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  • SMB & MIDMARKET DIGITALIZATION

    SMB & MIDMARKET DIGITALIZATION

    US SMB & Midmarket Digitalization Trends
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  • DIGITAL TRANSFORMATION

    DIGITAL TRANSFORMATION

    US Midmarket Digital Transformation Trends
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  • FEATURED INFOGRAPHIC

    FEATURED INFOGRAPHIC

    2018 Top 10 SMB Business Issues, IT Priorities, IT Challenges
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  • SAAS TRENDS

    SAAS TRENDS

    US SMB & Midmarket SaaS Adoption Trends
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  • IT MATURITY SEGMENTS

    IT MATURITY SEGMENTS

    US technology adoption trends by SMB IT sophistication
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  • BUYERS JOURNEY

    BUYERS JOURNEY

    Understanding SMB & Midmarket Buyers Journey
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  • CLOUD STUDY

    CLOUD STUDY

    SMB & Midmarket Cloud Adoption Trends
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  • SECURITY SURVEY

    SECURITY SURVEY

    SMB & Midmarket Security Adoption Trends
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  • MOBILITY SURVEY

    MOBILITY SURVEY

    SMB & Midmarket Mobility Adoption Trends
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  • IOT STUDY

    IOT STUDY

    SMB & Midmarket IoT Adoption Trends
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    SMB Data You Can Rely On | Analysis You Can Act Upon
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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

The twin ladder approach to delivering digital transformation for SMB and Midmarket firms

Techaisle's most recent survey of 1600 SMBs & Midmarket firms (defined as 1 employee to 1000 employees), found that only 18% do not have any form of digital transformation initiative. Which means that 82% of SMBs are already on their digital transformation journey. And interestingly, 42% are taking a holistic view of digital transformation. What it means is that these 42% believe the Internet and digital technologies impact every aspect of the business and must become a core part of organizational strategy. What is more encouraging is that SMBs believe that in the next 2 years, 32% of their business activities would be digitized and increase of 30% from 2 years ago. Globally SMBs are expected to spend US$250 billion on digital transformation in 2018.

Techaisle’s extensive research also identified that successful implementation requires a journey through digitization and digitalization, from substitution to augmentation to modification and redefinition, spanning all of the functions in an organization and all of the technology used to support its activities. Based on both quantitative survey and depth-discussions with SMB and midmarket businesses on the transformation journey Techaisle has developed the twin ladder view of digital transformation. Figure below presents a single-image depiction of the ‘twin ladders’ of digital transformation. The bottom set of steps is labelled “the technology ladder,” and stretches from the deployment of modern, flexible infrastructure to advanced IT-enabled capabilities. The technology ladder begins with the building blocks needed to establish infrastructure that is capable of supporting digital transformation. It includes mobility, virtualization, hyperconverged infrastructure & converged infrastructure and other technologies essential to provisioning advanced IT services. Businesses need to deploy and make use of the building blocks and platform technologies before they can launch initiatives that are truly transformative for their businesses and customers.

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Survey shows SMB and Midmarket BDMs control cloud business applications purchase

Techaisle's SMB & midmarket decision making & buyers journey report confirms that business decision makers (BDMs) – who tend to inhabit the ‘carpeted’ realms of their businesses – are more engaged by discussions about business benefits and objectives than by ‘feeds and speeds’. Cloud business application sales reps will need to develop ‘deep carpet’ language and skills. Techaisle survey data shows that:

