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.

Digital Transformation Challenging the Channel - Five key issues

20% of channel partners are offering “digital transformation”, but most common is “digitalization” at 46% and balance 34% are still at the basic “digitization”. MSPs/SPs are the laggards and VARs/SIs the leaders. Among vendors, Dell & Cisco partners are leading the charge. The channel industry examined by Techaisle’s 2018 SMB/Midmarket focused channel research survey is very different from the community that existed a decade ago. Once a staid domain in which technologists provided IT infrastructure support to (mainly) local customers, the channel is being reshaped by five key issues in the face of digital transformation:

  1. Cloud, and its wrenching effect on all aspects of the channel business structure – only 69% of are partners selling cloud, out of which less than 2/3rd are successful
  2. Managed services efficiencies, especially vs. the pending opportunity associated with digital transformation – 77% are selling managed services but 50% are increasing on-site break-fix support
  3. Increasingly-complex data center technologies - there is a skills shortage in the SMB channel
  4. Orchestration & integration demands that are expanding in multiple directions – cloud orchestration expected to be a high-revenue growth area for only 23% of partners
  5. The need to sell on and deliver to business outcomes rather than technical outcomes

The data in the report illustrates the extent to which these factors are affecting channel management decisions today and influencing the future directions. The report covers:

  • What is the state of channel?
  • What does the channel offer?
  • Where does the channel land on digital transformation, orchestration & integration?
  • What does the channel want from vendors & distributors?
  • How does the channel sell?
  • What is channel doing in the cloud?
  • What is channel doing in managed services?
  • What data center solutions is the channel selling?

With digital transformation as the backdrop, let us look at a summary of the five issues highlighted above:

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SMB and Midmarket digital transformation needs orchestration

“IT and cloud orchestration” reflects the reality of a multi-platform world in the era of digital transformation. Techaisle research shows that within the SMB & midmarket segment, orchestrated connected cloud and technology will be the focus of substantial new investment over the next few years. Connected cloud itself forms the basis for an Interwork platform for successful digital transformation and is crucial for competitiveness and growth.

  • Upper midmarket firms use an average of 2.5 of the four leading public cloud providers (AWS, Microsoft, Google, IBM) – a true multi-cloud environment
  • For 25% of small businesses and 51% of midmarket firms, workloads and data migrate across cloud and/or on-premise platforms
  • 89% of midmarket firms state that orchestration tools are critical to their ability to deploy workloads on hybrid platforms
  • 46% of SMBs do not know which cloud services to use and in what order
  • 47% of SMB/midmarket-focused channel partners are offering orchestration but only 24% are delivering, but 55% are expecting substantial revenue increases in the next 1 year
  • Use of orchestration is poised for growth as 40% of midmarket firms and 15% of small businesses are implementing cloud connectivity

Using a large number of on-premise technology as well as cloud platforms is escalating complexity beyond reasonable manual management limits. In response to this conundrum, many SMBs & midmarket firms are turning to orchestration as a strategy for optimizing use of multiple platforms and multiple technologies (topic of another blog another time). But help and guidance are missing. Even Techaisle’s latest channel partner study shows that although 47% offer orchestration but only 24% are delivering, and that also partially. Their vendor partners are not helping because of intense focus on enterprise segment.

In the quest for digitalization and digital transformation there has been ad hoc adoption of technology – both cloud & on-premise - as responses to paint points within SMBs.

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2017 Top 10 SMB and Midmarket Business Issues, IT Challenges, IT Priorities

They are here. Techaisle's annual SMB and Midmarket Top 10 IT Priorities, IT Challenges and Business Issues. This is the 5th year of Techaisle tracking at a WW level and is much sought after by IT vendors, channels and media. For 2017, Techaisle investigated 15 different technology areas, each with several sub-technology categories, 20 different IT challenges and 20 different business issues.

Click on the infographic images below to view and download your copy

When compared with 2016 the list for 2017 SMB and Midmarket Top 10 IT Priorities, IT Challenges and Business Issues reveals major changes – digitalization has become an IT priority and supporting digital marketing/workplace an IT challenge, improving workforce productivity as a business issue has catapulted to the top, enabling mobile workforce is among the top 3 IT challenges and Collaboration, Cloud, Mobility and Security are the IT priorities. Cloud orchestration has also appeared for the first time in the list of IT challenges as IT is finding it necessary to orchestrate across the entire enterprise to deliver business infrastructure via the cloud.

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