It is no secret that Cisco has made several attempts and investments to address the needs of small businesses. It would not be out of place to quote an English proverb that states: "A cat has nine lives. For three he plays, for three he strays, and for the last three he stays". This time I believe that Cisco will stay. Cisco has landed at a good place.

Today at Cisco Live 2020, Cisco unveiled latest updates to its Cisco Designed portfolio of small business solutions that are aligned with top five problems that Cisco is solving for small businesses.

1. Work from home: how to meet and collaborate with employees and customers securely
2. Cybercrime protection: how to safeguard from identity theft, hackers and internet attacks
3. Always-on business: how to provide easy installation and reliable IT services using cloud technology
4. Workplace monitoring: how to enable safe social distancing and real time monitoring
5. New office: how to improve productivity and security at shared physical workspaces

The announcements

1. Cisco Business Switches and Dashboard - easy to set up, secure connectivity for small businesses which are powering connections across remote and in-office workforce. The two new series of switches – CBS 250 Smart Switch and CBS 350 Managed Switch - provide essential functionality along with advanced security options and are priced right – starting at US$200 - for small businesses. Both switches support PoE+ and have integrated DoS protection and time-based ACLs. The switches are stackable and come with limited lifetime warranty (usually unheard of). Techaisle small business research on buyer care-abouts for technology solution selection supplier shows that price (67%), reliability (66%) and support (54%) are ranked top 3 criteria. Cisco switches are purpose-built to appeal to the care-abouts. The dashboard, which directly integrates with the switches, is a network management tool with a streamlined user interface (a “single pane of glass” for all Cisco devices that eliminates the need to work with Cisco’s command line interface) to manage entire network with integrated lifecycle management and automated alerting. With zero-touch plug and play deployment, and hosted in the cloud or on premises, it allows small businesses to set-up, monitor and operate network devices from a simple interface on any device.

2. Tools to manage network in the Cloud – Cisco Meraki Health and Meraki Insight allows small business customers to monitor all aspects of their network and applications from Meraki Dashboard and API as well as detect and fix issues in minutes. As per Techaisle’s managed services research only 4% of small businesses have internal full-time IT staff and even within the 20-249 employee size segment, less than half are staffed with internal IT. Regardless of the size of IT staff, 79% of their time is spent on support and maintenance, majority in troubleshooting which creates not only IT efficiency deficit but also negatively impacts organizational productivity. Meraki Health’s objective is to make troubleshooting simple for the lean and almost non-existent and over-burdened small business IT staff.

3. Cloud Mailbox Defense for Office 365 – enhanced email security solution, designed for use with Office 365, with no changes to mail flow or DNS and can be made operational with 5 minutes. O365 (renamed to M365) adoption is on a meteoric increase. For example, Techaisle research shows that 48% of US small businesses are planning to use M365 within the next year. However, a vast majority of small businesses worry about malware and phishing attacks, password compromise and account hijack. Only 3% of very small businesses and 27% of small businesses have internal full-time IT security staff. These small businesses usually fail to add a secure email gateway, because they are unable to manage operational overhead and lack expertise to change mail flows and operate complex policies. They prefer a solution that can be easily deployed and managed. Powered by Cisco Talos threat intelligence, Cloud Mailbox Defense, runs natively in MS Azure, can be plugged into O365 with minimal policy configuration and does not require any specialized training to manage. Minimum seat count to get started is 25.

4. Webex Work bundle - a complete cloud collaboration solution that combines Webex Calling, Meeting and Messaging services in a single subscription, with attractive flexible monthly pricing for small businesses - per user/per month Webex licenses starting at $19.95/month. Techaisle research shows that within small businesses collaboration adoption efforts are being driven by demands for decision agility, speed of innovation, customer intimacy and faster time to market. 47% of small businesses are increasing investments in collaboration solutions because a lack of teamwork is impacting productivity. While the creation of a central information repository was the most important business driver for collaboration solutions initially, new adopters want to address the needs of increased employee mobility, dispersed team members and ad hoc scheduling.

