Techaisle Analyst Insights

Announcement
Dell just announced its full intention to assist SMBs with their Cloud Computing adoption by launching Dell Cloud Business Applications, a family of integrated SaaS applications with cross-application cloud analytics supported by end-to-end Dell services specifically for SMBs.

Key benefits include easy and affordable integration with existing software; integrated best-of-breed cloud applications selected, tested and backed by Dell; and real-time online analytics and reporting across multiple business functions. Dell Cloud Business applications can solve the top pain points cited by SMB customers contemplating a move to the cloud:
- Integrating applications is expensive
- Out of the box reports are insufficient
- Moving to cloud is harder than it seems.

The total solution announced by Dell includes:

• Access to Leading SaaS Applications (initially starting with Salesforce.com)


• Integration with Existing Software (through  Dell Boomi)


• Real-time Business Visibility and Analytics


• Comprehensive Services

In addition, Dell’s Cloud Business Applications will be delivered through a Dell-branded cloud service complete with business grade single sign-on and security.

First such SaaS application being made available by Dell is Salesforce.com. By re-selling Salesforce's CRM offerings to its existing base of SMB customers, Dell would increase its revenues while Salesforce.com could potentially expand its available market at a lower cost
than it would on its own.

Significance of the Announcement
The announcement is significant in more than one respect. Besides taking the guesswork out for SMBs on what applications to use in the cloud, the ability to integrate across applications both in-house and SaaS as well as real-time business analytics across the
entire business is really important.

Cloud Computing has become an all pervasive terminology promising the holy grail of quick start up and low costs allowing small businesses to focus on their core competencies. We have to pause and think about the reality and outcome in five years. As SMBs increasingly adopt cloud computing and reach a new level of complexity, the very technology that had a low start-up cost for them may become too complex and expensive.
While there are many different reasons for such complexity but the two that stand out are the Complexities in Application Usage and Intricacies in
Data Integration.

Dell’s Cloud Business Applications addresses Complexity Issue Head-on
A recent Techaisle survey showed that while the average number of fee-based applications/services being used has largely remained the same over the last three years, the maximum number of applications being used has shown steady growth.

For example, for US SMBs, that number now stands at 11 applications. This increases the complexity of usage of applications in terms of: different vendors, different billing, different sign-ons and above all inability to exchange data easily.



Dell aims to provide best of breed applications to the SMBs, largely helping them to make decisions on their behalf. Cloud Business Solutions directly speaks to typical SMB questions:

• What can I move to the cloud?


• What solutions are best for my business?


• How will I transfer my data to the cloud?


• Who will train my employees?


• What will be my cost?


• If I move from a Capex to an expense situation as far as my IT investments are concerned, what will be the impact on my financial health?


• How does it affect my cash flow, profitability, etc.?

Dell offerings also provide complete transparency to its SMB customers with regards to all associated costs and monthly single billing.

Dell Boomi – SMB SaaS Data Integration Made easy
As Cloud computing adoption among SMBs grows, the real issue of data integration will come into play. As we see it, there are clearly four stacks of Cloud offerings and it will become imperative for each stack to communicate with the other stack. And with increasing usage of number of SaaS applications following questions become relevant with no easy answers:

• How do I move my data and information across applications?


• How do I have a single sign-on?


• How do I change vendors?


• Will I be able to change vendors?


• How do I migrate my data?


• I like applications from two different providers and I want to run them both but will they interact?

Dell Boomi addresses above questions at an affordable price point for SMBs.

While there are many niche vendors addressing each niche area, the complexity grows manifold as businesses move from one application to another, from one device to multiple devices.



One of the last things that SMBs need is a high-cost of application data integration, a cost that may become higher than the applications they are using. SMBs do not have the time or the budget for such integrations. It is a given that SMBs will continue to work in a hybrid environment with both desktop software and cloud based applications in simultaneous use.

