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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.

Top 10 SMB and Midmarket Predictions for 2020

1. Connected business will be everyone’s problem.

The key focus of business investment will be more about the “work”: the ways that an increasingly-connected business can support pursuit of previously-unattainable objectives. The most important SMB & Midmarket technology-related adoption in 2020 will be this focus on connectedness – cloud, platforms, edge, devices, applications, security, collaboration, workspaces and insights. With the connective fabric rapidly becoming ubiquitous, businesses of all types and sizes will move beyond just the network access, and concentrate instead on using technologies to drive progress across the four pillars of digital transformation: operational effi-ciency, customer intimacy, employee empowerment and product innovation.

2. Momentum building for consumption-based IT acquisition.

Increasingly within SMBs and midmarket firms discrete sales of individual products or integrated systems will be replaced by agreements to provide IT capacity and business functionality “as-a-Service”. In 2020, the trend will be more midmarket driven than small businesses. 20% of midmarket firms will move towards OPEX-based agreements where these firms will look for flexibility and will prefer to acquire technology based on usage – namely IT consumption model – driven primarily because of current IT asset under-utilization.

3. Customer intimacy will take a whole new meaning.

Every SMBs’ survival is dependent upon customers and 2020 will see a ground-breaking year when customer intimacy (acquisition, retention, experience & satisfaction) will drive IT adoption and business process evolution. By the end of 2020, for 45% of SMBs, need for customer intimacy will drive IT adoption and 76% of new SaaS adoption will be customer focused. As a result, 15% of small businesses and 24% of midmarket firms will have “Top Notch” customer facing digital presence.

4. Need for Embedded Collaboration will be clear and present.

Anywhere, anytime also means any type of collaboration. Collaboration solutions cannot be deployed on stand-alone platforms – they need to be viewed as a framework for integrating multiple capabilities, native to multiple applications. By the end of 2020, 80% of SMBs will benefit from embedded collaboration and for high-growth, innovative businesses, effective, e¬fficient collaboration will be in their organizational DNA to deliver decision agility, business agility and innovation agility.

5. Regardless of the question, analytics will provide an answer.

In 2020, SMBs will see a new attitude and culture that will value and use data as a meaningful way to gauge overall performance and specific areas of interest at a glance will become prevalent. SMBs will demand Key Performance Indicators (KPIs) as a standard part of application architectures as well as a meta-directory of KPIs that all applications can access. It may finally become possible for SMBs and Midmarket firms measure and optimize for elusive objectives like Return on Marketing Investment, Optimal Pricing, Cost of Acquisition and Lifetime Customer Value. By the end of 2020, 15% of SMBs will be highly data driven and 30% will be using cloud-based prescriptive analytics and 50% of midmarket firms will demand AI-driven analytical platforms to proactively prescribe actions that will mitigate risk / increase opportunity within the predicted future.

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Prologue and Epilogue of Digitalization in SMB Market

Every year or two (or three), a new trend sweeps the IT industry, and breathless coverage asserts that the new phenomenon has arrived fully-shaped to transform technology and/or IT’s role in business strategy. This is, of course, very rarely true. Most trends play out over a long time, and change in technology tends to be incremental rather than revolutionary. For example – it is certainly true that digitalization (and digital transformation) are important issues today, and that they will have a transformative effect on IT and business strategy. But Techaisle research demonstrates, they are a recent highlight in a series of business issues and technology themes that stretch back at least 15 years, from 2003 to 2019.

Key SMB and Midmarket digitalization themes, 2003-2020

techaisle smb digitalization themes

techaisle wp prologue epilogue resized

As we enter the next decade, it seems that online capabilities and activities are entering a new era. There are still advances to be made in the ‘net’ realm: there is constant pressure to expand the speed of the Internet, enabling it to handle the voracious demands of unstructured content like video, and the rise of IoT and 5G portends a coming tsunami of data from billions of connected devices. However, the key focus of web-based business investment is now less about the ‘net’ and more about the ‘work’: the ways that an increasingly-connected world supports pursuit of previously-unattainable objectives. The most important IT-related development in 2020 will be this focus on connectedness – connected cloud, edge, applications, security, collaboration, workspaces and insights. Internet and the web are the navigation routes that we have been developing since the 1970s; the always-on, everywhere-connected Interwork© platform is the destination that we will be creating in 2020 and for years to come.

