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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.

Role of BDMs in SMB IT solution adoption

Typically, IT suppliers focus on product or service transactions – the point at which a buyer commits to a contract with a specific seller. IT vendor compensation plans are structured around the transaction, and lead funnels captured in CRM and marketing systems coalesce around this event. And because IT professionals are often engaged in signing contracts for IT products and services, vendor sales and marketing initiatives often key on the IT function.

From a buyer’s perspective, though, the solution adoption cycle is much longer, and commitment to a specific product or service is less important than establishing the business context that drives the need for investment, and the processes needed to ensure that the business obtains anticipated value from this investment. Before they commit to a contract, organizations need to identify the need for a new solution, align the need with strategic and operational plans, and identify and evaluate solution options. Once the product/service is acquired, the buyer’s process continues: the business still needs to deploy the new technology, train IT and business users on its features, evaluate the effectiveness of the solution in meeting current requirements, and optimize the solution over time to maximize returns.

Techaisle conducted a unique survey of SMB organizations. To understand the current state and implications of distributed IT influence and authority, Techaisle surveyed roughly equal numbers of business decision makers (BDMs) and IT decision makers (ITDMs) across seven employee size categories, and then analyzed results to create a unified view of the new decision authority realities.

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SMB Cloud CRM adoption journey points to accelerated digital transformation

Techaisle’s detailed SaaS adoption survey tracked the current and planned buying journey of cloud CRM, ERP and other SaaS applications within SMBs and Midmarket firms. Cloud orchestration & digital automation have become essential ingredients for business transformation. Techaisle analyzed the extent to which use/intended use of each of these cloud applications is connected with other applications and whether they are part of a conscious effort for digital transformation. The two sets of figures below show past and planned CRM and its adjacent SaaS applications adoption journey.

The research reveals a very stark difference between the past cloud CRM adoption journey and the intended path after adopting cloud CRM for the first time. The past adoption patterns were seemingly random reacting to a specific point of pain, but planned adoption is deliberate keeping in view the business issues & IT challenges and taking giant steps towards a connected digital business.

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90 percent of US SMBs expanding cloud usage

SMB cloud is ubiquitous today and becoming even more so, central to the technology and management needs of both smaller and larger SMBs. Cloud is no longer a trend that is discrete from mainstream IT. Techaisle data shows that cloud is viewed as an IT priority by 96% of US SMBs and 90% of current cloud using SMBs are increasing their cloud usage within the next one year. Cloud is not a future issue, it is an essential component of SMB IT.

While cloud growth has been extraordinary, it is reasonable to expect continued high-trajectory growth resulting from three key factors:

  1. Cloud is established as essential IT infrastructure
  2. Cloud addresses real business needs
  3. Suppliers will work with buyers to overcome current SMB cloud adoption challenges

Where are these SMB firms who are planning an expanded cloud presence in the evaluation process? Techaisle asked SMB respondents to identify whether they would refer to themselves as “gathering information,” “identifying potential solutions” or “evaluating suppliers”.

As cloud adoption continues to expand within SMB organizations, Techaisle SMB & midmarket cloud adoption survey data demonstrates that 38% of SMBs are gathering information on cloud technology, solution options and appropriate cloud adoption steps. 32% have moved beyond to the stage of evaluating solutions and the balance are in the process of evaluating suppliers. However, Techaisle believes that these percentages are a moving target as SMBs continue to increase spending on cloud.

Among the midmarket businesses, fully 80% of those planning new cloud initiatives are at this stage, with only 7% focused on evaluating suppliers. Highest percent is within the 100-249 employee size businesses establishing a clear fact that as businesses transition from a small to a larger organization they increasingly gravitate towards cloud to solve their growing pains, establishing processes and supporting a dispersed workforce.

Combining the above information with the data that 94% of midmarket firms are already using some form of cloud solution, we get a picture of a midmarket enterprise market that is in the process of assessing where and how the use of cloud should expand through the enterprise. Small businesses, on the other hand, have a roughly normal distribution across these categories: 24% report that they are gathering information, 46% have moved on to identifying potential solutions, and 30% are evaluating suppliers.

techaisle smb midmarket dichotomous cloud adoption resized

Techaisle believes that the differences between the small and market organization findings reflect different stages of cloud adoption. The small business findings are consistent with a community that moves from point to point, working first on one discrete solution, and then on the next. The midmarket findings are consistent with a community that has already deployed point solutions, and is now trying to build a longer-term strategy for an integrated, flexible approach to incremental cloud expansion. This dichotomous approach is a real challenge for suppliers: they need to differentiate discrete solutions for the small business market, and demonstrate that their offerings are essential components of broader strategies for mid-market firms, while attracting attention to their companies and products and building brand preference in both segments.

