Techaisle Blog

The first entry point to cloud for 51% of SMBs has been SaaS (cloud business applications). However, most businesses often obtain only fragments of cloud’s potential benefits because applications deployed usually lack the integration needed to enable a seamless enterprise-wide business process that supports agility, efficiency and growth. Discrete cloud solutions offer immediate relief from problems in many areas but disconnected cloud applications introduce friction. SMBs and midmarket firms are increasingly taking an integrated approach for a zero-friction future. The “rule of 5” refers to sources of complexity in an SMB and midmarket firm’s business related to:

1. Information timeliness/accuracy problems
2. The problem of incomplete information
3. Business process problems
4. Customer service and experience problems
5. Cost and consistency problems

This is where Zoho steps in. Zoho One - Zoho’s flagship cloud-solution, marketed as the operating system for the business, runs on a unified database with a unified data model with data pillars that enable seamless integration to deliver single truth for the business empowering users with a unified experience. A collection of 45+ apps running on a single database architecture and purpose-built on Zoho technology stack - services, software, hardware and network infrastructure - deployed on Zoho’s own global datacenters ensures performance, availability, security and privacy. Clearly, a visionary design architecture, which is being replicated by other CRM and ERP-focused vendors. But Zoho is ahead.

Why Zoho has the right solution to address the “Rule of 5”

Zoho’s secret sauce lies in its interconnected set of data pillars that feed all relevant apps. Each data pillar contains very specific metadata of employees, communications, customer information and opportunities, finance, assets, and inventory. Consistency has a lot to do with vertically integrated systems, a design paradigm that Zoho follows religiously. Although Zoho One is the holy grail for digitalizing business processes, most Zoho customers use a set of nine apps: CRM, Analytics, Books, SalesIQ, Expense, Invoice, People, Social, Inventory.

Zoho has the right solution to address the “rule of 5”.

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.

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

Techaisle’s survey research of 1256 US SMBs shows that 9% of small businesses and 29% of midmarket firms are either currently using artificial intelligence (AI) or are conducting pilots. Comparing data from last year indicates an increase of 80% within small businesses and only 12% increase in midmarket firms. Answer to slower rate of adoption within midmarket firms is present in several follow-up questions. 53% of midmarket firms are finding that AI technology and expertise is too expensive and does not fit within their current budgets. In addition, 42% of midmarket CIOs say that the importance of AI, its benefits and immediate returns are not clear to the executive management thus hindering adoption. As a result, in only 10% of midmarket firms, AI has been designated as a technology priority for internal IT staff. However, of the 36% of midmarket firms that are planning to deploy AI, 31% are conducting trials. This number has nearly doubled from 17% a year ago.

For all of SMBs, data shows that use of AI is among the top 20 on the list of IT priorities for 2020. Cloud, mobility, security, managed services, HCI, unified workspace, SD-WAN, analytics, collaboration and virtualization have higher priorities. This opens up opportunities for channel partners, consultants and AI-technology suppliers to not only evangelize use cases but also build a blueprint for easy understanding, deployment alacrity of AI solutions that can deliver previously unimaginable business outcomes.

The entry point for most SMBs is when AI is embedded in cloud business applications. 25% of small businesses are contemplating using AI for HR and recruiting, a challenge that small business owners constantly face.

Not only is the adoption trend different between small and midmarket businesses, the expected benefits and application usages also differ. 41% of small businesses believe that use of AI in improving customer experience will be integral to their business success whereas 30% of midmarket firms believe that use of AI in fraud analytics and 27% in web/social media analytics will help drive better operational excellence and customer intimacy. For example, a midmarket firm that provides hostel and budget accommodations wanted to deliver analysis and personalized communication to over 500 micro consumer segments. After adopting AI tools from Persado (a marketing language cloud that uses AI-generated language for digital marketing) enabled the company to deliver more precise marketing content resulting in double-digit engagement uplifts and improved customer loyalty.

