Develop a project plan with measurable milestones and assign authority and accountability to specific individuals
While this may seem too obvious to even mention, many SMBs don’t pen down specific detailed project plans for cloud deployment. While the cloud vendor is responsible for hosting the hardware and software on behalf of the customers, SMBs need to understand what specific steps need to be taken – both for developing/customizing new services and for migrating on-premise solutions to the web. This includes all the steps starting with stating the objectives, specifying the requirements, prototyping, testing, training the users and final deployment, with criteria for successful deployment being clearly defined. Some cloud vendors have standard plans for standard services and help SMBs customize these plans for custom service development and deployment.

Measure the actual progress against the plan
This requires working with the vendor’s staff to ensure that actual progress meets the specified milestones and the project is not going over-budget or time schedules.

Take corrective action when actual progress deviates from the plan
Taking corrective action becomes much easier if the original plan provides the required authority to relevant individuals to implement the plan and these individuals can be held accountable for their results.

Test the new service to ensure it performs according to expectations
Even the most experienced cloud provider or developer cannot ensure that the new service is 100% error-free. It is important to test the service not only to ensure that it works error-free but also provides full intended functionality so that the business can realize the full benefits of the service and justify its investment.

Provide training to the end-users to use the new services
It is often very difficult to get end-users to dedicate the required time for training as many end-users perceive it as a distraction from their regular duties. However, lack of training can result in under-utilization of all the functionalities of the new service.

There are some key lessons to learn from those SMBs that have gone through not one but several deployment cycles. Selection of right vendor is not only important but imperative to have a smooth and uneventful deployment.

Tavishi Agrawal
Techaisle

The concept was particularly appealing for small and medium businesses (SMBs) that did not have adequate financial and technical resources or the scale of operations required to install the required IT infrastructure in-house. Indeed, up until recently, many SMBs found themselves at a disadvantage in competing with large companies, which implemented the new (and often resource-intensive) complex applications to improve their productivity, develop new products and services better and faster, and provide superior customer service.

In recent years, however, the playing field has begun to be leveled with the emergence of cloud computing, whereby the servers, applications and networking equipment are installed at an external hosting company and users can use the applications they need using any device they want (e.g. desktops, notebooks, tablets, smartphones) without incurring any large capital expenditures upfront, paying for the use of applications on an as-needed basis. One of the most famous examples of such cloud computing is the CRM application offered by Salesforce.com, the single largest pure play cloud computing vendor in the world. While large companies spent tens, or even hundreds of thousands of dollars to install, maintain and periodically upgrade their CRM applications from large vendors like Oracle and SAP to serve their customers, SMBs can now acquire similar capabilities by paying a few dollars a month per user.

Several changes have taken place in recent years and now the stars seem to be finally all aligned for a rapid and sustained growth of cloud-based solutions.  Enter cloud computing accelerated by mobility and the work from anywhere and anytime culture.

The New Economy and Increased Demand from SMBs
The dramatic shock to the global economy in 2008 had a multifold effect on the decision making of businesses. With sharp drop in revenues and profits and decreased availability of credit, SMBs found themselves starved of the capital they required to invest for in-house IT infrastructures to meet their increasing IT needs to improve their employee productivity, develop new products and services and provide higher levels of customer service to compete in the globalized economy. With the global economy unlikely to recover anytime soon and resume its long-term growth of earlier years, SMBs have become quite averse to make large capital investments and prefer to pay on an as-needed basis. Cloud computing meets this need of the SMBs by converting capital expenditures into operating expenditures.

Increased Employee Mobility
A second factor that has increased the demand for cloud solutions is the increasing mobility among SMB employees and their need to be able to access their applications anytime from anywhere using any device (e.g. desktops, notebooks, tablets, and smartphones). Cloud solution providers have developed new capabilities in recent years that allow SMB employees to do precisely that. Applications and data can be accessed over fixed and wireless connections and they adapt the data views automatically depending upon the access devices being used by the mobile workers.

