Techaisle Blog

Techaisle’s latest SMB and Channel partner research shows that Dell more than doubled its approval scores among channel partners since 2013, and improved 15% among SMB tech buyers compared to 2014. 52% of US SMBs say they like Dell, which is up from 45% in 2014 and 53% of SMB channel partners, up from 26% in 2013. Dell is still vying to acquire a seat at the enterprise CIO table but at least within SMBs and midmarket firms Dell’s impact is being felt.

Dell is in a good place. Bolstered by its decade of purposeful targeted acquisitions and thrust into the center as its competitors disintegrate and regroup. Perhaps, without the confluence of these fortuitous events Dell may have been the engine that could but did not. While it has some ways to go before it reaches its destination, Dell’s end-to-end solutions train is on the move, on the right track and making good progress. Faster, stronger, better infrastructure solutions that span from the center of IT to the edge of network can only fuel growth to a certain extent. In an industry which is vying for the mindshare of buyers, Dell has to rise above with expanded branding and general awareness initiatives, including thought leadership campaigns, and not rely exclusively on its massive sales strengths. There is some good work being done by Dr. Jai Menon, Chief Research Officer & Vice President on technology evolution such as SBDC (Software-based Data Centers), HVC (High Velocity Clouds), NVM (Non-Volatile Memory) and DLP (Data Loss Prevention). Dell is also doing a great job of leading conversations on the importance of entrepreneurship around the globe to help spur innovation, employment and economic growth. Dell acquired more patents in 2014 (20+% growth) than any year in Dell history. However, most SMB buyers are yet unaware about Dell’s full capabilities and investments in these areas and how they affect the future readiness of SMB and midmarket firms' own IT.

Let us break down some key areas of SMB IT investment and Dell’s relevance.

Mobility

Mobility is a top IT priority for 76% of global SMBs and in US alone SMBs spent US$50B on mobility in 2014 (Source: Techaisle 2015 global SMB and Midmarket Mobility Adoption Study). There is no doubt that Dell has a strong presence in the mobile device segment with its laptops (especially XPS13), and Venue tablets. Dell has chosen not to participate in the Smartphone segment and rightfully so. But question remains: How does Dell stay relevant in emerging economies such as India which have moved overwhelmingly to the mobile phone and are moving rapidly to the smartphone, where Dell is not a significant player? The answer may lie in Dell’s focus on commercial PC segment where the market is both under-penetrated and has low PC to employee density.

SMB mobility is usually defined not by devices but by the workplace where those devices and their users are. Accordingly, SMBs are not only planning to adopt mobility applications, but are also seeking mobility solutions that enable their mobile workforce - specifically solutions that provide management, security and infrastructure needed to connect mobile devices and applications into corporate IT environment. Mobility solution is Dell’s strongest suite of offerings built from various components such as Dell KACE, Dell SonicWALL, Dell Cloud Client Computing (Wyse thin clients), Dell Data Protection software and Dell Mobile as well as Desktop Workspace (Wyse vWorkspace).

However, Dell is not the first mobility solution supplier that comes to mind. A category that is in high growth mode today, which responds to a rapidly-growing SMB market need and drives high spending levels within SMB accounts is clearly attractive to a wide range of potential suppliers. Ordinarily, one would expect to find that large horizontal IT vendors like Dell with its portfolio of mobility security and mobile management offerings have staked out the high ground in a market of this type, and that channel members are acting as guides to their SMB clients. However, data from Techaisle’s SMB Mobility Adoption survey shows that SMB buyers are predominantly turning to specialized firms for mobility solutions.

Recognizing the need to be front and center Dell is investing in training its channel partners on mobility solution offerings but to be really successful Dell must define its offerings in more commonly understood categories - Mobile device management, Enterprise mobile management, Windows-as-a-service, thin clients and mobile app security.

Cloud

Cloud is no longer a trend that is discrete from mainstream IT. Techaisle’s global SMB and Midmarket Cloud Adoption trends survey data shows that cloud computing is viewed as an IT priority by 96% of US SMBs and a similar percent globally. Within the US alone, SMBs spent US$30B on cloud in 2014. Cloud is established as essential IT infrastructure for SMBs and Techaisle expects cloud momentum to continue as cloud addresses some of the key IT issues faced by SMBs.