Techaisle Take

To understand the profundity of Cisco’s small business solutions let us harken back to three of the top 10 SMB predictions I had written in 2015:

• Collaboration becomes a much bigger concept. In years past, “collaboration” was a big-company issue in which IT professionals used something called “presence” to connect staff to each other. What a quaint time that was! In 2015, I had said that this concept of collaboration will be swept into the dustbin of history. and it will become clear that collaboration spans files and people, staff and customers. It includes file exchange and multi-point editing; it extends beyond the corporate staff (and as a result, beyond large enterprises) to include customers; it has broken through the corporate walls, and demands support for mobility. In fact…
• Collabmobilicloud becomes an SMB management reality. There is a tendency in the press and in vendor product literature to treat collaboration, mobility and cloud as separate solutions. There is a tendency from the user perspective to treat them as aspects of a single approach to accessing, working with and sharing information. The users pay the bills, and in 2015, their perspective will predominate. Collaboration initiatives are part of mobility strategies, mobility is at the core of collaboration initiatives, and both are dependent on the cloud. This will have a major impact on application development and…
• Connected security becomes “security”. At one point, there was a debate in the security world - what was better – unified threat management (UTM) systems that ensured that there are no cracks between security products, or best-of-breed (BoB) products that could evolve as quickly as the threat landscape itself? BoB won that debate decisively; in fact, what used to be called “UTM” is now referred to as “next-generation firewalls,” one of many important “shields” around enterprise data, applications and users. However, with the expanding threat perimeter (caused in no small part by the trends towards hybrid and collabmobilicloud), 2015 is time to take a fresh look at how to ensure that all of the aspects of security infrastructure are integrated to protect against intrusion.

The above were true then and are even more poignant today. The Cisco Designed portfolio of small business-focused solutions directly addresses the needs and threat vectors for secure workplaces, better collaboration, simplified manageability and organizational productivity empowerment. Cisco has also made it easy for small businesses to buy the solutions, deploy and manage them either through their own internal staff or externally with the help of channel partners such as MSPs.

If the office of a small business is defined by devices, so too is the workplace defined by the ability to work from wherever those devices (and their users) are located. Small businesses are investing in mobility because it contributes to cost savings, increases market reach, improves productivity and establishes better ways of working. Security remains the top constraint for accelerating remote work adoption as small businesses struggle with data protection and mobile management. Techaisle global survey reveals that cloud, mobility, collaboration and security are among the top five technology priorities for over 60% of small businesses. 42% of small businesses are looking for solutions that are easy to buy, deploy, manage and support.

However, designing simplified products does not guarantee success in the small business segment. In an IT environment that is already very complex and likely to become more so, trusted advisors are very important to small businesses. Three quarters of small businesses rely on a trusted party – an internal employee with expertise in IT and/or external consultants – to provide advice on IT strategy. In most cases (over 60%), these advisors are trusted because they are viewed as unbiased and experienced, and able to provide the “right guidance” to the buyer. While the ‘unbiased’ observation would seem to rule out product vendors, small businesses exhibit a clear preference for advisors who can move seamlessly from advice to procurement and deployment. Cisco needs to invest in nurturing “super consultants”, both internally and externally (within channel partners) who can not only advise but also architect, deploy, manage and support Cisco Designed for Business portfolio solutions.

Regardless of the thoughtfully designed solutions, they are still discrete and transactional offerings. But we are increasingly immersed in a post-transactional market, where discrete sales of individual products or integrated systems are being replaced by agreements to provide IT functionality “as-a-Service.” Inexorably, the market is shifting from one defined by discrete purchase-and-deploy deals aligned with refresh cycles to one where businesses take a ‘hybrid IT’ approach that blends a limited number of on-premise assets with a growing range of on-demand services. To participate in this shift and stay relevant Cisco needs to create bundled solutions, including managed services with a recurring “as-a-service” offering.

Cisco should plan a larger product vision that aligns with digital transformation trends within small businesses. The vision should cover technologies such as HCI, SD-WAN, security, IoT, and workspaces. These integrated solutions will create reasons for small businesses to remain connected with Cisco.

Cisco has landed at a good place, finally. And it is ready to take off and soar within the small business segment. (Don’t muck it up)

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The long game has just begun. Competition is at bat and IBM has thrown its first pitch.

