Techaisle Blog

In the report “The SMB Channel and the Cloud”, Techaisle uses findings from in-depth surveys with US-based channel firms deriving at least 50% of revenue from sales to SMBs to illuminate conditions within the US SMB cloud channel, and to develop perspectives that suppliers (and the channel itself) can use to construct successful cloud channel strategies.

From 2013 to 2015, the percentage of SMB-focused channel partners that have become very successful in selling to SMBs has increased from 40% in 2013 to 63% in 2015. On the flip side, the percent of partners who are unsuccessful has increased by 60%. MSPs are the most successful partner type in cloud, while consultants are struggling to gain traction in the cloud market.

Highlights from the research include:

It is here. Techaisle's 2016 Top 10 SMB and Midmarket IT Priorities, Business Issues and IT Challenges. 

Techaisle's recently completed survey of SMBs and Mid-market companies reveals the following Top 10 IT Priorities, IT Challenges and Business Issues that the IT and Business Decision makers are facing in 2016. In its detailed global SMB and Midmarket survey Techaisle investigated 14 different technology areas and a lot more sub-technologies, 19 different IT challenges and 19 different business issues.

2016 Top 10 SMB Business Issues, IT Challenges, IT Priorities

2016 Top 10 Mid-Market Business Issues, IT Priorities, IT Challenges

On 7th January, Harry Brelsford, Founder, SMBNation had a Q&A webinar with Techaisle on the challenges of SMB-focused MSPs and cloud channel partners. Given below are his questions and Techaisle’s responses.

Harry: Referring to this blog SMB IT Channel has reached an inflection point can you better define “inflection point?” does that mean a tipping point before collapse or a pivot?

Anurag: It is a pivot not a collapse – “one stop solution shop” is dying as each of cloud, mobility, managed services and CI/virtualization gets too complex for generalists to manage. The IT channel is changing, permanently and in ways that are entirely different from what we have seen in the past. In the same way that “cloud” refers to a very wide range of very different IT models and deployments, “the channel” is becoming a generic phrase that describes a set of business approaches that is increasingly specialized and fragmented. The areas that I just mentioned – cloud, mobility, managed services, virtualization - today, there is substantial overlap across these categories – but it is our belief that over time, success in any one of these areas will require discrete focus and investment, reducing opportunity for equal success in/focus on other competencies.

Harry: I like how you provide historical context – the comment you made regarding a market defined by the adoption of a particular type of technology (e.g. small Business Server (SBS)) is a point well taken by this crowd. But I’m not sure I’m seeing a cult-like community emerge around any particular cloud product (e.g. Office 365). Would you agree?

Anurag: Talking from a channel POV, agreed. If there is a cult growing, it is around Hybrid IT; possible that Cloud Broker business model will get to this level as well. SMB organizations will accept the notion that their focus on cloud needs to evolve into a focus on hybrid IT, as firms realize that their platforms and management scope must encompass on and off-premise systems. Truth of the matter is that Office365 also disintermediates the channel. There is no stopping an organization from going directly to Microsoft and purchasing and installing Office 365 as opposed to using SBS from a channel partner in the past. It is a classic cloud vs. on-premise conundrum. The ecosystem should evolve but it will evolve around integration of data and applications.

Harry: Along those lines, I just had a conversation that I’m not seeing the same ecosystem building up around a cloud product or service. For example, we’d like to take credit that SBS really helped build Trend Micro and today it’s a $1b company. But I’m not seeing these add-ons in the same way with Office 365. The only thing I can point to are a few SharePoint snap-ins and a few tools (migrations, etc.). Do you agree or disagree?

What is the current state of managed services in the channel?

Techaisle’s SMB global channel partner research shows that in the US 71% are currently offering one or more managed services solutions and another 18% are planning to offer managed services within one year. Techaisle believes that the channel is at the beginning of a migration from generalist to specialist firms that will play out over the next few years. With that in mind, it is fair to ask, how widespread is managed services delivery today?

Figure below, taken from Techaisle’s US SMB Managed Services Channel Study illustrates the proportion of channel partners that currently offer managed services to SMBs. Unsurprisingly, 100% of MSPs report that they do so. What might be more surprising is the extent to which channel members with other core business models provide managed services to their SMB clients. Roughly two-thirds of VARs and SPs, and 80% of SIs, offer managed services to SMB customers. IT consultants are less likely to do so, but here, too, one-third of firms are already using managed services delivery to support SMB clients.

Above data demonstrates that there has been and continues to be substantial take-up in managed services as a business delivery model outside of MSPs. This will help to build SMB customer awareness of the benefits of the approach and comfort with managed services as a delivery model. It will also have a positive impact on the channel generally, as experience with managed services helps build channel familiarity with recurring revenue models which will be important in other important channel business areas, such as cloud.

Comfort level with – and profitability of – managed services

Clearly, SMB channel members of many types are investing in developing managed services capabilities. This trend begs the question, to what extent are these firms benefitting from these investments?