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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.

Worldwide focus on SMB and Channel Partners market research and industry analysis.

Anurag Agrawal

Desktop Virtualization - Making the Choice

The desktop virtualization juggernaut continues to gather steam as more and more companies choose to use the technology to improve security and for systems management. Large vendors have firmly jumped into the game, numerous Total Cost of Ownership reports have been published and the message from vendors to IT departments is clear – desktop virtualization is the way to securing desktops and reducing costs of management.

In our view, it is a warning sign that perhaps the message around desktop virtualization may have gotten out of hand. Technologies are often designed with specific scenarios in mind but as the market grows a technology often becomes a broad replacement for older traditional technologies. Indeed, it starts becoming a “standard” way of doing things regardless of the actual scenario. The issue is that functionality is typically optimized for a specific set of scenarios. As usage broadens, functional advantages of the new technology over the old may erode and users experience diminished returns.

This appears to be happening with desktop virtualization as well – the virtualization mantra is being repeated and chanted around IT departments like gospel and the real question is whether it makes sense to accept desktop virtualization as the universal panacea as pushed by vendors or should IT decision makers take a hard look at traditional systems management technologies and decide where the use of each is appropriate. In a recent survey conducted by Techaisle of over 300 desktop virtualization users, nearly two in five respondents stated that the primary reason for deploying desktop virtualization was to improve security of corporate desktops and 22 percent stated making desktops and notebooks easier to manage as the primary reason. The same survey also highlighted some interesting perceptions surrounding desktop virtualization and its benefits.  

Misperceptions Abound

The majority of IT managers and departments who have deployed desktop virtualization have likely been using traditional systems management tools and techniques prior to deploying virtualization technologies. The survey data indicates however that users are making generalizations regarding virtualization that may not be true in every situation. For example, 99 percent of virtualization users believe that it is a better way to manage PC assets compared to traditional systems management tools and methods and 96 percent believe that virtualization leads to more savings. The strength of these perceptions leads us to believe that there are two primary issues:

  1. The cacophony surrounding desktop virtualization is leading to confusing generalizations: Marketers would do well to guide customers better in this regard. While the virtualization market has developed, systems management tool vendors have continued to enhance the capabilities of their products. However, these advances are being drowned out by the virtualization message. It would be useful for IT vendors and the channel to provide guidance to customers underscoring when it would or wouldn’t be useful to deploy virtualization.

  2. Customers risk slipping down the slope of the diminishing curve unless a more pragmatic approach is considered: Given the strength of these perceptions among desktop virtualization users, it is very likely that some of these users are experiencing sub-optimal returns on their investment. Take into consideration the typical customer of an IT department – the Information Worker. A recent study conducted by Microsoft comparing PC management costs using traditional systems management techniques versus desktop virtualization found that in the case of PCs used by Information Workers, using traditional tools and methodologies would likely lead to lower total costs of ownership relative to desktop virtualization. The primary reason was that while desktop virtualization lowers costs if rich clients are replaced with thin clients and therefore eliminate physical visits to the desktop it also injects new costs resulting from implementing and managing a sophisticated virtualization infrastructure. Indeed, the study found the costs to be approximately 11 percent higher if virtualization was deployed.


 What these findings essentially suggest is that the deployment of virtualization be made considering specific usage scenarios rather than a generic solution to reducing desktop management costs.

Defining the Scenarios

There are a number of considerations when looking at defining scenarios where virtualization may be a good fit:

  1. The type of work being conducted

  2. The nature of the information being consumed/created

  3. The primary tasks of the user

  4. The need for mobility and ad-hoc connectivity

  5. Regulatory requirements


Of these, we believe the first three to be most important largely because they apply to nearly all companies regardless of size or industry. The last point – regulatory requirements – apply to specific sensitive industries (such as national security) that providing virtual desktops may be the only choice.

The first three points – the type of work being conducted, the nature of information and primary tasks are tightly intertwined with each other. Workers whose task primarily relate to creating, manipulating and acting on information – so called “Information Workers” benefit the most from rich clients. Business or Enterprise PCs are typically designed to support Information Workers given that they form a large part of the workforce. These workers demand a highly responsive IT infrastructure and place value of reliability and performance. IT departments looking to provide the same experience via a virtualized environment are likely taking on a task that will strain the existing infrastructure. Upgrading the infrastructure will very likely reduce or erase any cost savings. Under such conditions, full featured PCs are a better choice.

