Techaisle Blog

Announcement

Cisco has announced a new Cloud and Managed Services Program (CMSP) that integrates its currently existing Cloud Provider, Cloud Services and Managed Services Channel Programs (MSCP) into one. Besides streamlining incentives, discounts and payments for its partners, the program also aims to simplify pricing for Cisco-based cloud and managed services offerings. The program will also enable collaboration and sharing of complementary opportunities between partners through a microsite via Cisco’s partner portal. All partners are expected to transition to the CMSP by August 2013.

Techaisle Take

We believe that with one master move Cisco is strategically addressing the US$94 billion global SMB opportunity by 2016.

Techaisle’s global channel surveys have shown that Cloud, Mobility, and Managed Services Solutions together are changing the SMB channel landscape as these solutions are revolutionizing IT utilization by SMBs. The new paradigm would be the "3-in-1" Channels offering Mobility, Cloud, and Managed Services as a single offering. We first wrote about the 3-in-1 channel here. And now Virtualization is quickly becoming a potent arsenal in the SMB channel partners offerings.

Techaisle’s corresponding SMB research has consistently shown that SMBs want mostly integrated solutions to limit complexity and therefore seek partners that are capable of such deliverables but very few partners currently do so as they are all camped in either one or two solution corners and few seem to embrace a holistic solution view - and this is making SMBs unsure of overall benefits and desire to spend.

With its current announcement Cisco is removing some of the barriers by bringing channel partners serving managed services and cloud needs of SMBs under a common cluster. Since many SMBs want to obtain all services from a single provider, it is important for broad product/solution vendors to evaluate all their partners, seek and cluster partners based on where they are with regards to capabilities of delivering complete solutions and introduce programs to support development. As the dividing line between cloud and managed services is becoming thin, Cisco has just done it, that is, created a single program that should:

• Enable channels to build more dynamic and serious partner-to-partner collaboration to collectively address complementary opportunities


• Enable Cisco partners to add capabilities, such as, managed services to an existing cloud services


• Attract newer partners to join Cisco program


• Help current channel partners qualify and move up Cisco’s channel partner pyramid

The data on the right from Techaisle’s channel study (N=2851) shows that channels that serve the SMB segment are keen to offer multiple services that straddle cloud and managed services. Cisco’s new program should open up opportunity for its channel partners to offer both cloud and managed services using Cisco platforms.

If we look at the survey data at micro-level, we find that is a higher percentage of Channel Partners that are offering some type of Managed Services Solutions than they are offering Mobility Solutions or even Cloud Computing. The channels falling in the green columns will benefit immediately, those in the blue columns will find the program attractive but those within the red columns in the chart would be of immense importance.

It is clear that Managed Services has been the most important offering for Channel Partners, as they evolved from a typical value added channel to offering break-fix services and remote managed services.



The path being chosen by Channels to move from one offering to the next is strongly dependent upon their current offering. Those that are in the mobility space are moving to cloud, while those in the cloud are moving to managed services.

Understanding the channel dynamics and current offerings gives clues in the direction they will move. For those that are offering only one of the services there is a clear path to adding services. In fact Techaisle survey shows that the channels have chosen their path of selection.

Channels are also interested in offering mobility solutions, however, it is also clear that mobility has become possible due to cloud and managed services allowing employees to work from anywhere, anytime and from any device.

 

The responsibility now lies with both the channel partners and Cisco to make the program a success. However, there some other steps that Cisco needs to take as well.

• Extend the reach of its Smart Care to cover cloud based services


• Develop capabilities that not only work with Cisco's networking devices but also with client devices. Although it must be said that Cisco is addressing some of those needs through its partnerships with other vendors


• Further the agenda on not only BYOD but also just BYO


• Market the program aggressively. Channel partners are being courted and trained by many other vendors


• Use the program to establish a strong presence in the datacenter space

With the latest move, Cisco may have begun to shift the tide in its favor more decisively.

Anurag Agrawal
Techaisle

Having the right information in the right context in the right format at the right time is critical to making business decisions these days, and increasingly that means access through mobile devices – whether it is the roughly 30% of consumers who own tablets or those tens of millions who get information from a Smartphone. A recent Techaisle survey of over 600 channel partners uncovered several important similarities and differences between how SMB channels are approaching three of the most important trends in the market: Cloud-Computing, Mobility Solutions and Remote Managed Services. In this post we will offer a snapshot of some characteristics of Mobility in the SMB Channel.

