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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.

2020 Top 10 SMB and Midmarket business issues-challenges-priorities

Techaisle has released its annual research infographics on top 10 IT priorities, business issues and IT challenges of SMBs (1-999 employees), midmarket firms (100-999 employees) and small businesses (1-99 employees) for 2020. In its detailed SMB survey Techaisle investigated 27 different technology areas and several technology sub-categories, 25 different IT challenges and 24 different business issues. This is the 10th year of Techaisle’s annual survey research initiative that probes for top business issues, IT priorities and IT challenges. Tracking history provides a fascinating evolution in which new business goals drive new IT priorities and uncover challenges that must be addressed to enable progress on business objectives. Primary research was conducted among senior IT and business decision makers from Techaisle network of 1.8M B2B IT professionals spread across 30+ countries.

WW SMBs are expected to spend US$1 trillion on IT in 2028, growing at a faster rate than the enterprise segment. Innovation is increasingly becoming a line-item of IT budgets. 40% of midmarket firms and 15% of small businesses are carving out budgets specifically for technology-driven innovation. But there is a flip-side as well. Within 47% of small businesses and 22% of midmarket firms, IT is not expected to actively drive innovation. As data suggest, nearly half of the SMBs assert that either they do not have the right IT skills or not enough IT staff. However, data does show that move to pay-as-you-use/consumption-based financing is likely to reach an irreversible trend with 14% of SMBs either currently using or planning for it. But a mass-move to only OPEX-based technology acquisitions is still in distant future with 30% of SMBs still preferring a mix of CAPEX and OPEX.

2020 top10 smb it priorities business issues techaisle infographics blog

Download 2020 SMB infographic here

For 2020, data shows that for the first-time customer experience has appeared within the top 5 challenges being faced by IT within SMBs which has a direct correlation to the top business issue of attracting and retaining customers. A direct result of the new challenge and focus is in the increase in plans for adopting integrated CRM and customer service solutions (in some cases replacing one brand of CRM with another), acceleration in use of artificial intelligence and analytics. A small business CEO of a manufacturing firm told Techaisle, “we are planning to purchase more cloud-based applications to save time and effort. See being a start-up, currently we do not use many cloud applications and we know that there are requests from our sales and HR department to purchase additional cloud applications. Right now, we are not using any cloud application for customer service and for evaluating our progress, growth and tackle pain point of our business, we need to be more connected to our consumers. So, we are trying to purchase a cloud application like Salesforce or Zoho that can enable us connect with our consumers for feedback and registering customer support / complaints”.

For small businesses, upgrading to digital marketing and utilizing social media is among the top 10 IT challenges. These small businesses are not only experimenting themselves but seeking external assistance in how best to use major digital platforms like Google and LinkedIn to make their customers aware of the services and products that they have to offer. They are also hoping that such initiatives may help them get valuable feedback from their customers.

Security is not only the biggest IT challenge but it is also a key top priority in every region and across all employee size segments. As one SMB CIO told Techaisle, “security has been our biggest concern. The more we try to deploy latest technologies and software hackers always find new ways to breach. So, we are hiring more experts in our cyber security team and we are evaluating more vendors to have the best software and tools for security”. In fact, US survey data shows that 3% of small businesses and 94% of midmarket firms have employed IT security specialists within their organizations. If data from 1-19 employee size segment is excluded, then the percent of small businesses with full-time cybersecurity staff increases to 25% within 20-49 segment and 57% with 50-99 employee segment. The data is no different in Europe and Asia/Pacific, in fact, the percentages are higher in Europe. A small business IT director in Germany told Techaisle “as our company grows and evolves, security concerns are increasing. There are increasing number of cyber risks and we have plans to implement new security solutions, amending policies and hiring additional security professionals for protecting our organization from any cyber breaches or threats”.

Controlling IT costs, although number nine on the top 10 list is a challenge for SMBs. IT is known to be kinetic, complex and risky and costs can spiral out of control rapidly or SMBs are unable to realize the ROI of the investment in the shortest time. Most SMBs find controlling cost to be a major challenged because there have been situations where their spend was higher than budget allocation resulted in losses. Therefore, SMBs are becoming better on their budget forecasts and moving towards cloud eliminating Capex.

Accelerating cloud adoption is a given but there is a new initiative to consolidate IT workloads. A Vice President of IT in Asia/Pacific elaborated on this topic, “we have a lot of IT workloads that is spread over public and private cloud. It is very important for us to have our data consolidated at a single place that would be a private cloud so that only our internal team has access to it and no one else could access the data without our permission. We have plans to work on private cloud provided by Microsoft Azure and AWS”. There are many other SMBs and midmarket firms who have tasked their IT departments to research and add new cloud technologies based on business requirements.