Technological Developments
Cloud computing is also being enabled by the fact that new applications are increasingly being developed with Internet delivery in mind rather than just adapting the older client-server technologies for the Internet. A key element of this new trend is the evolution of integration platforms that allow users to integrate the web-based and on-premise applications to work together and exchange data on an as-needed basis automatically. Over time, this will allow SMBs to have multiple applications that work seamlessly like a single system without SMBs having to be concerned about transferring the data accurately and quickly for use by different applications thereby reducing their needs for internal IT skills.

Cloud computing is also becoming more economical by the increasing use of virtualization, which allows use of fewer servers to serve the needs of multiple SMB customers. Virtualization also allows for greater security, backup & recovery and higher levels of IT availability, which have become increasingly important for SMBs with their increasing reliance on IT.

Development of the Cloud Computing Ecosystem
Finally, a more complete ecosystem is evolving, consisting of cloud solution developers (e.g. Salesforce.com, Netsuite, Taleo, Concur) , infrastructure providers (e.g. Dell, IBM, Cisco, HP, etc.), hosting companies (e.g. Equinix, Savvis, Rackspace) as well as local channel partners that collectively have the capability to develop and deliver cloud-based solutions to the large number of SMBs spread out all over their markets. Furthermore, collectively they have the financial & technical resources and credibility to convince SMBs to adopt the new technologies.

Tavishi Agrawal
Techaisle

While Dell did not participate in this year’s CES, Dell’s announcementwas a pre-planned set of announcements by Intel’s OEM partners to unveil their new UltraBook PCs, Intel’s response to Apple’s MacBook Air. What made Dell’s announcement stand out was that while the new ultrathin PCs like MacBook Air have generally been targeted at consumers, Dell has added features and functionalities for businesses, including the ability of IT staff to manage the XPS 13 efficiently and effectively. These include features like standard Trusted Platform Module for BitLocker Data Encryption and optional remote and on-site managed services (i.e. ProSupport after-sales service and Configuration Services such as custom imaging and asset tagging) that allow SMBs to proactively manage their IT
devices and applications, avoid downtime and increase their IT infrastructure availability.

Also while, Dell XPS 13’s starting price point is the same as Apple’s MacBook Air, Dell delivers much more at $999 than Apple does at the same price.

The obvious question that arises is why would Dell adapt a (presumably) consumer-focused product launched primarily at a consumer-oriented show, to also meet the needs of businesses? The answer lies in Dell’s increasing focus on the SMB market since the creation of its new SMB Business Unit a few years back. While SMB business lies under the CSMB group (Consumer & SMB), until recently headed by Steve Felice, SMBs’ needs seem to be getting ingrained into Dell’s DNA.

Dell has increased its focus on SMBs on a worldwide basis and this is also being reflected in Techaisle’s SMB tracking studies. In Techaisle’s recentstudy on purchase intention of Ultrabooks, SMBs rated Dell as their number 1 choice for Ultrabooks, even before the products were announced. Techaisle expects that at least 3.6 million Ultrabooks will be purchased by US SMBs in 2012, resulting in 1 in 5 PCs (desktops and laptops) shipped to SMBs. With increased mobility, size and weight of mobile PCs have become important factors for road warriors, who want to be able to work from anywhere and everywhere they go. While Ultrabooks are considered more stylish and cool as compared to other form factors, including tablets, SMBs also value their long battery life, lightweight, built in security features, ability to run Windows 8 and fast boot times.

Techaisle Survey showed that Dell had even a better preferred status for the upper mid-market SMBs, that is, from 250-999 employee size businesses which are less price-sensitive than their smaller counterparts. Additionally, 47 percent of SMBs plan to purchase directly from a manufacturers’ website, which gives Dell an added advantage, given its history of success in selling through the web.