From a demand perspective, 60% of partners reported having SMB customers request Mobility Services, with almost 80% of ISV customers topping the list. Not surprisingly, email – the killer app, is the most used and offered service with about 50%, followed by Payment Processing with over a quarter. As we have found in other surveys, the front-office, revenue-related applications of CRM, especially among ISVs, and SFA, especially among SPs and Social Media Marketing, especially among SPs, were all being adopted by almost a quarter of respondents. We expect a rapid uptake in 2013 in the area of Mobile Analytics, which is being embedded into many front office SaaS applications in the form of dashboards and self-configured KPI management with proactive communications, or from the several cloud-based pure-play BI vendors in the market. As mentioned following the recent Citrix announcements, we also believe the market is ripe for adoption of Cloud-based Productivity Suites, which will also drive adoption of mobility among SMBs.

In many areas of Cloud Computing and especially Remote Managed Services, the big inflection point in both adoption and average spending does not happen until the 100-249 employee segment, but not so with Mobility; approximately 60% of the demand comes from the 1-9 and 10-49 employee segments, with the increase in email (across the board) and Social Media Marketing and Mobile Advertising (ISVs, SPs) driving the trend.

There are differences in the approaches, needs and challenges between SMB channel types when offering Mobility Solutions to customers, typically falling into Cost and Complexity, Management and Employee, Network and Device and Security categories. In this example, we see some key differences between the VAR/SI and SP partners related to the provision of Mobility solutions. Poor Network Service is the biggest challenge for VAR/SI partners, followed by Insufficient Network Speeds, Lack of Integration/Compatibility, and Immature Platform Choices. Both were challenged equally by Slow Performance of Mobile Apps and Device Management issues. SPs biggest challenges relative to VAR/Sis included Lack of Applications Availability, followed by Poor Mobile Web browsers, and Network and Device Issues.

As the market matures, these challenges should dissipate with increased mobile responsiveness built into websites and applications, more affordable device and data plan pricing and wider adoption of smart mobile devices. For now, the perennial SMB issue of cost and complexity of new technology balanced against perceived and demonstrated return on investment remains the most important barrier for channels to overcome.

Taken from a 2009 White Paper, this image shows the new competencies required from partners to make the transition from traditional reseller to Cloud Aggregator or Cloud Reseller. What Techaisle described was the opportunity to become either an aggregator, by becoming the equivalent of a “first tier” distributor (positioned between the vendor and resellers who then sell to end-users), or as a Cloud Reseller, selling directly to end users.

Competencies required for the aggregator include the ability to aggregate services and integrate them across services, either data across applications or building solutions between infrastructure, communications and application services. In addition, core competencies were/are needed in the areas of service provisioning and datacenter management. Then an Aggregator needs 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. Given these demanding requirements and the price pressure, it is not surprising that larger organizations like Dell have been the companies to aggressively pursue this strategy and taking advantage of an existing hardware and storage business to offer a full solution stack to resellers and Enterprise customers. As we have written on several occasions, the SMB channel is being squeezed by several trends including the rise of the Digital Channel, Self-Service Applications, Remote Management Dashboards, Plug-and-Play Horizontal Applications, and others. These make the aggregator approach difficult and susceptible to commoditization, more so given the additional challenges of recruiting, managing and supporting an additional tier of resellers. As a result, there has been a lot of confusion around how to make money as an aggregator, and the assumption that a solution has to include all layers in the stack: Computing, System Software, Storage, Network and Application. Even considering wholesale remote infrastructure availability, channels are confused about  which layer to start with, how to choose the vendors, where to recruit staff, how much investment, how to migrate existing customers and many other questions have prevented many channel partners from making the move.


The other option for SMB channels is to move existing and new customers to cloud-based services, which still requires embracing new technologies, and figuring out how to add value through specialization, integration, customization and/or all-in-one provisioning, maintenance and support. With that as background, we can move into the topic in the headline: What the SMB channel needs from Cloud-based Service vendors. The partners here represent VARs/SIs, ISVs and SPs, and are more typical of the Reseller category rather than the Aggregator.