In order to achieve data integration, ensure security and compliance and guarantee multiple device access, Dell’s integration and analytics capabilities built into its Cloud Business Application solutions will provide multiple specializations to an SMB. These very well thought out specializations and roles are:

- Consultants/Business Process analysts, advising on which cloud computing solutions to use
- Developers and Integrators, helping businesses achieve data integration
- Cloud Governance marshals, advising and auditing security and governance issues
- Data Aggregators, specializing in aggregating both internal and external data and making it actionable to businesses through the use of business intelligence applications

A good day for Dell and a good announcement for SMBs. Dell has to get the word out and not only make it a success in the US but also begin its gradual roll-out across geographies. And it cannot leave its channel partners behind. Dell cannot underestimate the usefulness of channels, more so in the emerging markets than the mature markets.

Anurag Agrawal
Techaisle

The World is Flat (© Thomas L. Friedman) and so has become IT, especially for SMBs. With a Flat world, rises an opportunity for SMBs to employ workers who are globally distributed, travel and telecommute. With a Flat world comes Flat IT. And the IT vendors are missing the dialogue with their SMB customers- some vendors more than others. They are also missing a new understanding of SMB IT adoption cycle.

But we are getting ahead of ourselves. Let us first understand the world of Flat IT.

Waves have Evaporated to Form Clouds

Analyst firms typically use words such as IT waves or eras in describing SMB IT adoption - client/server wave, networking wave, Internet wave, etc. There is nothing wrong with this wave theory except now that there are no more waves left, all water is evaporating to form clouds. But some analysts still continue with that philosophy and call the coming wave as mobility wave. These do not do any good to either a vendor or the end-customer. Mobility started with notebooks & Wi-Fi. An SMB does not buy IT considering the wave, it does not even think whether the wave is waxing or waning. A typical SMB buys IT because it needs IT and the SMB with the help of channel partners becomes smart enough to understand what IT to buy to make itself more efficient, productive and profitable.

Waves were relevant more than a decade ago when technology products were evolving in piecemeal basis. Today all technologies are available at the same time and its adoption among SMBs is dependent upon the business plan.

Building Block IT

Enter the building blocks. SMBs started off their journey into IT by unknowingly using simple building block concepts. Their first purchase was always a PC which served as the foundational block. When they added employees and file sharing became important, they built a network and added a server – the next block stacked up on the foundational block. When they reached a certain size they added more servers, the third and subsequent blocks became applications such as CRM, ERP and Line of business. All of these blocks could not be added without the existence of the previous block. Very soon when an SMB reached a mid-market level of operation, the blocks were neatly stacked one on top of another. And when the blocks became vertically unstable, they brought in external experts such as consulting organizations to help manage these blocks and possibly break them into small chunks that could be easily maintained. SMBs looked for Enablement.

IT vendors thrived. Dell concentrated on the foundational block, Cisco connected the blocks, HP played with all block layers while IBM refocused to the top layers. Vendors like Microsoft, SAP and Oracle provided the layers that enabled the blocks.

The process of an SMB growth and its relative steps to absorb IT were steady and predictable. Some SMBs stacked the blocks faster than others but steps to get to the top of the block were always same. It was also dependent upon the financial capacity of an SMB to the extent that those with large dollars available for investment built the blocks faster not necessarily having the same end-results as SMBs with limited investment capabilities and which moved slower. Call it cutting edge versus laggards, but such nomenclature also never proved that the cutting edge SMBs were more efficient or profitable than the laggards. IT vendors and channels made money as they exploited the IT imbalance among various SMBs creating a race to reach the top of building blocks as fast as possible.

Flat IT

Enter Flat IT. Cloud, mobility, virtualization, and managed services have effectively toppled the blocks down in one fell sweep and have laid everything flat on the table. SMBs are now automatically empowered but they do not know it yet, because nobody has told them so directly. The concept of cutting edge and laggard has been torn apart because
it carries little meaning as SMBs now have a rich menu of solutions available that can be plugged into in a very short time. Now it is not a race to the top, but how can an SMB reach its full potential in the shortest period of time.

