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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.

Citrix Seeds the Cloud

While unveiling a very lucid product and service strategy today, Citrix announced several significant products and alliances that fill gaps in the SMB Cloud Computing marketplace. These include:

  • An expanded Me@Work mobile applications suite, with new and improved apps,
  • A strategic alliance with Microsoft to distribute Windows and Office365 as Cloud Services through XenDesktop,
  • A VDI-embedded and secure Ultrabook Client,
  • Next generation Gateway and next generation cross-cloud bridge,
  • A certified cloud platform developed in collaboration with Apache CloudStack,
  • Improvements to the NetScaler line.

And the most consequential announcement of the day - a wide and deep strategic alliance with Cisco that if well executed, will offer a true 1+1=3 result for both sides and have a major impact in the industry.


As the Cloud matures, Techaisle believes that integration is key and the market will coalesce around virtual versions of the client and server concepts – with communication at the core of the client suite and a collaborative, front office multi-user suite in the middle of the Server environment. With today’s announcements, Citrix moves us closer to this concept.

We will focus on three of the announcements with a point of view on how we consider them to be both strategic and timely, and finish up with huge potential impact of the slew of new alliance announcements.

Part of the achieving the vision is to ensure collaboration is possible across all hardware environments, that application objects can be executed regardless of proprietary operating systems and formats. By supporting all the formats shown here through their Receiver, Citrix already enables apps and data on three billion devices, which is expected to grow to ten billion in the next five years – Like many Korean manufacturers, Citrix is thinking in terms of screens, and knows that consumers are driving adoption of connected screens as part of the lifestyle – my teenage daughter has a MacBook, iPhone, and Satellite TV running all at the same time, each screen running multiple applications. When selecting a workplace, surveys show this generation would rather give up a more lucrative employment opportunity than give up their devices or right to use social media. As Kevin Kelly observed in his visionary work, New Rules of the New Economy, back in 1998:

“Because communication—which in the end is what the digital technology
and media are all about—is not just a sector of the economy. Communication is the economy.”
- Kevin Kelly, New Rules for the New Economy, 1998


We could not agree more, and the ME@Work announcement shows Citrix is taking the long view.

The ME@Work mobile app suite includes several productivity and collaborative applications, including the #1 web-conferencing solution, GoToMeeting. We found it interesting that Citrix is simultaneously introducing some competitive products in conjunction with the partnership; an email client – most important component of the collaborative desktop – as well as strong offers in file sharing, personal collaboration, and web conferencing. It is a bold move; for those of us who have been watching the industry for a while,  we remember when there was a triumvirate – Windows, Intel and Novell - and then there was NT with OS-embedded LAN capabilities - and then there were two. And then Netscape came out swinging with a better web browser that seriously pressured Microsoft - and then there was Windows-embedded Explorer - and then there was one.

But Microsoft gets a lot out of these announcements, especially if execution can follow strategy. Microsoft revenue is over 25 times that of Citrix, but they can use the excitement brought by a fast-growing, deeply technical, and cloud-focused next-generation partner. Especially in the SMB space - the 100-249 & 500-999 segments of the mid-market are a real sweet spot for this partnership.

By partnering with Microsoft to bring Windows, Office365 and the SkyDrive to market, Citrix benefits from the practically ubiquitous Windows installed base and opportunity for widespread adoption of Office365, (which we expect to have a banner year in 2013). And access to the most mature global software distribution ecosystem in the world. Microsoft gains an ally that provides substantial support and momentum against Google Apps, a catalyst to move away from packaged software,  additional credibility in collaboration, and adds 10,000 channel partners at the same time.

The Ultrabook client is a strategic offer because it supports the tide of BYOD and it is another route to market for XenDesktop VDI. It also aligns Citrix with Intel and the major OEMs who are looking for returns on large investments in the Ultrabook line.

While the Microsoft news is a big deal, the even larger news was a strategic alliance with Cisco that involves major commitments of joint R&D, integration of product lines and joint manufacturing in the future. Key Points:

Citrix and Cisco announced broad cooperation in three major areas: Mobile WorkStyles, Cloud Orchestration and Cloud Networking.

Mobile WorkStyles
The big idea here is any data on any device (the billions of screens mentioned above) to support the growing BYOD wave, and leveraging joint strengths to deliver a unified secure environment for applications, data, voice and collaboration. Cisco contributes Jabber and substantial collaboration expertise gained from the Webex acquisition, Virtual Experience Infrastructure (VXI) technology, and MediaNet Technology. For Mobile WorkStyles, Citrix brings a new and improved CloudGateway and Receiver, a new and improved ShareFile service and XenApp & XenDesktop. The alliance aims to bring a richer experience with seamless security and a leveraged support infrastructure than covers the entire stack 24x7 on a global basis.