IBM calls its new PartnerWorld a reimagined business partner program. I see it as the most radical shift in the rubrics of partner engagement and enablement in IBM’s last decade. The new IBM PartnerWorld expands the program framework to three specialized tracks—Build, Service and Sell—each with tailored offers which have the potential to help partners unlock meaningful benefits faster than before and quicker than competitors. By adding the new Build and Service tracks alongside the existing Sell track, IBM is focused on aligning with the growing trend of partners shifting and expanding their models to better compete in a market driven by cloud adoption, compete better with leading hyperscalers and help partners develop new revenue streams as they create value for clients. The program focuses on three channel practicalities:

1. Driving growth
2. Enabling innovation
3. Delivering value

IBM announced a $1 billion incremental investment over three years in its public cloud ecosystem to help IBM Business Partners accelerate clients’ digital transformation initiatives and cloud adoption. IBM is expected to provide partners with architectural guidance and support.

IBM also outlined new partner resources for digital marketing, digital selling and financing including providing refunds of 100 percent on digital co-marketing activities, extending the PartnerWorld revalidation grace period so that partners do not decrease in program level or lose a competency achievement before 2021, and free Cloud/AI resources for 90 days.

IBM’s new My Digital Marketing platform (which replaces existing Digital Content Marketing Platform) is a no cost benefit for all registered IBM Business Partners and is available in 13 languages. More than a content repository, it is a marketing automation engine which can be used to execute campaigns and syndicate web content to drive demand generation and track opportunity. Staffed 24 hours a day, 5 days a week, it is billed as an end to end platform that allows a partner to plan, personalize, execute and measure marketing efforts.

Techaisle Take

It is no secret that the explosive growth of cloud over the past several years has dramatically and permanently altered the ways ‘the channel’ – especially, resellers – organize their businesses. The pressure is building on all sides of the traditional channel business model. The impact of cloud on traditional channel business models is wrenching at all levels of business operations.

Three tracks – Build, Service, Sell

Partners are invited to participate in all three tracks, regardless of their primary business model. A Build partner can develop and validate solution through new competencies and publish to the IBM Global Solutions Directory (IBM software catalog). It is not uncommon for partners to not only build their own applications but also provide services and act as resellers. Data shows that Services’ success depends on Build and Sell, Build’s success depends on not only themselves but also Sell and Sell channel cannot sustain sales cycles that are longer than 6 months. To drive success for the Build channel – which seems to be IBM’s focus to catch-up with AWS and Azure - IBM plans to rely on its Business Partner Connect platform that encourages partner to partner connection. With an instant match capability, IBM Business Partner Connect is designed to accelerate solutions for end-customers by matching partners looking for assistance with partners offering expertise. The three tracks together with Business Partner Connect are essential cogs for the ecosystem to thrive.

Ecosystem is nice but revenue is essential. Vendor suppliers who assemble catalogs of tested, interoperable solutions provide a service to customers and those who enable sales of these products do a service for ecosystem members. Enabling sales will likely be a challenge for IBM. But in the words of David La Rose, GM, IBM Partner Ecosystem, “we are at the start of a journey”.

Enabling innovation

Techaisle data also shows IP-led solutions will be key to partner success. By the end of 2021, 40% (from current 29%) of channel partners’ cloud revenue may be attributable to products they have built internally. A key aspect of IBM’s Build track (develop own IP) is the basket of incentives – cloud credits, techline pre-sales and consultation, dev/test support and marketing/sales support. This moves partner go-to-market support needs well beyond traditional market development funds (MDFs) to what we call as Solution Development Funds incentives; vendor programs and sales approaches will need to further evolve to meaningfully attract IP-oriented channel partners. In fact, for 47% of partners, solution development funds are more important than MDFs (which is at only 21%).

More than 50% of cloud partners have one or more cloud app development capabilities and MS Azure is the hyperscaler of choice. But the real race is between GCP and AWS and surprisingly a higher percent of partners are building in-house expertise in GCP over AWS. The question is if IBM’s $2500, $15000 and $85000 cloud credits are good enough to attract and retain partners when AWS, Azure and GCP offer significantly more. The answer lies in IBM’s commitment on customer incumbency in areas of specialization – financial services, cognitive, industrial and automotive and regulated workloads specifically focused on app modernization and migration services. Furthermore, there are opportunities for partners to purchase cloud booster packs. In the enterprise package, the cloud booster packs are unlimited, therefore the partner can gain access to as many cloud credits as they want through this program.