Hyperconverged Infrastructure (HCI) has moved up in its list of IT priorities driven by the promise of agility, reduced costs, scalability and centralized management. SMBs and midmarket firms are showing their preference for VMware, Cisco and Nutanix HCI offerings.

Cloud-managed SD-WAN service is a new top 10 IT priority for midmarket firms because of faster deployment, optimization of WAN bandwidth and improved operational efficiency due to automation and self-provisioning.

Scroll down or  click read more for infographics

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Prologue and Epilogue of Digitalization in SMB Market

Every year or two (or three), a new trend sweeps the IT industry, and breathless coverage asserts that the new phenomenon has arrived fully-shaped to transform technology and/or IT’s role in business strategy. This is, of course, very rarely true. Most trends play out over a long time, and change in technology tends to be incremental rather than revolutionary. For example – it is certainly true that digitalization (and digital transformation) are important issues today, and that they will have a transformative effect on IT and business strategy. But Techaisle research demonstrates, they are a recent highlight in a series of business issues and technology themes that stretch back at least 15 years, from 2003 to 2019.

Key SMB and Midmarket digitalization themes, 2003-2020

techaisle smb digitalization themes

techaisle wp prologue epilogue resized

As we enter the next decade, it seems that online capabilities and activities are entering a new era. There are still advances to be made in the ‘net’ realm: there is constant pressure to expand the speed of the Internet, enabling it to handle the voracious demands of unstructured content like video, and the rise of IoT and 5G portends a coming tsunami of data from billions of connected devices. However, the key focus of web-based business investment is now less about the ‘net’ and more about the ‘work’: the ways that an increasingly-connected world supports pursuit of previously-unattainable objectives. The most important IT-related development in 2020 will be this focus on connectedness – connected cloud, edge, applications, security, collaboration, workspaces and insights. Internet and the web are the navigation routes that we have been developing since the 1970s; the always-on, everywhere-connected Interwork© platform is the destination that we will be creating in 2020 and for years to come.

This eBook has been written to provide guidance to supply-side management responsible for digitalization strategies that affect sales and marketing of advanced IT solutions to SMBs and midmarket firms. The document is structured into six sections:

  1. What’s past is prologue – The Path to Digitalization
  2. Closing the gap between business priorities and IT challenges and the rise of digital
  3. Business Issues over the years – paving the route to digital transformation
  4. The rise of innovation – and digital – as a business focus
  5. IT challenges over the years – paving the route to digital transformation
  6. What’s future is epilogue: Connected Business

Download the free eBook here

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Salesforce for SMBs – The Power of Sales and Service Together on One Platform

My days of being critical of Salesforce and their SMB strategy are over. With the introduction of Sales Cloud Essentials and Service Cloud Essentials, Salesforce has once again become relevant for SMBs, especially for the very small (1-19 employees) and overall small business (1-99 employees) segments. For an SMB, CRM is not only – or even primarily – a system used to manage pursuit of new accounts. The most common use of CRM is as a means of organizing customer services. Techaisle SMB & midmarket survey shows:

  • 18% of micro businesses (1-9 employees) are using a cloud CRM solution
  • Cloud CRM usage within small businesses has increased by 31% in the last 1 year
  • 40% of small businesses are planning to use a cloud CRM solution in the next 1 year
  • 15% of micro businesses (1-9 employees) are using a cloud Customer services solution
  • Cloud Customer Services usage within small businesses has increased by 15% in the last 1 year
  • 49% of small businesses are planning to use a Customer services solution in the next 1 year
  • 73% of very small businesses (1-19 employees) using CRM are also using Customer services
  • 56% of very small businesses (1-19 employees) using Customer services are also using CRM

Sales & Service together for better customer relationship management

Small businesses often struggle with processes around customer relationship management – maintaining contact with past buyers, preparing for renewals or new product upgrades, informing them of service releases, etc. – and a CRM system provides a central means of scheduling and tracking these activities with/for each customer.

The improved visibility resulting from cloud-based sales and marketing automation systems has in turn illuminated the need for a better-integrated customer management and support processes. This insight is prompting increased investment in systems automating customer support tasks.

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Oracle takes the plunge with Eloqua – Techaisle Take

We have covered Marketing Automation as a major topic, especially through the Techaisle SMB Marketing Automation Study conducted in US, UK, Germany and several blog posts, commenting on the rapid growth and consolidation in the market. In one fell swoop Oracle is now addressing a US$3.5 billion opportunity in the US by 2015 and US$6.0 billion opportunity globally.

Oracle’s announcement that it would acquire Eloqua for $871M, a leading Marketing Automation vendor, seems a little odd at first, mainly because majority of Eloqua’s customers are said to be using Salesforce.com as their CRM platform, and because Oracle competes with Siebel-on-Demand and recently released its’ own Fusion CRM product.