From a business perspective, Citrix can ride on the back of the 800 pound gorilla straight into the Enterprise, leveraging the industrial-strength performance of Cisco’s premium product lines at a reduced price point. As with Microsoft, Citrix is aligning itself with an old-guard industry titan, in this case, one whose revenue is 16 times that of Citrix. And as with Microsoft, the deal looks like a win for both sides. Our opinion is that it could help revitalize Cisco, whose foray in to software based business created some great products in Webex, but the model was different enough to shake them up. We continue to write on the rise of the digital channel at the expense of a traditional HW VAR Channel. When Cisco acquired Webex they entered a software-based, inbound sales, price sensitive, online-marketed, sold and delivered, six-week sales cycle, user-configured business model that was almost the antithesis of what they were best at: premium quality enterprise hardware-based solutions that are differentiated by making the value of the whole network exceed the sum of its’ parts - sold by an enterprise sales force and delivered by top shelf VARs and SIs. Especially within SMBs, the right combination of price and SLA to solve business, not technical problems, are overriding criteria when buying, and traditional hands-on VARs might not even be called - cut out by online marketing and inbound sales teams. In hardware, it is more about scale economies, quality engineering and brand management - software is all about market share and developing accelerating returns and an ecosystem of fellow travelers.

Cloud Orchestration
The second key area of cooperation is in what is being called Cloud Orchestration, where the objective is to manage the traditional data center functions of computing, network, storage, security, and management, delivered across physical, virtual and cloud environments using Unified Computing, Unified Management and Unified Fabric. This is clearly Cisco’s home territory and they bring expertise and technology including Unified Computing System (UCS), Open Network Environment (ONE) and the Nexus Series of switch technologies to bear on these challenges. Citrix contributes the newest CloudPlatform, a new open source CloudStack and the XenServer to this effort. Using Cloud Orchestration, the alliance aims to deploy Public, Private and Hybrid Cloud environments with unified management that reduces complexity and improves agility, something SMB customers will be happy to see. Embracing Open Source is also a good move for Citrix to increase the footprint.

Cloud Networking
The third leg of the alliance is centered on the Citrix NetScaler Cloud Networking Platform. Here the objective is to adopt NetScaler as the go-to technology and jointly develop the next generation through the alliance. This will be accomplished by offering NetScaler as a strategic component within the Cisco Cloud Network Services Architecture, with seamless integration at the product level in areas including Security and WAN optimization. The order of implementation is that Cisco will adopt, sell and market the NetScaler, it will be manufactured according to a certified Cisco Design specification followed by a joint road-map for product interoperability, development and go-to-market strategy over the long term.

Through these announcements, Citrix has taken several steps to advance Cloud-based services and fill gaps in the market; they have introduced a new channel for Windows and Office365, brought to market their own collaborative suite, and a VDI-embedded client to further the VDI and BYO trends in the SMB space. Other technology announcements were also significant but for reasons of brevity we have not covered them in detail. One thing is for sure - no one can accuse Citrix of being timid. Of course, when snuggling up with the big guys the way they are, Citrix themselves said it best in the announcement: "POs are better than PR". It all falls on execution at this point.

 


 

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What the SMB channel needs from Cloud-based Service vendors

New Competencies in SMB Cloud ChannelTaken 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.

SMB Cloud Channel Needs
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.

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Meet the New Boss: Big Data (WSJ) – Techaisle Take

Wall Street Journal Article

This is an interesting article from the WSJ concerning how we are slowly allowing decision-making processes to move away from people and be handled by algorithms instead. It caught our attention at a time when we are completing survey work for Business Intelligence report. As discussed in an earlier post, one of the key trends in BI is how deeply it is being embedded into all kinds of applications , and this article is a good example. Please let us know what you think: comment, like, tweet or forward.

Laying the Foundation


Analytic software has evolved through several generations over the last 70 years from around WWII, when a series of unprecedented number-crunching challenges gave rise to Decision Support Systems (DSS) designed to solve problems such as best equipment production mix given material constraints, how to logistically support the Allied invasion of Europe, split the atom, or break the Japanese code. These kinds of problems tended to be monolithic, using stochastic models to find the best answer – and were a major catalyst to development of the mainframe computer.