In fact, survey shows that customer experience improvements and strategic operational excellence are becoming the SMB themes for 2020 and beyond which will likely drive adoption of analytics and AI. 38% of small businesses believe that the use of AI will provide benefits to their customer support, sales/marketing teams as well as assist the entire organization in driving better business strategy. Similarly, 43% of midmarket firms believe that pervasive use of AI could provide benefits to make more informed strategic decisions.

All data and analysis in Techaisle’s upcoming research report SMB and Midmarket Analytics / Artificial Adoption trends.

It is clear from Techaisle SMB and Midmarket buyers journey research that both ITDMs (IT decision makers) and BDMs (Business decision makers) play important roles in the (formal and shadow) acquisition of IT products and services. However, Techaisle research has also found that the distinctions between these roles are not evenly applicable across all types of IT-enabled solutions: in some areas, the business will look to IT for leadership, and in others, it will take direction from BDMs.

The positioning of these solutions is important to technology vendor sales and marketing strategies. Solutions in the “IT led” category need to have strong IT-focused positioning, with detailed information on product attributes; this material should be supported with a second layer of collateral containing information on the business case for the solutions, and aimed at BDMs. Solutions in the “BDM led” category require very different positioning: here, vendors need to make a strong case for the business benefits and relevance of the solution and orient these messages towards BDMs, supporting this campaign with accompanying technical information designed to provide clear deployment and integration guidance to ITDMs. The “IT/BDM collaborative” category is the trickiest to address. It requires deep information on business benefits and the process steps required to capture those benefits targeted at BDMs, and deep information on how to assemble, deploy, integrate and support/optimize these solutions targeted at ITDMs – and an understanding of how to position and convey the messages to each audience.

Virtualization is IT-led
In micro businesses, BDMs are reported to provide virtualization solution adoption leadership – but in all other employee-size segments, ITDMs are seen as driving adoption. Within mid-sized business, ITDMs are 2.5 times more likely than BDMs to be leading virtualization adoption, and ITDMs are viewed as having complete responsibility for virtualization solutions in nearly one-third of companies with 100-999 employees.

Managed services is IT-led
Survey responses tell a remarkably consistent story about managed services: accounts in each of the employee-size segments ascribe a rating of 36-42 (out of 100) to ITDMs as of managed services initiatives. This is a natural connection; in general, SMBs adopt managed services to reduce IT labor costs, to free up scarce IT resources to take on other tasks, and/or to provide management of complex technologies, such as services. However, BDMs may also have an interest in managed services, as they often provide access to cloud-based capabilities matched with human IT resources.

IaaS is ITDM/BDM collaborative-led
IaaS is deployed in two very different ways: as a cost-effective means of supporting IT infrastructure, generally sourced by IT, and as a means of supporting the specific (and sometimes, short-term) requirements of a business-led project, often paid for by the business team. The data suggests that the IT use case is more prevalent, and indeed, anecdotal evidence (such as the fact that market leader AWS has a very strong presence within the IT developer community) would tend to support this view. However, there is clearly supplier opportunity in the ‘BDM IaaS’ category as well.

SaaS is ITDM/BDM collaborative-led
SaaS is another category that can affect ITDMs and BDMs, as part of a collaborative initiative or individually. SaaS applications themselves can be seen as belonging to many different categories, including SaaS applications that support IT management functions (such as software development, migration/version management, and IT asset management applications) and applications CRM, ERP, HR/talent management, customer service applications, social marketing, etc.) that are designed to be used by specific non-IT users and departments. Use of multiple SaaS applications adds additional complexity, with the need to integrate and secure multiple data streams; this is likely one reason why IT’s influence over SaaS is greater within mid-market firms (which have a greater variety of users and applications) than within small businesses. Data illustrates, these issues eventually define a category in which BDMs are generally seen as having the primary influence over adoption, but where relatively few accounts (no more than 24% in any employee-size segment, and generally 9%-16%) report that BDMs have sole authority over SaaS initiatives.