The introduction of Ultrabooks by Dell could not have come at a better time. With increasing mobility among SMB employees, UltraBooks fill in the gap between the lighter (but also somewhat limited in their functionality) tablets and the traditional heavier laptops. Ultrabooks can perform all the tasks (and more) of the traditional laptops but with much greater convenience.

Anurag Agrawal
Techaisle

Without a doubt SAP has made a good move and in the right direction. One may argue that paying 13 times the revenue for a loss making company with nearly 66% of revenue going towards SG&A does not make financial sense. However, if SAP can leverage SuccessFactors’ technology and talent to speed up its transition to the cloud, the price would be quite worth paying. In fact, by offering SuccessFactors’ technology to its current customers, SAP could help reduce the cost of new customer acquisition for SuccessFactors, which has been a major concern for many SaaS providers.

SAP has been trying to add subscription-based cloud solutions to its license and services offerings for a long time. A lot has been written about non-success of SAP’s Business ByDesign – a SaaS offering for large-scale business-management deployment focused on growing mid-market companies. SAP needed just the right acquisition to truly begin its journey into the cloud.

SuccessFactors will not only provide SAP with 3,500 customers, but also technology and above all talent. SAP’s task in the immediate future would be use the technology and talent to scale across businesses, in effect a larger customer base. This is something that Cisco does well and has repeatedly demonstrated its capabilities across numerous acquisitions.

While enterprise and mid-market businesses can be targeted through the acquisition, there is still no “S”, that is, small business, within the SAP portfolio. The small business cloud computing market is the most fragmented and among the fastest growing. SAP should continue to look for acquisitions in the area. Possibilities could be Concur, SugarCRM, Zoho and others.

Several companies are ahead of SAP in delivering SaaS to small businesses including Microsoft Dynamics, Salesforce.com and NetSuite. Microsoft also has one of the largest numbers of channel partners that are very conversant with Microsoft cloud solutions and Salesforce.com has its Force.com platform that enables channel partners to develop new solutions for their customers. SAP should also think about expanding its SMB-focused channel partner base and offering PaaS for those partners to develop new solutions for
SMBs.

Anurag Agrawal
Techaisle

Global SMB spend on IT is expected to be US$426 billion in 2011. PCs and Servers spend, core businesses of Intel, will be US$80 billion, resulting in 120 million PCs (Desktops & Notebooks) and 3.8 million servers. Despite the slowdown SMB market is still a very healthy market that requires focus and attention. Based on surveys in numerous countries, Techaisle finds that “Refresh of PCs and Servers” is among SMB priorities.

It is more important now than ever for Intel to hit harder at an SMB strategy and messaging.

Recognize Growing Influence of Retail
Importance of retail is continuing to increase across many countries as PCs increasingly become commoditized. 65 million PCs, half of total SMB PC shipments, are purchased by
1-20 employee size businesses that usually shop at retail stores. There are 186,818 dealers/retailers globally who derive 58 percent of their revenue from selling PCs. The retail channel is continuing to grow in number, especially in emerging markets. On the other hand there are 242,010 VARs/SIs globally who are increasingly moving into cloud offerings as they find their traditional services model getting threatened. Intel should work with its OEM partners to offer business SKU PCs through retail stores. A few of Intel’s OEM partners such as Dell have begun selling business SKUs through retail stores albeit in some countries. As compared to retail, VAR/SI channel derives 36 percent of their revenues from selling PCs. This only enhances the importance and influence of retail within the SMB segment for PCs. Intel should also open up vPro sales through all channels including retail. Similar to the messaging of i3, i5, i7, “with vPro” and “without vPro” will a good value proposition for SMBs and create a differentiation between SMBs and Consumers. As vPro adoption grows, different types of channels including neighborhood repair shops will have the motivation to jump in to provide remote support and services.