Business Intelligence (BI) followed this linear and iterative approach with one that supported solving business problems, mostly operational, within divisions and departments of large commercial organizations, using more distributed equipment within a wider audience, i.e., Finance, Operations and Distribution. In the late 1990s there was an explosion of data resulting from widespread adoption of CRM, the killer app of the Client/Server era, adding mountains of Sales and Marketing Data to the volumes of operational information. There was a growing need to get a top down view of how performance in one area of the organization was impacting the others, to begin taking a more structured approach at understanding cause and effect, setting objectives and consistently measuring performance to improve results. BI was evolving into Enterprise Performance Management (EPM) - which is where market leaders are today.

EPM is characterized by using Business Intelligence software to understand the best performance scenarios, measure actual performance indicators (KPIs) and determine how to close the gaps, using exception reporting for most front office functions (CRM/SFA) and rules-based processing for the back office (Process Manufacturing/Real Time Bidding, SCM/Advanced Web Analytics).

Optimization Nation


Equally important as the individual BI technology advances are some of the underlying rules that have accompanied the evolution: Moore’s Law, Metcalfe’s Law, the Law of Accelerating Returns all drove exponential growth in production, adoption and utility. Over a 20 year period, these have resulted in a slow-motion Black Swan event based on the cumulative effect of technology investments, and having huge impacts on our society, including but not limited to the following optimization activities:

Law of DisruptionEconomy – development of consumer mortgage products designed to optimize sales volume regardless of risk, bundling them into bonds to optimize profit on the debt, creation of derivatives to optimize transactions and create demand for increasingly suspect debt, development of new financial instruments that have no underlying value such as  synthetic derivatives that truly have nothing but conceptual paper profits behind them, etc. By 2008 these financial instruments had optimized leverage to create risk greater than the combined GDP of industrialized world.

Employment – The WSJ article goes into depth about how algorithms have already replaced a hiring manager's decisions based on probabilities of how the employee might behave under certain circumstances. Employer choices have also been optimized by a flattening of the market caused by oceans of virtually unlimited supply from sites like Monster.com, 100K Jobs, Dice, etc. Middle management has been optimized out of the organizational chart and replaced with productivity tools, more efficient communications and a lower ratio of managers to workers. And the actual number of staff required to hit the bottom line has been optimized while CEO salaries have been optimized. If we look a little further down the line, Andrew McAfee's POV is deep on this subject, and more technical than mine.

Industry – We all know that manufacturing was moved offshore en masse over the past three decades to optimize production costs, but several other industry segments have been optimized as well, including Retail which has optimized through consolidation and healthcare which has optimized revenue per patient. Retail has been optimized at a structural level, to provide one-stop shopping for almost everything you need in a single location while volume has been optimized to produce the absolute lowest price and any cost, including optimizing the number of worker hours to keep an optimal ratio of full time to part time employees and save the resulting benefit costs. And it has also optimized the number and variety of retail outlets and small businesses required to service an optimized population in square miles. Healthcare prices have been optimized to take advantage of tax structure, potential law suits, healthcare insurance gaps, maximizing federal matching funds, Board and C-Suite compensation, pharma industry profits, and many more.

Government – Automation has also enabled a profitable business model that optimizes the use of Federal Government funds and ensures that every available dollar is spent, whether it is to make sure everybody gets a state-of-the-art mobile wheelchair, their 120 monthly catheters, a speaking glucose meter, maximum disability benefits, etc.  “Don’t worry - we’ll handle all the paperwork.”

Set it and Forget it


Complex SystemsThe imminent next generation of analytics involves truly “optimized” complex systems with human intervention largely removed from the process. Not to single out Wall Street, but they offer one of the best examples of unbridled application of technology in the singular pursuit of optimization, in their case, profit for themselves and their shareholders. The Financial Services industry has invested billions into technology and employed thousands of physicists and Ph.D.-level mathematicians to achieve a couple-millisecond transaction advantage, and programmed algorithms to use the advantage and change the rules (i.e., share price represents perfect information is no longer true). This has not proved to always produce predictable results, and the ghost in the machine has put us back on the precipice more than once, as seen in this TED video by Kevin Slavin. As we move into a brave new world that combines optimization software with networks that operate too fast for human intervention, more of our lives will be controlled by how rules are programmed into the system than what we do as individuals to impact the results. One of the best examples of where this is heading is the IBM’s Smarter Cities Initiative, which combines intelligent networks that manage Traffic, Water and Electric Utilities, Transportation, Healthcare, Public Safety, Education and others into an overall “Intelligent City”. Everyone hates traffic, so the video example from the IBM innovation site does more to explain this than I can by writing more on the subject.