  • Determining the need for new cloud business applications is the prerogative of business management. The balance of authority within SMBs is nearly 7:1 in favor of business management except in the case of midmarket businesses where it is nearly 2:1
  • Neither business nor IT have a clear authority within 29 percent of small businesses and 22 percent of midmarket businesses to purchase new business applications, yet, cloud applications do get adopted driven by need, experimentation, and rogue adoption
  • At 32 percent, ad-hoc purchases are more popular within upper midmarket businesses than any other employee size business
  • Business management also has authority over determining the needs for enhancements to cloud business applications. The balance of authority within small businesses is 5:1 in favor of business management and 1.2:1 for mid-market businesses
  • Neither business nor IT have a clear authority within 17 percent of Small Businesses and 21 percent of midmarket businesses to enhance already deployed business applications, yet, these applications do go through significant modifications and upgrades to better serve the needs of business management
  • SMB Business management controls the budget and purchase authority by 8:1 as compared to IT management. However, within the midmarket businesses, the control ratio drops to 2:1 indicating that it is easier to sell cloud technology to small businesses than midmarket businesses since the decision-making units are dissimilar
  • In 15 percent of SMBs budget for new business application is usually created at the time of ad hoc decisions for purchase to meet business needs
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Techaisle research shows SMB and midmarket technology purchase process becoming more complex

We are in the midst of a transition from an IT industry shaped by small decision making units (DMUs) comprised of IT professionals to an industry that must respond to the varied needs of BDMs and ITDMs. This makes for a very complex selling environment; many IT suppliers would no doubt like to have ‘the genie hop back into the bottle,’ as many members of their sales and marketing teams lack the skills and understanding needed to sell to BDMs.

Techaisle research on SMB and Midmarket buyers journey and decision-making shows that ITDMs and BDMs have differences in ‘care-abouts, are focused on applying IT to different business objectives, have different perceptions of success measures, and use different information sources. The data is not only helpful in building relevant marketing messages, but also serves to underscore the complexity of working with a diverse DMU. This DMU becomes further complicated with the presence of IT conversant business specialists (embedded IT staff), increasingly residing within line of business units, reporting to business, and away from IT.

  • Business management has seized a much greater role in technology acquisition, deployment & management than IT management – varying from 3.4X in “needs identification” to 2.0X in “solution evaluation & selection”
  • Within small businesses, business management plays a more influential role than IT in five out of nine stages of technology solution adoption
  • Within mid-market businesses, role of business management is predominant in the first three stages of decision making (needs identification to solution options), equal to IT in the next two (solution evaluation & selection) and substantially higher than IT in the last two stages (determining solution effectiveness and optimization)
  • In nearly 1/4th of small businesses and slightly over 1/3rd of medium businesses, technology specialists (embedded IT staff) are employed within Business Units not reporting to IT management. In nearly 50 percent of midmarket firms that have IT specialists, they are the primary decision makers
  • Determining the need for new cloud business applications is the prerogative of business management. The balance of authority within SMBs is nearly 7:1 in favor of business management except in the case of mid-market businesses where it is nearly 2:1
  • Ad-hoc purchase and deployment of new cloud business applications is prevalent within 22 percent of mid-market businesses
  • In 15 percent of SMBs budget for new business application is usually created at the time of ad hoc decisions for purchase to meet business needs
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SMB and Midmarket - ITDMs and BDMs: the balance of purchase authority

Techaisle's SMB & midmarket research not only confirms that BDMs are increasingly present in the IT solution adoption process but the research deep-dived to understand the extent to which BDMs actually lead their organizations in adopting solutions. To develop a deeper perspective on this issue, Techaisle asked both ITDM and BDM respondents to address questions that explored the acquisition process around software (both new applications and meaningful upgrades to existing applications), infrastructure hardware and IT services. The results provide direction for sales strategies aimed at these product segments within the US SMB market.

Software budget authority

“Determining the need for” a new business application or a meaningful enhancement to an existing application is not, of course, identical to signing off on the purchase of a new system. When we extended our coverage to ask about having “budgetary control and authority,” we discovered two interesting findings:

  • The proportion of organizations where budgetary control and purchasing authority for new applications rests entirely with BDMs increases in all e-size segments, relative to the statistics for determining need in these segments. This means that BDM control over the final purchase decision is even higher than the “determining the need for” statistics suggest.
  • The proportion of respondents reporting that responsibility resides entirely with either IT or business – but is not shared between them – increases in five out of seven e-size segments (missing only the 10-19 and 20-49 employees groups). This suggests that needs identification may be more collaborative than final purchase decisions.
  • Both findings point to the same conclusion: that BDMs are extremely important to suppliers of software.
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