In the typical Oracle fashion of acquiring existing market leaders, i.e. Siebel Systems, PeopleSoft and JDE, Oracle snatched up another jewel for the Ellison crown, apparently valuing B2B and Enterprise-level functionality over SMB and Social Media Marketing automation that have been the focus of arch-rival Salesforce.com. It also sends a message to Redmond, whose recent acquisition of MarketingPilot seems to offer a substantial list of features and functions, but does not carry the weight of Eloqua’s brand. In the short term, it kind of looks like a mixed bag; the repercussions of the purchase seem to revolve along these areas:

SMB Customers:

1)     Oracle says they will continue to support third party applications, but they have a huge vested interest in on-premise CRM in Siebel and other solutions that will compete for resources,

2)     Enterprise customers who still have a staff to manage applications may be open to another level of integration with a combined Fusion/Eloqua/Siebel offer, but for those SMBs already on SFDC, it is very unlikely that there would be a compelling reason to move from SaaS to an on-premise model; getting away from capital purchases, IT headcount, maintenance fees and software upgrades was the main reason for going with Salesforce.com from the beginning. Same for those who are already managing their marketing campaigns and customer communication programs using Eloqua; it is hard to take that away without some revenue risk and employee dissatisfaction.

3)      In a recent Techaisle survey, 77% of SMBs interviewed stated they were looking for vendors to reduce complexity. The type and level of integration of Eloqua into the larger Siebel suite will either make things more or less complicated depending on the approach taken by product managers to create a seamless experience.

Competitors:

4)     Oracle denies access to Eloqua’s technology to Salesforce.com, which would have been a very good fit both in terms of customer acquisition/migration and start up culture. This may well be the most important (short-term) advantage gained by Oracle. This moves Marketo, SliverPop and others up the ladder as the large independents in the space, with Hubspot and Marketo obvious next-in-line M&A targets, in a market that has seen scores of start-ups, mergers and acquisitions over the past few years.

5)     Despite a 30% premium paid by Oracle for Eloqua ($23/share over the market $17), there is already a class action suit alleging that the board should have shopped a buyer more aggressively, suggesting a $27 price as more reasonable. No comment.

6)     Over the longer term the implications are larger in a market that is moving fast, which will be influenced increasingly by Big Data, Automation and Optimization -  Enterprise capabilities to compete with the big players like IBM,  Salesforce.com and  SAP, who will be bringing competition and automation to a new level in the next few years. A recent Wikibon Post is a good example of how hardware and software are evolving to meet these emerging real time challenges. The post describes how fast the bar is rising in optimization in general and online advertising in particular:

“Many commercial Web publishers make space available on their Web pages for banner and display advertisements. Typically, when a user opens such a Web page, the browser reaches out to an online ad exchange network and requests an ad unit to serve to that user. The ad exchange broadcasts this information, often enriched with behavior data specific to the user in question, to multiple advertisers. Each advertiser compares the information against its internal ad inventory and existing ad campaigns to determine what that ad impression is "worth" to them. It then decides whether to place a bid and at what amount. Bids are returned to the ad exchange, which determines who the highest bidder is and delivers the winning advertisement.”
- Wikibon


Online Advertising Forecast, Kleiner PerkinsAll without noticeable lag to the user. These are the kind of industrial strength capabilities that are on the way as the market compounds at almost 130%, dominated by Mobile spending as devices grow by the hundreds of millions, as shown in this Kleiner-Perkins forecast.

Who’s Next?

So in our opinion this is a significant acquisition for Oracle, mainly because Eloqua has a strong base of satisfied users and a strong brand, and strong technology that can be applied to Oracle’s stack in the long run. The $871M price tag was not enough to prevent a lawsuit for some shareholders, but represents a sizable investment for Oracle as they strive to define the ultimate Customer-Centric, Multi-Channel Relationship Management platform in their race against the large horizontal vendors in the space (IBM, SAP, SAS, Google, Teradata).  To this end Oracle has acquired eight companies in the last two years (ATG, FatWire. Endeca, RightNow, Inquira, Vitrue, Collective Intellect, and finally with this announcement, Eloqua). The scope of what used to be called the “360ᴼ customer perspective” has evolved to include pre-sales, sales, post-sales, customer service and lifetime customer value application components, with a relentless push to automate and integrate each piece of the puzzle.

In the wake of this acquisition, an obvious question is who's next? As mentioned earlier, Marketo is an obvious choice, as are Silverpop Hubspot, Responsys, and others.  Will SFDC respond in kind or continue to focus on the lower end of the market and Social Media acquisitions? Regardless, we think 2013 will continue to see a rich market for Marketing Automation M&A activity, following two years that have seen scores of transactions in the space.

 

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