, they have the expertise to determine where a small business is in its technology journey and thereby provide contextual guidance. Their goal is to advise customers on what they need and what they could get, what needs to get fixed, how to fix it, and how to get the right next solution. It is a much more holistic way to drive the customer experience. For example, over the last year, a vast majority of advisor conversations were around the following topics:

• Migration to a remote workforce – What is needed to support a work-from-home environment and individuals looking to maximize their home office setup?
• General solution guidance – If using software applications such as QuickBooks, Office, or CAD, what system would work best?
• The move from cloud to on-prem or hybrid environment – What are the benefits of data management, application performance, cost, and security?
• Supporting the rapid expansion of specific industries, as a direct response to the pandemic. For example, private healthcare, transportation, and niche service companies in the market.
• Private schools and other entities enabling remote learning/training.
• Upgrading outdated technology – End-of-life software applications, operating systems, expiring warranties, and low-performing/over-tasked hardware.
• Ensuring proper security in a rapidly changing IT landscape.

None of the above are simple technology adoption questions. They are also not point-and-click PC purchases. Techaisle data indicates that there is an interesting opportunity to connect high-value guidance with click-to-buy type options. However, this kind of offering needs a more extensive consultative capability in many cases. For example, nearly three-quarters of small business buyers would like their IT suppliers to provide technical advice directly connected to business issues. In addition, almost two-thirds want an IT advisor who is "invested in customer success." Dell has a very rigorous model of getting to know the customer. Customer conversations revolve around what solution the advisors are trying to help with and what problems they are trying to solve through technology.

From the perspective of the technology world, 2021 and several years following will witness the benefits of the interconnection of all types of resources: platforms/environments, information, devices, and applications. With the connective fabric rapidly becoming ubiquitous, SMBs of all types and sizes will move beyond a focus on network access and concentrate instead on using edge technologies to drive progress across business processes and enable innovation.

Connectedness is an intrinsic component of the edge. It applies in two directions: client devices ranging from PCs to smartphones to sensors connect to more gateways and other powerful edge systems, which process time-critical responses and then communicate data safely back to clouds at the core of the infrastructure fabric.

Consider these data points from Techaisle's latest SMB technology adoption research study covering 2410 SMBs:

• 30% of SMBs have a "very innovative" mindset and are investing in edge technologies that drive innovation; 51% are in the "somewhat innovative" segment with a focus on transitioning to being very innovative and are evaluating edge solutions
• 38% of SMBs are investing in digital transformation to initiate innovation in products, services, and business processes
• 9.9 is the number of technology categories that very innovative SMBs use, which is 1.8X non-innovative SMBs. Cloud, security, virtualization, mobility, AI, analytics, IoT, SD-WAN, AR/VR, HCI are the leading technology areas where very innovative SMBs are increasing investment and deploying edge solutions

Innovation at the Edge

Cloud is not only the IT business infrastructure; it is also the essential business infrastructure for SMBs. While the cloud replaces conventional data centers at the core of the network, an entirely new technology tier – "edge" – is emerging as a complementary IT infrastructure source. Edge supports many innovative technologies that promise to extend technology's use and impact into entirely new domains.

Small and midsized businesses find it challenging to defend their users, applications, and data against external threats. Data from Techaisle’s SMB and Midmarket security research reveals 63% of US SMBs report that they experienced one or more cyberattacks in the last year, contributing to an average of 3.6% of revenue loss attributable to security incidents. For 46% of SMBs, preventing cyber-attacks is one the most pressing and critical IT issues. Yet, 59% of SMBs are very confident that their firms could recover from a cybersecurity incident. Nevertheless, security issues cast a long shadow over SMB IT priorities, especially as firms embrace the benefits of hybrid work, hybrid IT, only to find that their environments become more complex and more challenging to manage and protect. SMBs respond by expanding security budgets – but they lack the staff and expertise to construct effective shields around their organizations. The channel, working with leading-edge products like those from Fortinet, Cisco, Dell Technologies, Palo Alto Networks, has an essential role to play in defending their clients’ SMB businesses against security threats.

The origins of the saying “it’s about the journey, not the destination” may be unclear. Ralph Waldo Emerson, theologian Lynn H. Hough, Canadian rapper Drake, or others may have said the phrase, but its applicability in an IT security context is clear. There is no endpoint at which security is ‘done’; security requires constant updating to stay current with expanding threat vectors.

This requirement for continuously improved IT security is both a challenge and an opportunity for security suppliers.

What is the opportunity?

Techaisle has pegged global SMB security spending in 2023 at $68 billion. However, high IT security spending levels and growth rates mask an underlying sense of confusion concerning safeguarding emerging cloud and hybrid IT environments – and a lack of resources to address this problem. Compounding – or perhaps, causing – the lack of clarity into cloud security issues and the relatively tepid adoption rates for cloud security solutions is that SMB IT operations are under-resourced. Without specialized staff, SMBs cannot keep pace with the constantly changing threat vectors and security options.

The lack of insight by small businesses becomes clear: only 5% have IT security staff. 44% of midmarket firms have an average of three full-time internal security staff, but the demands of a business of this size would exceed a single individual’s bandwidth. The percentages more than double for upper-midmarket firms. Simply put, SMBs lack the bench depth needed to dedicate IT resources to security. Everywhere within the SMB segment, there is a mismatch between available resources and the depth of the skills required to keep pace with security needs.

The lack of understanding of a threat associated with a widely-used platform on the one hand, and the lack of IT staff resources available to address security concerns on the other, produces a clear conclusion: SMBs need suppliers to step up to the delivery of secure IT environments.

In many cases, these suppliers will be the mainstream channel partners who supply the SMB’s technology and act as the IT management presence within the SMB’s business. In other cases, including in many midmarket environments, the source of security products and services will be specialized managed security providers who focus tightly on operating SOCs and protecting client environments. In some scenarios, firms will ‘land’ by entering a client account from one of these positions and then ‘expand’ to serve a broader range of IT supply needs – crowding out competitors who can’t address the risk and compliance issues that are central to the CEO’s mandate.

What is the security supplier call to action?

As security suppliers move towards managing SMB security needs, they need to address the pace at which their clients absorb new offerings. Small businesses will not embrace eight new technologies, nor are midmarket firms going to integrate fourteen new solutions into their environments. Even if this were possible from a budget perspective, it would cause chaos in the business.

Instead, suppliers of security services need to co-create a security roadmap with their SMB, which starts with assessing the customers’ executive teams’ tolerance for risk. What absolutely must be secured, and in what order? The security supplier can then identify the solutions that best fit the customer’s immediate and longer-term needs and then deploy, integrate and manage the solutions over time. After all, data shows that 45% of SMBs feel it will be beneficial for them if an external services firm can help define and implementing security policies.

One key point of exposure in this process is the ability to ensure that different solutions work together. In the cloud world, and increasingly in the on-premise world as well, channel partners and MSPs focus on integrations: the breadth of a single vendor’s product line, plus – and importantly – the extent to which third parties develop and support links to a firm’s products.

There will be no slowdown in the digital transformation of SMBs; their business infrastructure will increasingly rely on technology. Likewise, there will be no slowdown in the threats to that infrastructure; as reliance on technology increases, so does the potential bounty for attackers. And as a result, there will be a continuous and growing need for IT security services – which will sustain firms adept at delivering and managing security solutions that combine expertise and industry-leading technology.