Facilitate Managed Services Adoption
Global SMB remote PC managed services is estimated to be US$1.3 billion in 2011 and will nearly double to US$2.5 billion in 2015. With vPro, Intel has a huge untapped opportunity to target managed services market aggressively. The technology has been around for a while and has had some success within enterprises. Selling vPro-based PCs through the non-retail channel to SMBs is certainly useful but selling through retail and white-box manufacturers will only quicken its adoption. The scenario today is similar to what the PC industry saw twenty years ago. To accelerate the adoption of PCs, Intel built a white-box channel and started shipping motherboards to them. Concerns were raised that the move would cannibalize market for traditional large OEM vendors but over a period of time both
OEM and white-box channels have learnt to co-exist. In fact there are 69,412 system builders across the world. Intel should be able build a similar program for white box assemblers with a focus on managed services using vPro. Large format retail channels could create their own NOCs or partner with other MSPs to offer remote managed support services (Techaisle had written about this happening in 2009, BestBuy purchasing mindShift has now happened). For small format retailers Intel should either create its own datacenter or allow OEM vendors to provide NOCs for remote managed support. Smaller system builders could use the data centers offered by Intel, its distributors or other large vendors for providing managed services to their SMB customers.

A PC Refresh Messaging – Path to Ultrabooks
Ultrabooks is another potential opportunity for Intel to sell into the SMB segment. However, current price point will inhibit adoption forcing Ultrabooks to be used primarily in corner offices and a smattering of traveling executives. If the price-point does not fall below US$800 this new form factor will follow the swift end like the netbook form factor. Ultra-thin aficionados will continue to adopt MacBook Air series. Initial adoption of netbooks had exposed a burning desire among Small Businesses for a low cost, light weight device with an extended battery life. At the same time huge adoption of tablets by SMBs as an additional device strongly suggests a market ripe for ultrabooks. However, a differentiated PC refresh messaging with Ultrabooks as mainstream notebooks PC is needed in the SMB marketplace. Although some may argue that VDI will replace PCs faster than PCs themselves, however, larger adoption of VDI among SMBs although growing in double-digits still too far in the future.

Cloud – Intel’s Small Business AppUp, Boon or Bane?
Among all of the new priorities that SMBs are driving towards, perhaps the one that most impacts the channel and the vendors is the trend towards increasing adoption of SaaS and Cloud Computing. All leading IT vendors – Microsoft, Dell, and IBM are providing a variety of cloud based platform and application services. Complementing them is a whole host of new companies that are aggressively developing solutions for this space. No doubt over the next 5 years cloud based services will be the new arena of intense competition. In
2011, SMB cloud computing spend will be US$11 billion (excluding spend on cloud
communication services). As SMBs transition investments driven by these new priorities, the impact on the channel will likely be significant. The small business AppUp services rolled out by Intel is certainly noble as it makes available best-of-breed cloud enabling technologies available to channel partners that serve small businesses. And it is easy to see why many cloud enabling technology vendors such as StorageCraft, GFI and many others will add their applications to the catalog. It gives them another distribution outlet. But
their continued commitment remains to be seen. However, Intel cannot just remain a Master Distributor, because it will very soon begin competing with its traditional distributors. More importantly, Intel in its effort to provide cloud services to its channels and small businesses is missing out on a very key issue: best-of-breed applications. No doubt the applications being offered are some of the best in the industry but there are too many of the same category. For example, how many backup and recovery applications will Intel offer before it finds that they are creating more confusion than simplicity? Channels
and SMBs will be forced to once again conduct their own research to sign up and use applications. It should not be a race for numbers but a race for best-of-breed. While its OEM partners may like to be part of the strategy initially they will not benefit in the long run. Within the next 2-3 years Intel’s OEM partners will begin to draw and implement their own SMB cloud strategies, most likely leaving behind Intel’s small business AppUp services.

Transition from IT vs. Non-IT
With growing adoption of cloud computing the role of IT has also been changing. Business departments are making procurement decisions independent of IT, similar to BYOD. In fact, Intel should focus its attention on Mobility vs. Non-Mobility or Cloud vs. Non-Cloud and even VDI vs. Non-VDI businesses. In effect, the old segmentation models do not exist anymore as the work from anywhere, anytime culture gets more ingrained within SMBs. Segments should be defined and labeled based on their business objectives.