In a Flat world, with Flat IT, similar technology is now available across all countries and gap between developing and developed worlds is narrowing. In some of the emerging markets, IT is not only Flat but leapfrogging technologies as building blocks are not fully present. Where converged infrastructure is becoming a possibility, Cloud services will
be delivered via wireless.

Next week we will discuss how SMB IT has become Time & Size Agnostic and how the SMBs of today are transforming themselves.

Anurag Agrawal
Techaisle

Techaisle believes that in about 5 year’s time, SMB Cloud Computing will begin its steady route of complexity of client-server technology. Client-server technology (alternatively server-based computing) became increasingly complex to implement and maintain because of the following reasons:

• Lack of control


• Complexity in development and usage


• Muddled TCO


• Intricacies in Data Integration


• Expensive implementation


• Dependency on Consultants


• Too many Vendors providing niche solutions

Historically, these are the very reasons that  gave rise to thin-client computing which quickly transformed its nomenclature to Desktop Virtualization. Again the promise of lower TCO, “access anytime, anywhere”, centralized computing with de-centralized user capabilities, disaster recovery and standardization is still struggling to make a definitive statement for SMBs.

Similar signs are already becoming visible in the Cloud Computing arena. The beneficiaries of this complexity will be three different types of entities:

1. Those that provide consulting to SMBs prior to Cloud Computing Implementation


2. Those that provide consulting and data integration across clouds post cloud implementation for SMBs


3. Those that have a stack of offerings providing not only cloud solutions but also seamless data exchange capabilities for SMBs

Anurag Agrawal
Techaisle

It should come as no surprise that marketing to SMBs is hard – harder in many ways than marketing to enterprises. The diversity and vast size of the SMB market is the primary reason for why getting and supporting SMB customers is such a hard task. Most Cloud vendors design their products with larger enterprises in mind with SMBs being an afterthought. Even if there are any SMB specific requirements that become part of the solution they are typically overshadowed by other enterprise requirements. This is a particular problem with Cloud based services which are designed to scale and so selling those to SMBs becomes a matter of configuring a price that SMBs can digest.

Little if any thought is given to whether a Cloud service has direct business relevance to SMBs. But as the Techaisle SMB computing survey data shows, vendors must demonstrate direct business relevance if they are to succeed in gaining SMB customers. Despite all the marketing around productivity and line of business Cloud services, SMB Cloud adoption is led by industry specific services. This aspect provides valuable insight into SMB decision making where Cloud services are concerned. When evaluating packaged software SMBs are more concerned with issues surrounding application compatibility, maintenance, cost, integration, training and support. It would appear, however, that this criteria changes when applications are evaluated as Cloud services. The key question appears to be how quickly can a Cloud service impact their business. This makes justifying purchase of industry specific services rather an easy one.

It is clearly not the only criteria though. The same survey shows high levels of adoption of hosted email, Cloud storage and security services. While all these have indirect business relevance in that they are foundational IT services, they are essentially a cost line item in an SMB income statement. SMBs are migrating these services to the Cloud because it is also an easy decision. SMBs are familiar with using email in the Cloud for personal reasons (Gmail, Hotmail etc.) and are therefore comfortable migrating the business email and storage to the Cloud as well. Similarly, migrating to Cloud based storage and security also are easy decisions for the same reasons.

Other services however, have not enjoyed the same success (yet). One can argue that this is simply a matter of giving SMBs time to get comfy with Cloud services. The problem as we see it is that most of the other services are marketed using a “reduce cost” value proposition. We believe a different sales and marketing approach is warranted. If reducing cost continues to be the centerpiece then for vendors this becomes a race to the bottom – which is not good for the industry as a whole.

Abhijeet Rane
Techaisle