Data shows that the larger SMB cloud trend is towards deeper use of SaaS. There is still scope for additional use of cloud infrastructure to replace and/or supplement physical back-office gear, but there is a limit to how much infrastructure is required by an SMB. Dell is a cloud infrastructure supplier with a formidable set of offerings and services which includes its converged infrastructure solutions, cloud client computing capabilities, and infrastructure management and integration solutions for cloud environments. But again, despite its investments, Dell is not the most widely recognized suppliers of converged infrastructure by SMB end-users and SMB channel partners (Sources: Techaisle SMB Converged Infrastructure Adoption Study & SMB Channel Partner Trends study). Nor is it mentioned among the top 5 IT suppliers for cloud infrastructure solutions by SMBs as per Techaisle’s recent survey.

But for those SMBs and midmarket firms that are moving rapidly to private or hybrid cloud deployments Dell combines the scale and efficiencies of its PowerEdge FX portfolio with solutions like Active Systems Manager and Dell Cloud Manager to deliver the infrastructure building blocks and management capabilities needed for private or hybrid environments. Furthermore, Dell works closely with partners, such as VMware (for EVO: RAIL) and Microsoft (for Azure) in delivering tightly integrated and engineered cloud solutions. There is tremendous merit in what Dell is doing and specific SMB segments are paying attention. As per Techaisle’s SMB attitudinal segmentation, Dell is becoming a go-to supplier of on-premise cloud infrastructure for “growth-aspiring” and “innovation-driven” SMBs and Midmarket firms.

Big Data

Techaisle’s study on SMB and Midmarket Big Data Adoption and Trends shows that 7 percent of small businesses and 20 percent of midmarket businesses are currently using Big Data solutions and that another 17 percent & 38 percent respectively is planning to adopt within the next 1-2 years. The promise of superior data-driven decision making is motivating SMBs to invest in Big Data technology. This represents a sizable opportunity considering that the segment is relatively new, it requires a certain level of IT sophistication and a history in linear investment in IT enablers to be successful. In 2014 US SMBs spent slightly over US$3B on big data. Specifically, midmarket attitude towards Big Data has transitioned from “over-hype” to must-have technology with the increase in employee size.

Dell has certainly dipped its toes into big data analytics with its acquisition of StatSoft and its Statistica advanced analytics solution. Its other two big data products Dell Kitenga and Dell Toad Data Point are incidental yet complementary to Dell’s big data solution stack. It is not out of place to mention that both Kitenga and Toad Data Point came from acquisitions. But the overarching anchors of Dell’s big data strategy are its partnerships with Cloudera & Intel (integration of Dell’s in-memory appliance with Cloudera Enterprise) and Dell’s professional services. Statistica may have one leg up on SAS due to its visualization capability and another leg up on Tableau with its statistical functionality. But it will be interesting to see where and how much of resources will Dell commit to drive its big data solution stack adoption beyond the healthcare vertical (where it has tremendous strength due to acquisition of Perot Systems). For now, most SMBs and midmarket firms are turning to Dell for their big data infrastructure platform. In a most recent set of depth interviews conducted with midmarket firms, Techaisle found that almost 9 out of 10 big data implementations were on Dell platform. Techaisle’s expectations are that, in true Dell fashion, Dell may be best positioned to commoditize big data solution and bring it out from the farmers’ market to the freezer aisle for SMBs to accelerate adoption.

Supplemental to big data, IoT is another relevant area for SMBs. Techaisle’s most recent global SMB technology adoption study shows that 52% of US midmarket firms and 18% of small businesses are either currently investing or planning to invest in IoT predominantly for security, fleet management, asset tracking and supply-chain visibility. Dell has a new IoT division and its first product is a US$500 gateway (re-purposed Wyse Thin Client) which supports Ubuntu, Wind River and Thinkworks PTC. Although one may argue that Dell is going back to its product DNA and building commoditized IoT solution but Dell may well have an advantage. By combining security from SecureWorks, analytical engine of Statistica and wrapping with Dell professional services, it may be well ahead with an end-to-end IoT solution. At least, Dell’s IoT offering is easy to understand and deploy for small and midmarket businesses.

Security and Virtualization are two other areas of importance for an SMB organization. Dell is present in both these areas. In security Dell has its own IP whereas for virtualization Dell is platform agnostic and has designed a set of blueprints that works with VMware, Citrix and Nutanix. However when the security market is growing at double digits, Dell’s software security growth in the area has been 7% (Dell does not disclose its entire security revenue details). Dell may well be suffering from a 1 vs. 1 selling as opposed to wider knowledge of Dell’s security offerings.