In a recent survey of SMB Channel Partners who offer Cloud-based Services, the most important need from Cloud Vendors was for an SLA that guarantees availability. SLAs were cited as most important by Service Providers and VARs/Sis with 61% and 59% respectively, which brought overall average to the top of the list at 53% of all partners surveyed.  This is consistent with what we have heard directly from SMBs, who are using the SLAs as a proxy for the brand of underlying infrastructure and system software of the applications. The effect of this is strongest on hardware vendors, whose equipment is becoming increasingly commoditized by plug-and-play infrastructure and exacerbated by a digital channel that uses self-service interfaces and management dashboards instead of on site visits. In a similar vein, the next requirement also comes directly from SMB customers, who want access to 24x7 support services. As SMBs move to SaaS and Remote Services, outsourcing infrastructure and applications exposes them to more risk and loss of control, increasing the need for the security of a 24 hour Support Desk to reduce the perceived risk of “offsite everything”. These first two needs line up with SMB purchasing criteria, ironically two of the other most important factors are Price and Data Security. That they are not passed on as needs to the vendors probably suggests that these are largely under control – users also typically rated high levels of satisfaction in these areas.

Most of the remaining issues relate to two categories: Product Related and Partner Program Related.

Product Needs included better methods of integration, a broader catalog of applications and single sign on across applications.

Partner Program Issues included better notification of upgrades, changes and downtime – providing onsite training, having a policy concerning data migration to competitive products, and ability to offer discounts for paying annual fees upfront.

Vendors and Cloud-Services Aggregators should keep these needs in mind to develop the best Cloud Partner Programs, and SMB Resellers should use these vendor capabilities to select the right Vendor/Aggregator to work with as they migrate customers from a traditional offers to Cloud-based solutions.

It is becoming quite well-known that traditional channel relationships, which developed over a thirty period based on PC, LAN, PC Server and Client Server architecture are changing rapidly based on the characteristics of Cloud Computing  products and services.  And now we have data to prove it based on Techaisle surveys of SMBs.

It is in some ways analogous to how the industries where value could be digitized were essentially transformed by the Internet because the value could move instantly around the globe. On a worldwide network, even a relatively slow one, bits gained an advantage over molecules in advertising, banking, music and entertainment, travel,  insurance, and many others.

With Cloud Computing, Remote Managed Services, Virtualization and other emerging cloud-based technology applications such as marketing automation, business intelligence and vertical applications exploding in the SMB marketplace, distribution channels face new challenges; these solutions can be efficiently delivered directly to the SMB customer, can be downloaded from the Internet, can be configured by savvy SMB customers or remotely, can be maintained, updated and upgraded online - in many cases the value can be delivered online. To further stack the deck, vendors who do not need help delivering complex solutions don't really have an incentive to work with a partner; to the contrary, they are able to sell much more efficiently by using the web channel and an inbound sales force. If you doubt it, sign up for a free SaaS trial and if they don't call within two hours, you are the exception.

SMB Channel Preference by Cloud Technology

The survey data shows a cross-tab of SMB decision makers,  and shows that for the majority of new cloud-based applications and services Vendor Direct and VAR are the preferred sources of purchase.



At this point it makes sense to discuss the channels and why some are more suited to certain types of employee size businesses than others. We categorize Cloud Services into Infrastructure, Communications, Business Applications and Vertical Market categories.  Provisioning of infrastructure services, like adding remote storage and back up services, has been simplified through web based interfaces and is well within the reach of IT staff. Similarly, horizontal SaaS applications can be up and running in minutes and customized by business users in a matter of hours or less - think GoDaddy, Constant Contact, Central Desktop, GotoMeeting, Sherweb - why pay a channel partner to implement these services?

Adding Value to Self Service Applications

Value Added Services become necessary in relation to the level of solution complexity; in business applications like robust CRM and ERP solutions from companies like Salesforce.com and Netsuite. Even if configuration can be accomplished with Internal IT staff, it may be better to let a VAR  or specialist do it to save time and money, as with configuring Enterprise Applications like Siebel and SAP. Cloud Data, Network and Application Integration Services are also in high demand and capable Service Providers have no shortage of potential partners.

As discussed in an earlier post, these relatively easy-to-deploy solutions have also given rise to an  important new source of advice, recommendations and services - the independent IT consultant - which will be the subject of one of our next posts.

Davis Blair
Techaisle