Other scenarios however favor deploying desktop virtualization as a way to reducing systems management costs. For example

  1. Where the need for rich clients is reduced because of simpler content authoring needs

  2. Where it makes sense to maintain a single instance of the application that is shared by many (for security purposes)

  3. Scenarios where offline access is not a key requirement or there is a specific application that is the sole basis for the primary task (e.g. – managing a calendar, setting appointments)


Rich Client Support and Management

An obvious question then is that for scenarios where rich clients are being used in a non-virtualized environment, are there technologies that provide a similar level of control for managing PCs? Indeed such solutions are available from both Microsoft and Intel. Microsoft’s Systems Center is a mature product that has been consistently enhanced over the years. The latest enhancement includes System Center Service Manager 2010, a new addition to the System Center suite of products, delivering an integrated platform for automating and adapting IT Service Management. Pre-built processes based on industry best practices provide for incident and problem resolution, change control, and asset lifecycle management. Through its configuration management database (CMDB) and process integration, Service Manager automatically connects knowledge and information from System Center Operations Manager, System Center Configuration Manager, and Active Directory Domain Services.

Intel too has been developing technologies at the hardware level to improve manageability of rich clients. PCs using Intel’s Core vPro processor are specifically designed for better, easier manageability. Intel has enhanced this functionality via a service pack for Microsoft’s Systems Center Service Manager. The solution now allows IT support personnel to remotely control KVM resources of the problem computer for easier resolution. Further, remote boot capability allows for support personnel to boot from a remote image regardless of the client’s operating system state.

Conclusion

IT decision makers have a lot of tools in their arsenal when it comes to tackling the cost of maintaining and managing PCs. Desktop virtualization has emerged as a key technology in this regard and while replacing rich clients with thin clients and serving up a centrally managed desktop image may be attractive to IT decision makers, they should not forget the advances made in existing systems management tools that make it easier to better manage rich clients.

The decision to deploy desktop virtualization versus using traditional systems management tools need not be a binary one. Specific user scenarios should be considered before deploying desktop virtualization and the technology should be deployed where it makes the most sense.

Abhijeet Rane
Techaisle
Anurag Agrawal

Europe Distributors set to Further Consolidate with ALSO/Actebis Merger

It’s happened! The long coming merger of Europe’s current 3rd and 4th largest distributors was announced. The new entity looks well capable of rivaling in size, if not in market presence, to that of US distributor Ingram Micro’s European interests. And arguably, by simple effect of exchange rate fluctuation [USD /Euro/CHF], the American Company’s ranking position is already in doubt.  This is only data though.

Anurag Agrawal - Techaisle - Global SMB, Midmarket and Channel Partner Market Research Organization - Techaisle Blog - Page 115 Distributor-Merger-Chart1


Actebis GmbH, a subsidiary of the Droege International Group AG, and the publicly listed ALSO Holding AG, a subsidiary of Schindler Holding AG, intend to merge their activities. Such a merger would create the third-largest ICT and CE distribution company in Europe, with a sales revenue of around USD $9.6 billion. The merger is subject, inter alia, to the approval of the responsible competition authorities.

Whilst the merger is announced as a 1+1 = 2 (or 133 as they called it), the new to be created organization is very much absent from most of the Mediterranean basin, the British Isles and a number of other EMEA countries which together form up to 40 percent of market – just looking at PCs.  Flanking opportunities may well turn out to be limited.
 
Additionally, there are some overlapping territories where the new enterprise will have to be much focused so as not to lose resellers to its competitors. Most resellers source from a few distributors simply to obtain credit and if these are reduced, then the likely outcome is that others will benefit.

For vendors, this is most likely good news.  Simplicity in market access/coverage will have to be weighed against the increased purchasing power of the new company but we expect few will complain.

The company also indicated as merger benefit the possibility to become number one player.  Whilst this is still somewhat far away, any southern European distributor is probably preparing the books.  

Techaisle channel database shows over 185,000 resellers in Europe. We believe that this is a clear example of broadline distributors rethinking their strategy to take control of this vast customer base and moving from the traditional bulk braking/warehousing to a more sophisticated logistics management offering.

Paolo Puppoli
Techaisle
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Anurag Agrawal

Only 37 Percent of Small Businesses Across Five Countries Have Heard About Cloud Computing, Says Techaisle

A recent Techaisle survey of small businesses (1-99 employees) within US, UK, Germany, Italy and Brazil shows that only  37 percent of SBs have heard about cloud computing. Among those who have heard about cloud computing, 13 percent said that they did not know what it meant. 44 percent of the respondents think that cloud computing means subscribing to services such as servers or storage hosted by a third party and 29 percent think that it means access to applications over the web.

Even among the 29 percent of small business that use SaaS, not all of them have heard of cloud computing.

Clearly a tremendous education initiative has to be undertaken by both the channel partners and IT vendors to articulate the use of cloud computing. At Techaisle we believe that the vendors are busy courting large enterprises as they are easily identifiable and have established IT departments. Small businesses do not generally have IT departments let along knowledge and focus on cloud computing.

Techaisle survey finds that channel partners are most effective in approaching small businesses regarding cloud computing. To that extent if the vendors are empowering the channels then they are certainly succeeding. But it may be opposite that channel partners in order to survive are changing their business model to embrace cloud computing.