Final Techaisle Take

Dell has successfully put together a full set of flexible and scalable technology solution building blocks. Its sales organization is learning how to use these “blocks” successfully to build robust and future ready IT solutions for its SMB customers. Dell’s channel organization has also been focusing on equipping its channel partners with the same level of understanding. Dell has also set up cross-functional teams as Centers of Excellence that are empowered to educate and guide channel partners. These blocks may look very easy to assemble but articulation of their capabilities is very tough unless a complete picture of the end outcome is shown beforehand. And Dell has its homework assigned – demonstrate business outcomes through use cases and show thought leadership by expounding forward thinking because within the eyes of many SMBs and SMB channel partners, Dell still lags other IT suppliers on innovative and cutting edge technology front (Source: Techaisle 2015 SMB survey). That said, Dell Blueprints, for integrating piece parts into whole solutions, may just be the answer that SMBs and channel partners are looking for.

Across geographies (US, Germany, Australia and India) and across different years, small businesses are showing remarkable uniformity and consistency in their response to which value statement best describes their business.  We first asked small businesses in 2010 (for India in 2012) to tell us which one of the following statements best described their business success:

• Business success depends upon a strong relationship with the customer & being responsive to their demands

• Business success depends upon implementing highly efficient & optimized processes to deliver products/ services at the lowest possible cost

• Business success depends upon implementing cost effective IT solutions to improve productivity, efficiency and profitability

• Business success depends upon ability to consistently innovate and bring cutting edge products to market

We did expect customer relationship to be garnering highest number of responses. What we did not expect was the rapid rise in efficient process implementation with the size of business. We certainly did not expect the same sentiment to be represented across four different countries – US, Germany, Australia and India.

In 2014 we repeated the question to a completely different random sample of small businesses and we got similar responses across all countries.

The data clearly shows that for very small businesses, business success is dependent upon customer delight whereas for 50-99 employee size businesses, process efficiency and optimization also become important. The data consistency exhibits that irrespective of size or maturity of country, small businesses have similar mindsets in what defines their business success. With this foundation in place small businesses systematically build their business but the rate at which they are able to truly scale and achieve their value statements becomes dependent upon the absorption of IT. In fact, the role of IT has increased by an average of 38 percent between the two years of comparison. In today’s market, IT is generally delivered in the form of systems that improve sales process efficiency and visibility, collaboration, project management, analytics and social marketing systems that capitalize on connectedness within an economy that increasingly relies on person-to-person, cloud-enabled communications.



 

There is tremendous future interest within SMBs in cloud-based marketing systems, sales systems, and solutions supporting business operations. Availability of cloud-based business solutions will drive tremendous growth in automation across seven functions:

1/ Marketing solutions
2/ Sales systems
3/ Customer service solutions
4/ IT Operations solutions
5/ Solutions supporting business operations
6/ Solutions supporting financial operations
7/ Solutions supporting HR/talent management

And when we further consider that each solution area can (and often does) incorporate multiple applications, and that some cloud applications are outside of these seven areas, we will see that both the scope and depth of cloud workloads will increase to support small business value-statements.

I first met Jag Randhawa at Dell World. It was a meeting organized by Dell Analyst Relations to showcase Dell’s Cloud Business Applications. Unbeknownst to Dell Analyst Relations, we hardly discussed Dell. What struck me immediately was his smiling demeanor and an earnest desire to be a champion of business innovation and his views on what IT could do to spur growth through employee involvement and implementing new technology ideas.

We re-connected, ten months later at his office.

Jag Randhawa is the VP of IT at CAMICO Mutual Insurance Company, an SMB with slightly less than 100 employees. And he is the quintessential CIO who loves his job, his company and his fellow colleagues. He also showers high praise on Dell’s customer intimacy, likes VMware’s virtualization solutions and embraces Open source.

Specifically, he uses Dell for Network, Switches, PCs, Servers, Storage and is purchasing Microsoft Software. From VMWare, he uses their server virtualization technologies and software like VMotion and inventory management software for managing all the VM servers.