Finally
Creating an SMB brand distinction is more important now than ever – a brand that delivers empowering technologies to both SMBs and their channel partners and a set of products and solutions that enable an SMB reach its full potential in the shortest period of time. SMBs will continue to invest in on-premise IT infrastructure while experimenting with, or moving selective applications to the cloud and increasing their reliance on MSPs. As SMBs prefer to procure their IT products and services from same channels Intel should evaluate all of its partners’ expertise areas and create symbiotic partnerships among them with Intel as the broker to serve the SMB customers. At the same time Intel should recruit new retail channel partners to advise, train and thereby help its OEM partners.

Anurag Agrawal
Techaisle

Business Intelligence is among Top 5 investment solutions planned by SMBs. The current economic scenario has businesses of all sizes focused heavily on identifying profitable customers to improve the ROI on marketing dollars spent. While a number of SMBs have already deployed formal CRM solutions and many others have internally developed CRM processes, the next focus is on making sense of the data captured, linking it to business objectives and monitoring business performance. Large businesses have over the last decade spent billions in improving data analytics capabilities; however, typical business intelligence solutions have been out of reach for majority of SMBs due to cost and deployment complexity. But there are a host of new entrants in the field that are resetting the price bar and filling the gap between low-end MS Excel based solutions and high end solutions such as SAP Business Objects and IBM Cognos.

For example in the US alone, when Techaisle asked 850 SMBs:
Please tell us which of the following technologies you are either “investing in”, “investigating”, or “Ignoring”; [Investing: Have completed purchase, Post purchase deployment phase; Investigating: researching or in pilot phase; Ignoring: not considered important]

Results below for US SMBs shows that the market is ripe for growth and adoption.

Historically, businesses have used a hub-and-spoke model, that is, an enterprise-level data warehouse with dependent data marts.  But this poses a problem as business intelligence and analytics are required by businesses to have high quality and incredible execution speeds because time-to-market is of essence.

As per Techaisle research, 50 percent of mid-market businesses (100-999 employees) and 53 percent of Enterprises (1000+) say that “Improving effectiveness of sales, marketing and business decision making through investments in data mining & business intelligence solutions” is critical. In such a dramatic scenario it becomes more useful for businesses to utilize a virtual data warehouse that pulls data dynamically from various applications as needed.

Similarly, on a scale of 1-9 where 9 is extremely critical, SMBs rate “Improving responsiveness to changing customer needs” as 6.5. These data points cannot be ignored.

Many upper-mid-market businesses use on an average of 6.1 different types of business intelligence solutions. These could be in-house development or a combination of SAS, IBM-Cognos, SAP Business Objects, Microstrategy, Oracle-Hyperion and several other players that provide point solutions. This leads to unclear KPIs, conflicting dashboards and only few metrics that are actionable. These mid-market businesses are trying to turn to analytics-as-a-service.

It would do well for vendors that are targeting the business intelligence to focus on analytics-as-a-service offering for SMBs. However, a key of aspect of any such solution would be the ability to quickly integrate applications or if not, ability to seamlessly pull data for the stakeholders in an easy to use format.

Tavishi Agrawal
Techaisle

VMware Go Pro
While VMware Go Pro was introduced in January 2011, the latest release has some new important capabilities such as – “IT Advisor,” which scans and assesses an SMB’s physical and virtual infrastructure and then provides recommendations, guidance, alerts and actions to help the small and mid-market businesses optimize their environments, streamline management processes, improve security and expand their virtualized infrastructure. Each time the IT Advisor scans the environment, it provides new alerts to quickly identify and solve problems.  The latest release also includes updated asset and patch management capabilities that allow users to create and label groups of machines and then schedule patch scans and deployment for these groups.