This eBook has been written to provide guidance to supply-side management responsible for digitalization strategies that affect sales and marketing of advanced IT solutions to SMBs and midmarket firms. The document is structured into six sections:

  1. What’s past is prologue – The Path to Digitalization
  2. Closing the gap between business priorities and IT challenges and the rise of digital
  3. Business Issues over the years – paving the route to digital transformation
  4. The rise of innovation – and digital – as a business focus
  5. IT challenges over the years – paving the route to digital transformation
  6. What’s future is epilogue: Connected Business

Download the free eBook here

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Salesforce – a step closer to enabling connected business with connected insights

On Monday, 10th June, Salesforce announced a definitive agreement to acquire Tableau bringing Salesforce one step closer to empowering analytics-driven digital transformation for its customers, enabling enterprise performance management, driving connected businesses and hurtling itself on a collision course with Microsoft and SAP. Microsoft’s Power BI is rapidly dethroning many analytics platforms including Tableau and SAP is taking giant leaps towards customer experience management with Qualtrics.

Besides adding to topline revenue of Salesforce, the acquisition will likely not have any significant material effect on revenue growth rate as Tableau’s revenue is less than 10% of Salesforce’s revenue with Q/Q growth rate only slightly more than half of Salesforce.

Salesforce began as a SaaS company in 2000 with its famous “No Software” logo and attention-grabbing advertising of a fighter jet striking a biplane. In the last seven years it has transformed into a leading cloud SaaS company with creatively created and strategically segmented solution offerings – Sales Cloud, Marketing Cloud, Services Cloud, Commerce Cloud and Analytics Cloud. But collectively these are only customer-focused applications that operate within the Salesforce platform. But the scope of SaaS impact mirrors the scope of activity in the enterprise itself. SaaS is being meaningfully applied to IT operations, to core business functions (finance, HR, business operations, ERP) in addition to customer-facing tasks (customer service, marketing and sales). There are dozens of discrete SaaS application categories and thousands of applications that address part or all of the requirements in a specific area, or which bridge across process requirements.

The true benefits arise when cloud applications are connected to each other. Connected applications provide businesses the benefits of agility, efficiency, collaboration, alignment, customer intimacy and innovation. This cross-functional visibility is important to diagnosing issues within the business and formulating enterprise strategy. Almost all businesses, from small to enterprise are on their digital transformation journeys. Frequently, a key step in the digital transformation process is to automate related tasks within and across business process. In the absence of adjacent SaaS applications such as ERP, HR, financial management - Salesforce was forced to acquire MuleSoft, the integration solution to help businesses of all sizes create connected applications.

But a key missing piece from Salesforce’s portfolio has been analytics. Regardless of the business issue, analytics provides an answer. Businesses are prioritizing a wide range of improved outcomes: improvement within existing operations and processes, expansion of customer base, profitability, creation and accelerated delivery of new offerings, reduced cost, and enhanced ability to manage the unknown. Remarkably, each of the issues can be addressed with analytics solutions – and indeed, businesses are using analytics to address each today. This provides analytics vendors with a powerful ability to link product/service capabilities with critical ‘care-abouts’. And exactly this capability was missing from Salesforce’s portfolio. Its AI-led analytics platform Einstein was not proving to be a true analytics solution but rather a collection of dashboards. And for that matter, neither is Tableau (which leans more towards data visualization than analytics). However, with some of its recent announcements such as Ask Data and updates of VizQL, when combined with Salesforce platform may prove to be very useful for new and common customers.