Driving growth

For 42% of channel partners, driving growth is the top business issue for the next one year, especially with a clear focus on increasing effectiveness of sales and marketing. Driving growth is also a function of digital discovery. To maximize addressable market, channel partners need to embrace digital marketing as a way to gain entry to accounts that have not yet self-identified as prospects. Marketing has not been a major focus for most channel businesses, and those that have invested in marketing staff have typically tasked them with optimizing access to vendor investment (MDF, etc.) funds. Marketing’s need to add advanced digital competencies is challenging most channel firms. To that extent, IBM is providing My Digital Marketing platform that supports content and digital marketing to ensure their partners are in a position to engage with the largest possible number of prospective clients.

Delivering value

IBM’s messaging around “delivering value” is about IBM partner packages and partner support desk. Partner Packages deliver value by giving IBM partners the flexibility and scalability for learning, development and test. IBM Support Desk delivers value for the partner by providing on-boarding and continuous support of navigating the PartnerWorld Program to ensure the partner takes advantage of all benefits available to them. Essentially, IBM is doing what in fact is a default expectation of almost every partner, which is, simplifying partner experiences.

However, increasingly, a vendor’s perspective on delivering value is less relevant than the buyer’s view of whether/how their suppliers are creating value for their businesses. In other words, value begins from the customer - the channel partner’s customer. IBM needs to ensure its channel partners’ sales and marketing resources and customer commitments align with business outcomes rather than technical thresholds.

The long game has just begun. Competition is at bat and IBM has thrown its first pitch.

The above article is a synopsis. Download for free detailed Techaisle Take report here

Consider these statistics from Techaisle’s recent worldwide channel sizing and channel trends studies. 62% of MSPs have less than 25 employees, 92% of MSPs have less than US$5 million in annual revenue. A large majority of these MSPs sell to smaller SMBs who are currently experiencing gut-wrenching disruptions to their businesses. MSPs are not immune to the COVID-19 crisis. 15% of MSPs either want to sell their business or wind down and 52% of MSPs need external capital to grow and remain viable or are seeking M&A opportunities. While MSP business model success is predicated on recurring revenue, profitable MSPs drive more than 40% of revenue from non-recurring sources. Pursuit of recurring revenue is not a bad idea as it provides a foundation for future revenue and it is important to business valuations. But data shows that recurring revenue is not the sole indicator of business success.

Recurring revenue can predict earnings thereby reducing risk, however, selling licenses or seats alone does not create a high margin business. MSPs who have moved to predominantly recurring revenue model are more likely to run out of operating capital than they are to reap the benefit of enhanced business valuations or the ability to manage cash flows during an episodic global crisis. Techaisle’s survey data clearly shows that channels with high percent of recurring revenues have been consistently unsuccessful in managing uncertainties in business climate. MSPs that lack margin also lack the ability to invest in improving their capacity to innovate and compete in the long-term and for weathering business interruptions. MSPs that do have meaningful margins, on the other hand, have the ability to invest in capabilities that enable them to expand into new market areas or overcome periods of economic crisis.

A typical pure-play MSP’s 84% to 90% of recurring revenue is spent on human capital, RMM/PSA solutions and other overheads, leaving between 10% to 16% for margins.

COVID-19 is a pandemic. No market segment is immune to the economic shock. The channel comprising of MSPs, systems integrators (SIs), dealers, resellers, VARs and retailers form the essential cogs of technology’s eco-system that puts products and solutions in the hands of customers. COVID-19 is challenging the channel. As per Techaisle’s global channel partner census count, there is one channel partner (excluding consultants) for every 160 commercial businesses and 1780 households. It is natural, in current circumstances, when both consumer and commercial IT spending is being reined in, for channel partners to lower their 2020 revenue growth expectations and re-prioritize business objectives. Techaisle leveraged its panel of 225K channel partners to understand the impact of COVID-19 on channel business. Data from COVID-19 impact survey of channel partners (excluding small retailers) shows that the percent of channel partners expecting revenue increases in 2020 may drop by 20%. Good news is that 63% of partners are still expecting increases but not in the high-teen percent that they had planned for at the beginning of the year.

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