VMware Go Pro with a starting price of $12 per managed system/per year will become available for download in Q4 2011. However, it will take some time for the product to be widely available through VMware’s global partner network of nearly 25,000 channels.

VMware vCenter Protect Essentials Plus
New features within VMware vCenter Protect Essentials Plus include – new scripting capabilities to drive increased efficiency by allowing SMBs to manage and execute scripts across machine groups or the entire network.  It will also allow users to execute Remote Desktop Protocol from the vCenter Protect Essentials Plus “Machine View,” allowing IT admins’ remote access to a target machine. While not a typical scenario for a small business, nevertheless, vCenter Protect Essentials Plus console will also allow multiple administrators to simultaneously perform different tasks at the same time in IT-intensive mid-sized organizations that offer hosting and other cloud-based services including social media services.

Similar to VMware Go Pro, VMware vCenter Protect Essentials Plus will be offered through VMware’s global network of channel partners in Q4 2011. It is expected to be available as an annual subscription at $57 per server/per year and $36 per workstation/per year.

Techaisle Take
As per Techaisle’s research, Worldwide SMB Virtualization spend is expected to be US$952 million in 2011. However, the spending is heavily driven by medium businesses (100-999 employees), in fact, 95 percent will come from this segment. US represents nearly three-fourths of that spend. Thus far, most virtualization vendors like VMware have focused their efforts on the mid-market businesses that have in-house IT staff and large IT infrastructure. On the other hand small businesses can also benefit from virtualization if vendors actively market their offerings to service providers that can provide aggregated offerings for smaller businesses. But with its new offerings available in 28 languages, VMware is making a bold attempt at broadening its SMB customer base on a worldwide basis.

The messaging used by Mark Shavlik, Vice president and General Manager, SMB Management Solutions, VMware seems quite right as he addressed virtualization as solving a business issue and not a technology product.  He said, “We continue to innovate to bring SMBs advanced solutions tailored to their needs so that they can increase efficiency and reduce costs regardless of the size or sophistication of their IT organization”.

VMware has being doing well because it has established itself as the default Virtualization vendor for large enterprises. However, with its new initiatives, it is increasing its focus on its messaging specifically for SMBs. This would allow global SMBs to enjoy the benefits of virtualization and improve their asset utilization and reduce management costs while at the same time increasing business flexibility and security.

The cacophony surrounding virtualization has led to confusing generalizations. VMware would do well to guide SMBs better in this regard. While the virtualization market has developed, systems management tool vendors have continued to enhance capabilities of their products as well. It would be useful for VMware and its channels to provide better case studies and ROIs to SMBs underscoring when it would or would not be useful to deploy virtualization.

VMware has three major advantages: its portfolio of products, ecosystem to implement and support, VMware’s environments and brand recognition. It is time to start capitalizing on these advantages to target the SMB market segment. Microsoft and Citrix are not far behind.

Tavishi Agrawal
Techaisle

Cloud and Solutions have become front and center – solutions that are designed and imagined to directly address business issues such as productivity, automation, enhancing sales and marketing, reducing operational cost and many others.

Some may begin to call Dell the new IBM. However, unlike IBM, Dell is addressing entire sets of market segments – small businesses, mid-market businesses, enterprises, government, healthcare, consumers. Dell’s recent different acquisitions are playing a big part in its transformation. Most notable among them have been Boomi, SecureWorks, KACE, Compellent, InsightOne and Perot Systems. Dell may have fewer big case studies as of now compared to IBM but it will get there.

PCs, servers and general computing hardware are still relevant to Dell’s business and integral to its growing arsenal of solutions. PC is still relevant to businesses and consumers alike. Those who predict the PC is dead are not seeing the picture correctly. They are probably getting carried away by the current “wave” of tablet adoption. However, the nature and use of the PC as the foundational block has changed. An SMB today can start work immediately with a server that resides in the Cloud, use a smart phone that provides access to corporate information anytime and anywhere, a CRM application that resides off-premises, a communications infrastructure that is cost-effective, and a line of business application that is plug-and-play. At Dell World 2011, Dell demonstrated solutions in each area such as device management, unified communications, cloud business apps, collaboration, storage, datacenters, expense management and many others.