If connected cloud applications is a logical starting point for connect businesses then connected insights is the logical destination. A fact that I feel is being pursued by Salesforce. Most businesses are developing an understanding of the power of advanced analytics, and many are well along the path of installing a “data culture” in which facts are used to identify options, not simply to justify decisions based on instinct or anecdotal feedback. Many cherished but complex metrics, such as return on marketing investment or lifetime customer value, can be established by providing analysts and data scientists with rich data and sophisticated tools. Both MuleSoft and Tableau bring Salesforce closer to delivering an Enterprise Performance Management (EPM) system which will allow businesses to have a new attitude and culture that values and uses data analytics as the quickest way to gauge overall performance and specific areas of interest at a glance. And a key reason why SAP purchased Business Objects many years ago, Oracle acquired Hyperion and IBM absorbed Cognos and SPSS, but some fell by the wayside.

Most businesses including SMBs and midmarket firms that have used CRM and ERP systems within the past few years are familiar with the dashboards that are available with many of these applications, either embedded or purchased/developed separately. Dashboards will continue to evolve and be dynamic in several ways; the way they use data from subsystems like ecommerce and other real time feed sources, the way users can personalize the layout of their dashboards, and the ability to build KPIs “on-the-fly” by calculating variables on the screen and saving the result in a meta-repository for all to use. While several SaaS vendors allow this kind of metric building and start the user at a dashboard, we have yet to see anything targeted to the mid-market or SMBs that connects the performance across front office, production, fulfillment and customer service almost out of the box – so the future has been here for a while and we are waiting for the market to catch up. Microsoft fired the most recent salvo with Power BI and now Salesforce is responding. If only Salesforce bought an ERP firm or HR or collaboration or virtual workspace or customer experience/survey. It would certainly be a game-changer.

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Artificial Intelligence – visibly absent in small businesses but notably present in midmarket firms

The IT industry is abuzz with discussion of Artificial Intelligence (AI) and blockchain. Both AI and blockchain are currently aspirational within SMBs and Midmarket firms. It is not because these firms are not open to the technologies but they have limited understanding of deployment processes.

Regardless of the aspirational nature, both the technologies are showing a very promising adoption trends within midmarket firms. Techaisle’s survey research of 1100 US firms shows that 26% of midmarket firms are currently using AI and another 28% plan to deploy within the next one year. If they stick to the plan, by mid-2020, over 50% of firms will have at least either begun trials or accomplished full deployment of AI within their organizations.

Similarly, blockchain adoption shows an important trend. Although, less than 1/5th of midmarket firms are currently using the technology, a full 40% do plan to adopt blockchain within the year. In fact, when the two datasets are combined, data shows that 42% are currently experimenting and another 42% are developing protypes. Drilling down into the data we find that 26% of midmarket firms are seriously investigating the possibility of implementing blockchain.

In contrast to midmarket’s current and planned adoption of artificial intelligence, only 5% of small businesses are currently using artificial intelligence and 10% of small businesses which are planning to deploy AI are conducting trials.

Not only is the adoption trend different between small and midmarket businesses, the expected benefits and application usages also differ. For example, 38% of small businesses believe that use of AI in marketing / advertising and 32% in improving customer experiences will be integral to their business success whereas 43% of midmarket firms believe that use of AI in process automation and 42% in improving analytics will be integral to their business success. Nevertheless, one-third of both small and midmarket firms believe that use of AI in cybersecurity will be essential for improved security.

Identical percentage, 54% of US small and midmarket businesses agree that artificial intelligence refers to a system consisting of a series of algorithms that can learn from constant inputs. 45% of small businesses and 46% of midmarket firms aspire to use AI for automating IT and a similar percentage plan to initially use AI for non-core processes and applications.

Artificial intelligence adoption within SMBs is at a stage where cloud was a decade ago. Visibly absent within small businesses but notably present within midmarket firms. However, it is not a question of when AI adoption will take firm root but how. The responsibility lies with the vendors and other suppliers for guidance, deployment alacrity and outcomes.

 

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