Techaisle Blog

A recently finished survey of 2900 small businesses across four countries- US, UK, Brazil and Germany shows that 1 in 5 small businesses own an iPad and 2/3^rd of these iPad owning small businesses will likely continue investing in iPads.

iPad owning small businesses are also more prolific users of social media platforms for both personal and business use. Survey shows that 1/3^rd of iPad owning businesses actively use one or more forms of social media such as Facebook, LinkedIn and Twitter whereas only 1/5^th of non-iPad users use social media.  Besides higher social media usage, these iPad owning businesses also seem to be early adopters of Cloud Computing. Nearly three times as many iPad businesses vs. non-iPad businesses are actively investing in Cloud Computing technologies.

On the question of iPads vs notebooks, not surprisingly, 15% of iPad owners prefer iPads over notebooks. On the flip side, non-iPad owners seem to be die-hard notebook users. Given a choice, 52% of non-iPad owners prefer to use notebooks only. 21% of small businesses consider all three: Notebooks, Netbooks and iPads to be important.  Those that use iPads have very low preference for Netbooks. The research shows that currently there is a clear polarization between iPad and Notebook users.

Besides being a “cool device,” the number one stated reason to purchase an iPad was sales and marketing. When specifically asked the most regular uses of iPad, the survey showed that iPads are being used for internet searches/news, emails, vertical applications and social media interaction.

96% of all small businesses that have an iPad also have a smart phone. In addition to smart phones, it is inevitable that iPads will become the center of SMB Future Workplace.

Tavishi Agrawal
Market Analyst
Techaisle

It is a given that SMB’s Cloud Computing adoption is growing. It is a given that SMB’s SaaS is fast replacing on-premise software. Does it even matter if the growth rate is 20 percent or 25 percent, whether it is US$100 billion market by 2012 or US$125 billion market by 2014? What really matters is how adoption can be accelerated. What really matters is how the right advice is given to SMBs that are adopting SaaS/Cloud Computing.

There are many forecasts in the market. Depending upon which market research firm one follows each has its own stated forecast, definition and defensible methodology.

Market will grow, it has to grow. Industry is driving SMBs towards Cloud and increasingly taking on-premise alternatives off the market. Everyone that is in the IT business is talking about Cloud Computing. There are hardly any alternatives left for SMBs.

So we should really get off the forecast and market sizing train. Instead we should concentrate on factors that will help vendors and channels to accelerate adoption. Now one may argue that all analyst firms have conducted their own surveys to determine the reasons for adoption or non-adoption. However, each of them misses the point of finding those important nuggets that identify a path for vendors and channels, a path that will lead them to Cloud Computing nirvana.

Analysts and analyst firms like us should seek answers to burning questions such as:

1. What applications should vendors focus on?
2. What comes first – back and storage, mission-critical applications, CRM, vertical applications or something else?
3. What should channels be doing in targeting the SMBs?
4. What should be done to convert the non-adopters to adopters?
5. How should SMBs be educated?
6. What is the role of multi-touch devices?
7. What will happen 3 years from now?
8. Which SMBs will regret and which will rejoice after adopting Cloud Computing?
9. How to educate channels?
10. Which market segments are more important than others?

Hence, instead of talking about SaaS/Cloud Computing Spend and growth rates, let us begin a sensible dialog about 10 “thundering” questions about Cloud Computing. You can even check out Techaisle’s Cloud Computing reports here.

Tavishi
Techaisle

Despite the bank bailout, American small businesses have had limited access to financing. The blame game has focused on the greed of bankers who are taking advantage of the “free” (meaning zero interest) dollars given to them by the government and using that to make Wall Street bets as opposed to lending to small businesses and homeowners. But are they really to blame? Money is efficient. It finds its way to places that give the best returns. It so happens that the best returns no longer come through lending activities but from high frequency trading. The fact that the bankers asked for and were given the money to engage in this activity at no cost to them was a mistake the Bush and Obama administrations made. No question about it. But why blame the bankers? They are simply fulfilling their obligations to their shareholders. Should they make such obscene amounts of money in bonuses? Why not? The amount of money they contribute back to the country is a matter of taxation and tax reform. That said, proprietary trading seems to be on its way out and banks are gradually returning to their boring old lending practices.

In a recent survey, nearly 35% of small businesses clearly mention that availability of credit/loans is impacting their business, as shown in the chart below.



The real issue though is the lack of good options for delivering financing to small business in an efficient manner. Bank consolidation over the last decade has left business lending to small businesses largely in control of large and mega banks. Small businesses can and often do turn to the Small Business Administration (www.sba.gov) for financing. The SBA has a number of micro-financing schemes that allow small businesses to borrow a maximum of $35,000. SBA data suggests the average amount borrowed hovers around $13,000. The delivery of those loans however is done through various local, community and national/global banks. The process is onerous, locks in collateral and is often not available to the weakest of small businesses. These initiatives also do not help START small businesses as most loans require a documented operating history. Small businesses therefore often start businesses by using credit cards as a way to finance ventures. This is dangerous as cards have higher interest rates and defaults can negatively impact personal credit histories for years to come. The result is a dampening of the ability of individuals to take risks. The result is less innovation and fewer small businesses.

Perhaps this is an opportunity for us to look to the third world where micro-finance lending has created whole new businesses by the hundreds. These businesses are small but successful enough that loan repayments are above the 90% level. Because of the small amount of money in each loan, the risk per loan is low often requiring no collateral commitments. Micro-financing organizations such as Grameen Bank have turned in impressive performances both in terms of the amount of money they have lent over the years and the number of businesses they have helped. Grameen Bank’s history is well documented having been in existence since 1976. In some ways they could be hailed as the world’s most successful venture capital firm. By the end of 2009 Grameen had lent over $8 BILLION (since inception) in micro-credit to nearly 8 million small businesses. What is impressive is the low default rate. At the end of 2009 less than 3% of the loans outstanding were overdue. All of this has been accomplished in an impoverished country like Bangladesh with 2500 branches and about 13000 loan agents.

Can the model be replicated in the US? Absolutely! But it demands structural change in the way small businesses access financing today. Perhaps the solution lies in establishing a micro-finance exchange – a clearinghouse for micro-credit made specifically to allow people to start businesses. What would the benefits of such an exchange be?

1. Access to low interest financing with low or no fees. Access is limited to companies with fewer than 20 employees (80% of all small businesses)

 

1. A cap equivalent to current micro-finance initiatives or slightly lower (say a maximum of $35,000)

 

1. No collateral requirements but the applicant must submit a business plan

 

1. No impact on personal credit history if the loan is not repaid

 

1. Operational support for small businesses including better rates on things like internet access, mobile service plans, transportation and logistics, import/export, legal services, banking, insurance and talent acquisition.

Micro-finance in developing countries has proven to work well and it demands serious consideration as an option here as well.

Abhijeet Rane
Techaisle

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