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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.

2016 US SMB IT spend growth rate to remain flat at US$188B

Techaisle forecasts that US SMB IT spend growth rate could very well remain flat at US$188 billion in 2016 as compared to 2015. However, the US midmarket spending growth will likely increase by 6% whereas the small business spending will fall by 2 percent in 2016 from 2015. In early 2015, Techaisle had forecast US SMB IT spending to be US$180B by end of 2015 – based on most recent Techaisle SMB surveys the actual spending for 2015 came in at US$188B. Techaisle survey data shows some very interesting patterns for planned SMB 2016 IT budgets across different employee size businesses. Small businesses show progressive fall in IT budgets until they reach a certain size whereas midmarket businesses show budget increases until they reach a certain size.

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Indicators of managed services channel (MSP) success

Where is the SMB managed services channel today, as we enter 2016? Since 2013, managed services has taken deep root within the channel, and at the same time, some of the firms that were only casually involved with managed services have pulled back in order to focus in other areas. In the report, The SMB Channel & Managed Services: Success Metrics, Techaisle uses findings from 808 in-depth surveys with US-based channel firms to illuminate conditions within the US SMB managed services channel, and to develop perspectives that suppliers (and the channel itself) can use to construct successful managed services channel strategies. The survey identified a set of issues that is highly correlated with very successful managed services channel businesses, another that can be used to identify partners that are likely to be unsuccessful in managed services, and a third which lacks predictive value.

Results from three annual Techaisle channel surveys, shown in figure below, show that the trend towards specialization – in which channel members commit more strongly to managed services, or move away in order to focus on other areas – is well underway. 64 percent of the channel is ‘very successful’ in selling managed services, meaning that the population of very successful managed services channel members has increased by nearly 70 percent since 2013. A much smaller but growing proportion (currently 11 percent, more than double the 5 percent logged in 2013) acknowledges that it is not having success with managed services. MSPs and SPs report the highest level of success in selling managed services, while SIs, consultants and (especially) VARs are see less success.

techaisle channel msp resized

A view of these findings organized by core business model provides additional insight into the partner communities where managed services are – and are not – gaining traction. As would be expected, managed service providers themselves are most likely to report success in managed services sales. Beyond this group, there are several interesting observations contained within the data:

  • Nearly three-quarters of service providers state that they are “very successful” at selling managed services. This is an important issue within this community: SPs increasingly rely on managed services to differentiate their core hosting or connectivity services, which are (in many cases) relatively low-margin, and which offer limited prospects for future growth. Perhaps the most interesting finding for SPs is that 18 percent consider themselves to be unsuccessful in selling managed services. This group will be at risk as they compete with firms that augment core service presence with expanded, high-margin service portfolios that lock in an increased share of ‘customer wallet’.
  • SIs are not especially aggressive in this space. At a high level, this data makes intuitive sense: SIs tend to have engagements that have a fixed duration and deliverable and managed services involve longer-term relationships tied to SLAs rather than functional specifications. However, it might be expected that SIs facing a shrinking product delivery market (due to increased use of cloud) might look to solidify customer relationships via managed services. The data shows that some SIs are following this path, they are either not committed to this strategy or are actively pursuing other options.
  • Consultants and (especially) VARs are tepid in their pursuit of managed services business. Corresponding 2016 channel reports from Techaisle (see details below) show that VARs are finding great success in cloud, while consultants report that they are experiencing high levels of mobility sales success. Neither group seems particularly enthralled with managed services

It’s clear to all of us that today’s IT industry is comprised of many ‘moving pieces’. This is especially true in the SMB segment: with cloud, mobility and managed services, the buyer’s options have expanded; with the increased involvement of non-IT managers (in both ‘real’ and shadow IT), the buyer community has expanded; and with the channel’s struggle to understand and act on the new cloud-driven demands of a post-transactional IT market, the supply chain itself is undergoing tremendous change.

Techaisle is committed to working with the IT industry to ensure that these changes result in increased opportunity. Techaisle has recently completed two large-scale surveys – one of channel partners (VARs, SIs, MSPs, SPs and IT consultants) and another of SMBs (firms with 1-999 employees). We have also created a thought leadership piece, “Channel Imperatives for 2020: The Changing Channel for a Post-transactional IT market” which examines how 12 tenets of ‘conventional wisdom’ in the channel – mantras like the need to add value, or to increase service revenue, or to focus sales people on retiring quota, or to assemble and deliver best-of-breed solutions – are giving way to new management imperatives. We believe that this research is essential for suppliers looking to plot a channel-centric strategy for SMB market development by capitalizing on the insights contained in our analysis.

The series of three channel focused reports are The SMB Channel and Cloud: Success Metrics, The SMB Channel and Mobility: Success Metrics and The SMB Channel and Managed Services: Success Metrics. Each contains charts and analysis that can be used to identify high-value ‘very successful’ partners and avoid low-value ‘unsuccessful’ channel organizations. They are designed to connect with channel marketing, recruitment and management strategy.

techaisle channel success reports resized

 

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

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 top10 smb it priorities business issues techaisle infographics resized

 

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

2016 top10 mid market it priorities business issues techaisle infographics resized

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On SMB MSP & Cloud Channel 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?

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