26 percent of small businesses have heard about cloud computing from their channels while only 13 percent have heard about it from an IT company. 25 percent of small businesses have also heard about cloud computing from blogs/forums and other social media websites.

Of those with dedicated channel partners, 48 percent say that their channels have approached them with some cloud computing offering.

While it may be said that the use of cloud computing among small businesses is on the rise there is definitely confusion and lack of knowledge about what it really means.

Anurag Agrawal
Techaisle
Anurag Agrawal

IT Channel Complexities in India

Mature markets are just around the corner in India.

  • A lot has changed in the last 10-15 years and channels feel that in next 4-6 years by 2013-2014, about 20% of Indian market is predicted as a MATURE MARKET. Ten years ago the awareness for IT was created, PC was becoming a necessity. In last 6 yrs market has really picked up.

  • The India IT market is growing and are looking for big changes. Most of the partners for various MNC brands have recognized the changes and are moving from being mere VARs or System Integrators to solution providers, getting into more of services than selling boxes.

  • A dealer who has been selling software for a long time is now thinking of giving the whole solution. In the hardware market the margins are thinning, so the question is - how to make money?

  • Money comes from services so channels are moving towards better markets like the Managed Services, Infrastructure software implementation, maintaining the hardware as well as the software. This has already happened in the mature markets outside India.

  • One may also witness partnerships here - two big partners merging or two small partners merging forming the equation of 1+1=11 and not 2. Consolidations of various services are happening and some channels are emerging as leaders in the market.

  • Business models are also heading towards a big change. The today’s scenario allows any partner to be ‘single vendor dedicated’. As an example if one is HP partner he is still selling & setting up solutions for Cisco/ IBM/ Mac. Channels opine they have to position themselves as multi brand and multi solution provider. Whatever the demand they should be able to supply it.

  • The customer is negotiating or dealing with one single partner rather than trying multi service providers. This is one big change that has happened among channels keeping in view the changing perspective of the customers. These changes will help India emerge as a mature market.


Challenges in SMB (1-250 employees) segment for IT Vendors:

  • It is a very disorganized segment.

  • The IT maturity level is very low.

  • A lot of patience is required while dealing with this segment.

  • The volume business has always been a key concern.

  • The principles / vendors only interested in managing bigger accounts as more money/ revenue and less effort involved.


Advice in Partner selection criteria:

  • Instead of choosing many partners, vendors should focus on the selection of partners.

  • The partners who are capable should only qualify the selection.

  • They should then be trained and most importantly be supported by the vendor to grow and become a bigger partner of that small town or city.

  •  The corporate clients of a smaller city always lack confidence in the local partners and their capabilities and deliverables. Therefore, a partner from a nearby big city may not be working efficiently but is always looked upon with confidence because of it partnerships & technological capabilities.

  • If the vendors succeed in doing the same with the channels of smaller cities, this will surely be an advantage to ALL.

  • The small city partners have the best of contacts to explore more business. The only challenge they face is the Bandwidth and proper guidance. The Channel partners feel that the vendor should fully support them.


New Technologies:

  • There is and is not awareness about the new technologies among the channels. For example many partners may have only heard about Cloud Computing.

  • Channels feel that the vendors themselves should come forward to promote the new / emerging technologies among their partners as well the users.

  • There is always a demand for the new technologies and the channels are gearing up themselves for this.

  • Channels also feel that today’s customer is obviously more knowledgeable. To cope up with the knowledgeable customers channels have to upgrade their skills and knowledge base. And that is the key to a partner’s growth.

  •  All the big organizations the ITES/ IT companies and large corporate have their own in-house resources. They have a fully fledged IT department which takes care of all their IT needs.

  •  Here, the channels only work as suppliers for the hardware and software.


Takeaway:

The government departments are also in the process of implementing various IT related program primarily for the SMB segment(1-250 employees) especially. This is being considered as the most potential segment in terms of IT growth and expansion.

The grey areas are the SMB and the government. Here the implementation has just begun and it will take another 4-5 years. Today SMB is the very large and the most potential segment and challenge lies in how to deal with them and their needs. The knowledge level of these companies/ this segment is very low as compared to the International markets and standards. The IT deployment in terms of products and human resource is very low and they are dependent on the IT vendors. A lot of knowledge has to go in educating these segments.

Channel partners are investing heavily in Data Centers but it will take time to develop as all the technologies are new.

The channel partners who are at the local level at Tier III & IV cities overall do not have much knowledge base as the bigger partners in the Tier I & II cities, so  they ultimately end up in Box selling. Even the customers of Tier II, III & IV are not well-educated and their understanding level for IT is low. A lot of education has to happen in these cities.

THE IT VENDOR MUST KNOW ITS AUDIENCE FIRST…

Gitika Bajaj
Techaisle

Research You Can Rely On | Analysis You Can Act Upon

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