Cloud Focus

His is a Dell shop, to the extent that he has replaced all existing storage and security solutions with those from Dell. He and his IT team of twelve do not work with any channel partners. His philosophy – whichever applications that can be pushed to the cloud without compromising security of his customer data, just do it. And he has done it; CAMICO is using 12 cloud applications which are:

1. SalesForce.com – Sales Management

1. SilverPop – Marketing Automation

1. Nexure – Agency Management Solution

1. Acuity – Legal Partners Expense Management

1. DocuSign – Electronic Signature

1. LearnLive – Webinar Broadcasting and Training

1. ADP/HCM – Payroll and Human Capital Management

1. Skype – IM and Video

1. Paypal and Total Biller Solution – Credit Card Payment Gateways

1. Concur - Travel Expense Management

1. RingCentral – Telephony

1. MailRoute – Email Spam Filter

Business Perspective Focus

To increase employee engagement and help grow the business, he created a Bottom-up Innovation Program at CAMICO, in which employees submit ideas to grow the top-line, increase operational efficiencies, improve customer service, enhance business processes, and reduce cost. This program has generated many valuable ideas, and as a result he is embarking on two of his most ambitious business focused IT projects.

1. Using Open Source for eCommerce solutions

1. Developing a Big Data Proof of Concept

Both of the projects are still in infancy stage and they are both being developed using Open Source. To explain further on the eCommerce solution initiative, he says, “We currently host our website and members-only extranet using Oracle Portal, and now we are planning to use Drupal for our website and another open source software for extranet, which is yet to be determined. Our website and extranet also have eCommerce capabilities embedded in it, so we will be porting our eCommerce into this new Open Source portal”.

He is most excited about the big data project which is his initiative to provide actionable insights and perspectives for the business management at CAMICO. When I asked him about the key objective of working on a big data project, he said, “We are experimenting with Big Data using many of the Open Source software to analyze and find correlations among loss trends. The first objective is to find loss causes in our current data and subsequently use these findings to better underwrite future risks.”

Employee Engagement Focus

As mentioned earlier, The Bottom-up Innovation Program was his brain child. The program encourages all employees to submit ideas that could add value to customers or the business. Employees observe their environment, listen to customers, and bring their outside experiences as consumers to generate ideas that could benefit the company or customers. These ideas are validated, refined and prioritized by a committee of fellow employees. For every accepted and implemented idea, employees are recognized for their contributions through intrinsic and extrinsic rewards. This program makes employees more an integral part of the company, thereby increasing employee engagement and retention. The program has become such a success that he is invited to speak at several industry events for the benefit of other organizations. He not only speaks about the concept but also explains the implementation mechanics and expected outcomes of the program.

Overcoming business challenges

Similar to most other CIOs, he and his team have a long list of IT initiatives but the top four initiatives for 2014 and beyond are:

1. Replace Website, Members-Only and eCommerce platform

1. Use Big Data for analyzing current and future risks

1. Move more infrastructure solutions into the cloud

1. Build targeted Mobile solutions

But there are enough challenges that his team (he detests the word “staff”) has to overcome. As per Jag, the biggest challenge for any IT department is money and talent. He elaborates on his statement, “There is never enough money to do everything we want to do. However in my view, if there is a business justification for an expense, money is never an issue. The definition of business justification is, for every dollar spent how much money the new solution is going to make or save? There are times when you cannot find direct or immediate benefits, so you have to find creative ways to show value and sell new ideas. Cloud applications make it easier to try new solutions without heavy upfront commitment”. To qualify, he quickly states that the big data project was unscripted and not budgeted but he was able to create a business value which catapulted it to be among the top four IT initiatives.

Business Focused CIO

He is very clear in his mind that there has never been a better time to be a CIO. And he has a message for other IT leaders, “Technology has become an integral part of the business. IT leaders should always be thinking of how they can leverage technology to create competitive advantage, grow the business and create operational efficiencies.” As if on cue, he recites what he practices:

1. Partner with business peers. Look for ways to help them achieve their goals faster using technology.

1. There is no IT project; every project is a business initiative. If you want funding for any initiative, figure out how it adds value to the business.

1. Find partners who will help you showcase the value of technology.

1. Above all, build credibility with your peers by providing excellent service.

Way to go.

All predictions below are compiled based on SMB and channel surveys conducted in 2012 covering Cloud, Mobility, Virtualization, Business Intelligence, Marketing Automation, Managed Services, Business Issues, IT Priorities, Channel Challenges across several countries.

