Techaisle Blog

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.

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.

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.

Today, there are several different frameworks that are being used. One of the most common is a six-step process from awareness to purchase. Techaisle’s view is that a buyer-centric marketing framework should consist of four stages which can be easily understood and actionable. Techaisle’s four-stage framework begins from the stage when a business need is generated within a firm and search begins for a technology solution. These four stages are:

1. Identification of business requirements / needs,
2. Determination of technology requirements to meet business needs,
3. Identification of potential solutions and suppliers,
4. Selection of solution and supplier

In each of the above stages it is important for the marketer to understand the decision-making unit, the decision makers and their care-abouts.

Consider these facts from Techaisle’s SMB and midmarket buyer’s journey research:

• 275% increase in number of decision makers in the last decade
• 87% of firms search for partners to help simplify technology
• 74% of IT purchases are triggered by an acute business pain point
• 70% of the buyer’s journey is complete before first meaningful contact with a potential supplier
• 56% of buyers are millennials and Gen-Zs are not far behind
• 24% of firms use six or more information sources

In 2018, 41 percent of US midmarket firms had set their ambitions on a “Holistic” digital transformation strategy, meaning that these firms believed that Internet and digital technologies impacted every aspect of their business and should be a core part of their organizational strategy. In 2019, midmarket firms have tempered their ambitions and only 27 percent believe in holistic strategy. Nevertheless, the percent of midmarket firms with “Inclusive” digital transformation has remained unchanged at 43 percent. These firms believe that digital transformation while important is still a subset of strategic planning but not seen as critical business-wide. Both the 2018 and 2019 surveys were conducted with 876 midmarket firms.

Good news is that 17 percent of midmarket firms have either completed or have substantially completed their digital transformation journey. Another 46 percent are focusing on digitally transforming their businesses in the next 1-2 years. Highest planned adoption at 41 percent is coming from high-growth midmarket firms.

So what changed in the last 1-2 years?