Traditionally, the IT industry gets caught up in terminology such as Cloud, Mobility, Managed Services, Big Data and so on. We had written that vendors have a real opportunity now more than ever to tweak their messaging to take on a series of statements that explain what the new IT can do for SMBs and enterprises in terms of functionality, operational cost, fixed cost, profitability, and how it benefits their business plan. Or even in more simple terms, messaging such as: how can a business use a PC to connect to
line of business applications faster, more securely, and from anywhere to help
them run their business better. We have begun to see this messaging from Dell.

Anurag Agrawal
Techaisle

Techaisle conducted a quantitative survey with over 8300 SMBs and spoke with ITDMs in US, UK, Germany, Australia, Brazil, Singapore, Malaysia and India to understand small
and medium business Cloud Computing market opportunity along with issues,
concerns, problems and challenges.

One of the questions that we asked to current non-users was: What vendor actions would compel you to use Cloud services?

Top reasons ranked in order of % of respondents for the US is given below.

There are obvious differences between SBs (1-99 employees) and MBs (100-999 employees).

There exists a strong correlation across all the points raised by SMBs. While most cloud computing vendors may like to pick up one or two issues and address them in their marketing messages but it may not have the most impact.  Vendors like Dell that have embarked on the journey to help SMBs adopt cloud solutions have the most to gain by addressing all of the above issues.

Other large IT vendors may soon follow, but at least if Dell executes on its plan it may take the lead. The last time we spoke with Dell, they had already implemented most of the points and had developed a roadmap to roll out the remaining.

Needless to say, vendors should take specific actions to overcome SMB Cloud Computing adoption barriers.

Anurag Agrawal
Techaisle

In fact not only the keynote but the entire event had widespread case studies from large enterprises that were using Chatter as their hub for all internal conversation. Heavyweights from Coca Cola, Burberry, NBC Universal, Verizon and others were there to lend support and show how Salesforce.com was helping them transform their sales organizations. Even the billboard cut outs had quotes from CEOs of prominent enterprises touting the benefitsof Chatter  on multiple devices such as iPads, Tablets and mobile phones.

Key Announcements
The event was very significant in more ways than one. On the one hand it had four key announcements while on the other it did not talk a lot about SMBs. But contrary to popular sentiments many of the announcements may actually be very relevant for SMBs.

Four Key Announcements were:

1. Chatter: ability to create and maintain a private social network for business and soon to be available (Chatter Now, Chatter Customer Groups, Chatter Connect, Chatter Inline Filters, Chatter Approvals)
2. Data.com: ability to create targeted lists from 30+ million business leads from Jigsaw as well as 200+ million in-depth company profiles from D&B and connect them into the CRM process
3. Database.com: a database for the business built and used in the cloud
4. Touch.salesforce.com: built in HTML5 with the capability of rendering any app built on Force.com platform to any mobile device without modification

SMB Suitability?
While all of the above technologies are great for Enterprises some are better suited for SMBs than others, especially for the less than 100 employees’ businesses. Last year Salesforce.com had revenues of $1.6 Billion with over 100,000 customers (Salesforce.com Annual Report). This suggests an average of $16,000 per customer and much fewer than 100 users per customer. And this leads us to believe that most of Salesforce.com’s customers are upper-mid-market businesses. The above announcements fall firmly within the realm and sweet spot of the 100-999 employee size businesses.