SMB focused Predictions

• As SMBs continue to adopt cloud computing aggressively they will continue to move away from capital budgets; Revenue will become the focus rather than tight cost control. The buyer will move toward the department that is responsible for delivering business results and thereby revenue. The CMO becomes increasingly important as this unfolds.  Further, countries are coming out of economic slump which was a major factor in the initial move to the Cloud, as firms were scrambling to reduce capital outlays and reduce OPEX. But SMBs are now priming themselves for growth, and the Cloud is firmly established as an important tool to build the business.
• SMBs’ emphasis on front-office, revenue-generating applications will continue with CRM at the hub and with more marketing automation and business intelligence applications. The base of marketing automation vendors will continue to consolidate as start-ups fail and pure-plays are acquired and big players roll out integrated solutions. Cloud CRM spend will continue to grow at a healthy rate of 21 percent.
• Communications, Collaboration, Content and Context will be the primary computing scenarios of SMB IT departments, driven by Mobility, Cloud-based Applications and Process Optimization. Virtualization, Cloud, Mobility, Managed Services will together form the Four Pillars of IT that will support the transformation of SMB, enabling them to reach their full potential in the shortest period of time. The foundation for these four pillars will be the datacenter, both off-site and on-premise depending upon SMB segmentation. Techaisle forecasts that global SMB Cloud spend will grow by 22 percent in 2013, Mobility by 14 percent, Managed Services by 15 percent, Virtualization by 25 percent and datacenter by 8 percent.
• The adoption of cloud-based productivity suites among SMBs will accelerate which will begin to balance usage of collaborative and individual SaaS applications. Office365 will go main stream along with increased usage of ERP and more sophisticated applications, offering new customer and other value-added opportunities in data and application integration. We expect SMB Cloud productivity suites spend will almost double from relatively slow adoption through 2012.
• There will be a significant increase in emphasis on data integration rather than application integration; data will be combined from several sources to power different application blocks and embedded business intelligence functionality, as we first predicted in 2008.
• The SMB server and network will start becoming less visible as they progressively move offsite physically and from a remote management perspective. Cloud-based server spend will likely grow by 40 percent as compared to on-premise new server spend growth of 5 percent, the benefits of remote management overwhelming the on premise for headcount-constrained firms.
• Although social media will gain importance, SMBs will continue to struggle to determine ROMI from their social media initiatives and its usage will be considered a “productivity drainer” by many lean-staffed and short-skilled SMBs, unless they are in a local business that requires high customer intimacy to grow and build business. Aggressive SMB adopters will realize benefits but many others will be disillusioned unless advised, encouraged and shown a path by early adopters. The market will be inundated by advisors causing more confusion, especially as big data analytics start showing strong results for Enterprise-level companies.
• ISVs will focus their attention on developing client applications that integrate email, context and workflow to build other productivity applications. New business models and solutions from ISVs and Service providers will appear for SMB mobile apps that will deliver content based on context, beginning with a few verticals and then spreading horizontally.
• BYOD will be the new normal; with priority for SMBs on data and applications management rather than managing devices.
• The next generation of business intelligence and Mobile BI will be widely adopted within SMBs; Upper mid-market firms will experiment Big Data using combinations of Hadoop and other technology (e.g. Greenplum) whereas lower-mid-market and small businesses will look for insights from federated big data deliverables provisioned by cloud application vendors.

Channel Partner focused Predictions

• There will be an accelerating trend to vendor direct through development of remote integrated-service interfaces and inbound marketing initiatives. To counter, channel partners will aggressively develop outbound sales capabilities to compete with vendor direct sales and rise of the Independent Consultant to prevent from being cut out of the distribution chain.
• Successful Channels will finally realize and pursue their individual respective competencies and roles as consultants, business process advisors, integrators, aggregators or plain vanilla cloud deliverers.
• Expect that channel partners will be more successful going deep with integrated suites or a few applications that they integrate rather than trying to provide a complete infrastructure, communications, applications and vertical solutions.
• Channel partners will begin to put together a repeatable, profitable SMB solution that will include proprietary integration value-added services or software, accelerated with productivity suites and collaborative combinations, such as Office 365 and SharePoint, or Google Apps, or the new Citrix ApplicationMe@Work or XenDesktop.
• Cloud aggregators will continue to enter the market, however, few will be profitable as aggregators will need to be able manage reseller relationships with structured sales and marketing programs, implementation and post-implementation support for the channel, and tier-2 customer support for end users.
• Mid-market focused channels will look up to their vendor partners to help combine mobility, cloud, virtualization offerings while others will rely on a partner-to-partner network

Tavishi Agrawal
Techaisle