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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.

Practical guidance for navigating digital transformation with customers

Digital transformation success requires that channel partners respond to a diverse set of challenges: the channel organization needs to be able to balance extensive consulting and executive customer management with product transactions, ongoing management services and tangible contribution to customer business success. Those that are able to align their capabilities with digital transformation requirements will be positioned for long-term success in IT’s highest-growth market. Techaisle’s digital transformation (DX) framework highlights six ways that channel partners can profitably connect with customers in their initial stages of the DX journey. At the beginning of the DX journey, channel partners should plan to deliver billable services in foundational technology areas:

  1. Deployment of discrete foundation technologies needed to enable pursuit of DX business objectives: The requirement for these technologies should be clearly associated with capabilities needed within the DX roadmap; the systems themselves should be prioritized in accordance with the benefits that they deliver.
  2. Provision of management/support for technology tied to the DX roadmap: In this step it is essential for channel partners to increase customer communication so that they understand the value associated with ongoing support and integration that maintains the currency of the DX platform by managing its discrete IT components.
  3. Development and delivery of incremental feature/function objectives: Some of the technologies deployed within the DX framework may provide all needed functionality ‘out of the box,’ while others may benefit from ongoing enhancements. In these latter cases, both channel partners and their customers will benefit from the addition of features that provide incremental benefit to users/organizations that have absorbed current capability and who are ready for, and have need for, additional functionality.

Interwork technologies

Once the foundational level is in place and immediate benefits of the technology have been identified and communicated as ‘success stories’ within the customer organization, the channel partner should help the customer move on to the next DX level: establishment of connected ‘Interwork’ systems. Here, channel partner opportunities expand to include higher-value activities:

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SMB IT is challenged and its role in supporting governance-risk-compliance

Managing governance, risk and compliance is an IT challenge for over 1/4th of midmarket firms and slightly more than 1/10th of small businesses in each geo – US, Europe, Asia/Pacific, Latin America. See chart below. In an SMB context, “governance” is at least somewhat analogous to “taste” in home décor, or “sustainability” in supply chain practices: easy to acknowledge as important, but difficult to define. What is easy to delineate is the notion that governance has important linkages to issues that are of vital importance to SMB management:

  • risk mitigation,
  • regulatory compliance, and
  • protection of the corporate reputation.

Governance is a way of describing the objectives of senior executives, or of the company as a whole; it is the approach that determines how the SMB interacts with its customers, its suppliers, and its community. Oftentimes, the term ‘governance’ is coopted by IT professionals, who talk about issues like “IT governance,” “cloud governance,” or “data governance.” These are important concepts, but they really refer to policies and controls.

techaisle smb compliance challenge globally 2

Policy is the ‘glue’ that connects governance and security: SMBs benefit from thinking about management issues first, and then developing positions that guide security decisions. This works as a starting point for an SMB security strategy. However, there are challenges that arise from specific IT usage patterns or events that impact an SMB’s risk profile.

Consider the issues cited in the chart below - examples of usage patterns that affect an organization’s security stance: use of cloud, and ‘shadow IT,’ or user-managed applications and/or storage that may not align with corporate security policies. It’s possible to simply state that any use of cloud or user-managed IT services needs to adhere to these policies, but the reality is that they may not: for example, a cloud supplier’s SLAs may not include corporately-approved escalation processes, and users may lack understanding of (or concern for) corporate IT guidance. This doesn’t mean that use of cloud and shadow IT should be banned – cloud is an important IT service delivery option, and to some extent, shadow IT reflects innovation within the business.

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HPE boldly pivoting headlong into post-transactional market

Recently concluded HPE Discover was different than most other analyst events in more ways than one. First, HPE announced that it has strategically dived into the cloud swim-lane with a confident commitment to offer “everything-as-a-service” by 2022. HPE has plans to offer entire portfolio through a range of subscription, pay-per-use and consumption driven offerings. It is a bold strategy and in direct contrast to its key competitors. Second, the phrase “doubling down” on SMB and midmarket segments was not only mentioned in the HPE Global Partner Summit on the mainstage, but also in the keynote address by Antonio Neri as well as by several senior leaders in their respective breakout sessions thereby targeting SMBs as a priority market segment.