Chatter as an SMB Collaborative Platform
As per Techaisle’s continuous Global SMB research, a small business (1-99) has an average of 8 employees in the US and 20 percent, that is, 1.2 employees per small business are on the Cloud. With this low number of employees will Chatter be a viable option for small businesses? These small businesses are already overburdened and hamstrung with using Facebook, Twitter and other external facing social networking channels? The answer is yes with some modifications. Recent Techaisle study shows that 81 percent of SMBs are adopting mobility solutions, 66 percent of small business employees and 48 percent of mid-market employees either work from home or travel for work at least once a week. For these employees and business owners collaboration is a top of mind issue. To that extent Chatter is a great collaboration tool. Chatter makes the work from anywhere and anytime easier for SMBs. It makes it all the more important for mid-market businesses to adopt Chatter as they have an average of 125 employees per business and 30 percent of them are on cloud.

Database.com & Data.com
This is where the divergence begins. Are database.com and data.com relevant for SMBs? Yes, but the pricing and unpredictable monthly expenditure may limit SMBs’ use and deployment. Database.com is being offered free for up to 3 standard users, 3 admin users, 100,000 records and 50,000 transactions per month. Both a B2C SMB and B2B SMB will have more than 100,000 records but necessarily not 50,000 transactions. It also depends upon the size and vertical of the business. Therefore, it will take time for proper used cases to accumulate before SMBs and their channel partners can begin to recommend such a
solution.

Data.com is quite a powerful tool priced at $99 per user per month. This allows up to 300 records per month to be imported with additional records at $0.50 per record. This is quite an attractive pricing for SMBs.  However, it would be up to their channel partners to show them the value along with some price comparisons. Most SMBs may require more than 300 records per month while others may require less depending upon their coverage areas. More mid-market businesses would be able to use it rather than small businesses.

Jigsaw (genesis behind data.com) suffers from its crowd sourcing practice [in that it is populated by people in exchange of credits to see other people] – often data is not up to date and the proportion of businesses contacts tend to be of large enterprises, so not a lot for SMBs to get records and lists of neighborhood businesses, non-profits and other organizations. This may create a dilemma for an SMB paying customer if they cannot find relevant contacts.

Next Steps for Salesforce.com’s SMB Strategy
As the adoption of salesforce.com continues within large enterprises it begins to look like ERP implementations of yesteryears. The cost to switch is tremendous. With a great messaging from Salesforce.com enterprises are willing and able to deepen their relationship with Salesforce.com.

Techaisle’s Cloud Computing research and market sizing shows that Cloud CRM spend by small businesses (1-99 employees) in the US alone is expected to be US$679 million in 2012. While Salesforce.com seems to have done well in the midmarket (100-999 employees) segment, 6 million small businesses (1-99 employees) in the US alone represent a huge opportunity.

Salesforce.com derives over two-thirds of its revenues from the US even though US accounts for just one-fourth of the world’s GDP and even other large tech companies derive a much greater share of their revenues from overseas than Salesforce.com. Techaisle’s research shows a significant increase in awareness of and willingness to adopt SaaS solutions in several countries both among SMBs and Enterprises.  In fact only 35 percent of SMB Cloud CRM spends in 2012 is expected to come from the US.

Salesforce.com has yet to show its commitment and plan for a global SMB reach.

Salesfore.com has grown rapidly and the guidance for this year is also for continuation of that trend. However, the market conditions will begin to change with the the dramatic increase in awareness as well as potential supply of SaaS providers especially targeting the SMBs. Techaisle’s global research also finds that SMBs in selected markets also show a significant willingness to adopt various other SaaS solutions. Given the SMBs’ proclivity to purchase multiple solutions from a single provider, Salesforce.com should plan to broaden its offerings beyond CRM and also allow for easy and efficient integration with its
CRM offerings.

Salesforce.com has been a pioneer in the PaaS space with its Force.com offering. The platform is being used primarily by enterprises or channel partners (e.g. ISVs, VARs and systems integrators). To continue its reach within the SMB segments Salesforce.com has to develop a stronger channel ecosystem which could contribute to growth in its subscription base.

Anurag Agrawal
Techaisle