This perspective is reinforced by data showing the current uses of cloud within SMBs. Generally, SMB IT departments have used cloud to supplement IT infrastructure resources – for example, by procuring cloud-based storage to offload data from on-premise drives, or by using cloud for backup. Cloud has also made its way into SMBs as a means of supporting non-core applications and related processes; for example, cloud might be used to automate previously manual tasks in HR or customer support that aren’t linked to financial and production systems. But data from the Techaisle SMB survey finds that use of cloud is expanding even into these business-critical applications.

When SMBs are asked to indicate the areas of their operations where cloud has been or will be applied, nearly half report that they are using/planning to use cloud for IT infrastructure, and 37% state that cloud will be deployed to support non-core processes and applications. However, nearly 30% state that they are using or are implementing cloud to run at least some of their core applications. Given that these core applications are not changed or re-platformed very often, 29% is a surprisingly high figure. Cloud is expanding beyond IT-specific uses and niche applications, and is increasingly seen as a viable platform for even business-critical process support.

techaisle-smb-midmarket-core-cloud-adoption-resized 

The shift in cloud’s positioning and dichotomous approach brings with it a shift in the kinds of insights needed to help connect suppliers and buyers to address common interests in deployment, integration and expansion strategies. SMB buyers need help in moving past initial cloud pilots and applications to integrated cloud systems that provide support for mission-critical processes. Cloud sellers need to adjust their messaging to address the needs of early mass market rather than early adopter customers.

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Midmarket technology & business buyers: two peas, two pods

Business decision makers (BDMs) are an intrinsic force in most midmarket organizations and are the primary decision makers in some high-growth technology areas, including collaboration, social media and analytics – meaning that increasingly, BDMs are ‘the boss of IT’. These BDMs view IT as a component of business processes, rather than as a stand-alone silo. Techaisle SMB & Midmarket Decision Authority data shows that twice as many BDMs as ITDMs (IT decision makers) in midmarket businesses say that it is critical for IT to understand how technology contributes to overall organizational success. These BDMs have specific objectives for technology usage, clear perspectives on adoption drivers and impediments, and tend to be influenced by information sources that are different from the inputs used by ITDMs.

This pressure from business managers leaves IT leaders scrambling to stretch limited budgets to meet seemingly limitless requirements, striving to deliver predictable, secure systems that respond to the increasingly varied needs of their business users and competitive environments. The growing divide between IT authority and responsibility, exacerbated by the fact that business perspectives on IT are shaped by information channels that are not part of the IT professional dialogue, has created an environment where businesses are struggling to develop the cohesion needed to promote or embrace new IT capabilities to achieve business objectives within existing IT and business process structures..

In a unique survey, Techaisle posed the same question, “expectation of associating business success factors to IT solutions” to both BDMs and ITDMs and probed to identify what each expected from the other. Techaisle data shows that BDMs tend to have higher expectations of IT; while business decision makers and technology decision makers are reasonably well aligned in some areas, there is a wide expectation gap in others, which may explain (at least to some extent) the continued proliferation of non-sanctioned, “shadow” IT.

techaisle-midmarket-linking-it-with-business-success-resized

The figure above provides a simplified view of differences between BDMs and ITDMs across several different factors. Although there is a tacit agreement that both business and IT management should understand business related success imperatives and should be able to associate IT solutions to achieving those objectives, closer examination of the data shows some important differences between the two groups:

  • 53 percent of upper midmarket BDMs say that it is very critical for business success that ITDMs are able to identify and associate IT solutions with business efficiency, productivity & profitability. On the on the flip side, only 30% of IT executives in these upper midmarket businesses say that business executives should be able to associate IT solutions with business efficiency, productivity and profitability. Responsibility for delivery clearly rests with IT, and BDMs have very high expectations from ITDMs.
  • Data also clearly shows that BDMs again have high expectations for support in using technology to build customer connections. Over 40 percent of BDMs believe that it is critical that IT has a grasp of solutions that enable beneficial customer & supplier interactions. In contrast, only 1/4th of ITDMs say that BDMs should have a grasp of such solutions.
  • Employee productivity is an important aspect of business and in most cases businesses are expecting IT to understand and deploy core technology solutions to make employees more productive.
  • Business process automation is an area where there is better alignment between IT and business. However, automation is a dominant need within the 100-499 employee size segment; nearly 40 percent of BDMs in the segment say that it is critical that IT can identify requirements for automation and associate IT solutions with these needs.
  • Cross-organizational integration is recognized as being important by both BDMs and ITDMs in mid-size businesses: over 50 percent of both groups agree that it is critical for both business and IT to associate technology solutions with business demands. This is an area where both BDMs and ITDMs are fully aligned.

The trend towards increased BDM involvement in IT decisions is likely to accelerate further. BDMs are already active in shaping demand in core IT markets, and they are the dominant force in high-growth areas like collaboration, social media and business intelligence/analytics. ITDM and BDM divergence will continue and although there is cross-pollination they may as well continue to operate from different pods. Although it may be tempting to try to bring the various parties together, IT suppliers cannot successfully act as intra-corporate matchmakers: they have to come to grasp with the reality of selling to two different constituencies which have different expectations.

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