Whether you agree with it or not, we are on a direct course to this future that is almost impossible to divert. This is a philosophical question and everyone will have their own opinion about the cost/benefit of chasing optimization. Comments and Opinions are welcome, please let us know what you think.

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Pick of the Week - Exxova

"As a general rule, the most successful man in life is the man who has the best information."
- Benjamin Disraeli (1804 - 1881), British Prime Minister

We are in a transformational time for Mobility and Mobile Business Intelligence, with lots of innovation happening in both hardware and software. Factors such as declining data plan prices, improved broadband availability, software investment, and widespread access to Smart Phone applications will continue to drive market acceptance as barriers to adoption fall away.

Mobility Requests to SMB ChannelsTaking a channel partner  view of the market, this chart shows what SMB Channel Partners (50%+ Revenue from SMBs) are hearing from their customers: overall 60% report that customers are asking for Mobile Solutions, including ~80% of ISVs, 54% of VAR/Sis and 47% of Service Providers.

One of the trends in BI overall is a large  increase in embedded BI functionality into software applications. This arose through the enterprise-level dashboards and  reporting capabilities that SMBs saw with Salesforce.com functionality and quickly become must-have features for serious software applications, especially those delivered as a Service (SaaS). On premise and SaaS versions have been updated through development of new internal code or OEM arrangements and open source code from players like Pentaho and Jaspersoft.

Enabling BI mobility is accomplished by moving  existing functionality to a mobile environment, using the new technologies on top of the old, which is more complicated than starting from scratch in many cases.  The larger companies such as Oracle, IBM and SAP are approaching  this through acquisition of smaller companies and integrating them into existing products. But in a classic build vs. buy fashion, smaller companies offering SaaS BI services have been building new offers from the ground up, directly employing the newest technologies like HTML5, iOS and Android for delivery to Apple devices, smartphones and the burgeoning number of tablets in the market. Smaller providers in many cases have gained a timing advantage; using native technology brings existing mobile functionality to bear on the problem; instead of simple links to server data, the presentation of the information can immediately be rich and interactive using screen manipulation, i.e., pinch and squeeze or geo-location awareness, as part of the data exploration and visualization experience.

Other features of “true” mobility integrated with “true” BI include the ability to interact with data objects on the screen, such as search, filters, check-boxes, drill-down and drill-through to the record level and other interactive functionality. Of course, then being able to use the built-in device communications capabilities is also important once the information has been isolated – SMS, email and  forms should be available for manipulation and dissemination of the information.

Many use case scenarios present themselves from the low end retail – such as immediate revenue and profit reporting from the new generation of card swipers into QuickBooks or MS Dynamics and received on a smartphone, to a mid-market electronic component manufacturer checking inventory turns in the Singapore distribution center using SAP Business Objects or IBM Cognos 10 through a Samsung Galaxy Note Tablet.

Among the pure-play SaaS Mobile BI firms to have emerged in the last few years is Exxova, based out of Atlanta, which we chose as our Cloud Vendor Pick of the Week. We chose Exxova because they have a unique value proposition: although they use some of the most powerful  back end analytics technology – SAP, Business Objects, Oracle, etc., they have managed to simplify this technology and allow administration of database structure and reporting by literally dragging and dropping fields in a web-based interface, creating new groups and calculations, and having the results delivered immediately through mobile devices running iOS and Android as described earlier. Having separated the reporting layer from the analytical engine allows them to provide deep BI capabilities to end users without the additional cost of licenses for all the back end tools, while at the same time allowing Flash and Flex to be delivered in original format to the Apple environment.

We interviewed their President Mark Hillam, a BI industry veteran and former Business Objects executive for this post. In response to how Exxova reduces complexity for the users and administrators of Mobile BI, Mr. Hillam replied:

“Every report, dashboard, and analytic is rendered with perfect fidelity to the original source.  All of this is accomplished without any modification or changes to the Enterprise BI platform or the existing content.  Even full report editing is capable from the mobile platforms.”

Exxova offers a strong example of true Mobile BI functionality which is relatively easy to administer and use at a good price point. There are others in the market such as SAP, Microstrategy, Oracle and IBM, who also have strong mobile solutions. For the SMB marketplace there will always be a balance between cost, complexity and functionality to be taken into account before long term commitments are made, Exxova seems to fit this space well. For more information, see it in action below.



 

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