Specifically, “everything as a service” or XaaS is a very astute strategy. As we near the end this decade, it is clear that the IT industry as a whole has been transformed by cloud - by the way it alters IT service delivery options, by the way it impacts the economics & resource requirements associated with that delivery, and by the applications and business opportunities that cloud unlocks for user organizations of all sizes and in all industries. We are increasingly immersed in a post-transactional market, where discrete sales of individual products or integrated systems are replaced by agreements to provide IT capacity and business functionality “as-a-Service.”

No segment of the IT market is immune to this trend. Sales of on-premise hardware and software are declining and will continue to decline; at the same time, leading web service providers, including Microsoft (Azure), Amazon Web Services, Facebook, Google and Alibaba, are building 40 percent – 50 percent of all x86 servers for internal use, and then providing access to these servers on a pay-as-you-go basis, and software developers are creating systems on these platforms to automate sales, marketing, finance, HR and other business functions.

Inexorably, the market is shifting from one defined by discrete purchase-and-deploy deals aligned with refresh cycles to one where businesses take a hybrid approach that blends a limited number of on-premise assets with a growing range of on-demand services. Although hybrid IT is inherently a more flexible and efficient way of providing IT services needed by businesses, it still requires effective planning to address important issues within business operations. There are many different types of hybrid IT solutions, but they all belong to one of three basic types: Solutions that respond to IT department needs, and are adopted by IT professionals; Solutions that address business management needs, where demand is driven by non-IT executives or staff members; Solutions that change both business processes and IT systems, and which require IT/business management collaboration for effective delivery. And these are the hybrid market segments that HPE plans to address.

But Antonio Neri’s ambition is far bolder and greater than simply pivoting to an XaaS business model. His promise is for a zero-friction future in a cloud-less world for all segments of the market. A strong foundation has been laid with HPE GreenLake, an outcome of its acquisition of Cloud Cruiser in 2017. At HPE Discover, HPE extended its GreenLake offerings for the midmarket to enable quick deployments of workloads with right sized and ready to go storage, compute and virtualization. For midmarket firms which do not own and manage their own data centers, HPE has partnered with Equinix and CyrusOne to offer co-location solutions. To help its channel partners that serve the midmarket segment, HPE has developed a new quoting tool that reduces quote time from 18 hours to 15 minutes. In addition, HPE also announced the availability of HPE GreenLake Chatbot - an artificial intelligence driven, automated chatbot that quickly answers partners' HPE GreenLake inquiries.

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Capturing the Midmarket digital transformation business value map

IT trends belong to one of two main categories. Some, like Linux or cloud, refer to a product or product category that changes IT strategies by providing breakthrough capabilities. Others are statements of IT strategy, highlighting opportunities to directly connect IT capabilities to broader business objectives.

Digital transformation (DX) is an example of this second type of trend. DX, according to a report by global research leader Techaisle, is the integration of digitalized processes to achieve enterprise-wide automation spanning multiple functions; modernization of current processes and supporting infrastructure to achieve previously-unattainable or unimaginable business outcomes.

Digital transformation isn’t defined by a single initiative or end-point. DX describes an evolving set of capabilities that connect investments in core technologies to enhanced operational efficiency, employee empowerment, product innovation and customer intimacy – which in turn enable DX adopters to increase revenue, decrease costs, reach new markets, deliver better products and services, and ultimately, drive more profit and improve shareholder value.

Viewed from this outcome’s perspective, DX success is rooted in the ability to connect incremental investments in technology with milestone achievements, aligned within a roadmap that ties to the organizational vision of modern capabilities delivering new levels of business performance.

The channel will play a critical role in guiding midmarket firms through the DX transformation. This starts with helping IT and executives within client organizations to define their vision for the key competency areas: mapping the digital transformation pillars to business outcomes provides IT and non-IT management with a cohesive set of meaningful objectives for addressing business pain points.

techaisle midmarket business value map

Capturing the midmarket DX opportunity

What does the channel need to do to translate midmarket demand for DX and its attendant benefits into long-term customer relationships? To capitalize on the DX opportunity, channel partners need to develop deep understanding of how the DX platform is built – how this framework supports process evolution – and how to cleanly align the IT and process frameworks with a delivery plan that addresses midmarket executive care-abouts.

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