Techaisle Blog

The channel industry examined by Techaisle’s 2018 SMB & midmarket channel research survey (separate studies conducted in the US and Worldwide) is very different from the community that existed a decade ago. Once a staid domain in which technologists provided IT infrastructure support to local customers, the channel is being reshaped by five key issues: cloud, and its wrenching effect on all aspects of the channel business structure; managed services efficiencies, especially vs. the pending opportunity associated with digital transformation; increasingly-complex data center technologies; integration demands that are expanding in multiple directions; and the need to sell on and deliver to business rather than technical outcomes. Let us discuss four key questions arising out of the research that is of interest to IT vendors and distributors.

Question 1. What are the top channel trends?

The channel is being reshaped by five key issues:

1. cloud, and its wrenching effect on all aspects of the channel business structure;
2. managed services efficiencies, especially vs. the pending opportunity associated with digital transformation;
3. increasingly-complex data center technologies;
4. orchestration & integration demands that are expanding in multiple directions; and
5. the need to sell on and deliver to business rather than technical outcomes

A lot has been written about cloud so let us discuss the other four areas and the remaining three questions.

Techaisle's extensive and unique survey research (N=1476) on US SMB & Midmarket Digitalization trends shows a great belief in SMBs’ organizational commitment to digitalization strategies. Survey data shows more than 40% of small (10-99 employees) and midmarket (100-999 employees) businesses believe that they are “holistic” with respect to digital transformation – that within their firms, the Internet and digital technologies impact every aspect of the business and are at the core of organizational strategy. Another large proportion of the SMB population – 30% of small businesses, 43% of midmarket firms – report that their organizations are best categorized as “inclusive,” seeing digital as important to the business, but as a relatively minor factor in strategic planning, and not having organization-wide impact. Lesser proportions of both populations (20% of small, 12% mf midmarket) see themselves as ‘siloed’ with respect to digital initiatives, and less than 5% of both groups believe that their digital strategies are either ‘in the shadows’ or ‘nonexistent.’

Techaisle’s global Midmarket Converged Infrastructure (CI) and Hyperconverged Infrastructure (HCI) adoption trends survey report(s) show that 28% of US midmarket firms are currently using HCI solutions and another 46% are planning to adopt in the next 1-2 years, more than doubling of penetration. US data is based on a survey of N=609 midmarket firms. Highest potential adoption rates are within midmarket firms that have a holistic digital transformation strategy, are born-in-the-cloud and are rapidly moving from Advanced IT segment to Enterprise IT segment. Input to HCI market positioning and marketing communications begins with a perspective on the drivers that lead midmarket firms to embrace HCI solutions. Survey data illustrates that three drivers – improved operational efficiency, cost reduction and improved scalability – are the most frequently-cited reasons for embracing HCI. Issues connected to core infrastructure renewal, “hardware upgrade” (34%), “data center consolidation” (29%), and “improved backup/DR” (27%) round out the list of top-rated drivers.

Techaisle's most recent survey of 1600 SMBs & Midmarket firms (defined as 1 employee to 1000 employees), found that only 18% do not have any form of digital transformation initiative. Which means that 82% of SMBs are already on their digital transformation journey. And interestingly, 42% are taking a holistic view of digital transformation. What it means is that these 42% believe the Internet and digital technologies impact every aspect of the business and must become a core part of organizational strategy. What is more encouraging is that SMBs believe that in the next 2 years, 32% of their business activities would be digitized and increase of 30% from 2 years ago. Globally SMBs are expected to spend US$250 billion on digital transformation in 2018.

Techaisle’s extensive research also identified that successful implementation requires a journey through digitization and digitalization, from substitution to augmentation to modification and redefinition, spanning all of the functions in an organization and all of the technology used to support its activities. Based on both quantitative survey and depth-discussions with SMB and midmarket businesses on the transformation journey Techaisle has developed the twin ladder view of digital transformation. Figure below presents a single-image depiction of the ‘twin ladders’ of digital transformation. The bottom set of steps is labelled “the technology ladder,” and stretches from the deployment of modern, flexible infrastructure to advanced IT-enabled capabilities. The technology ladder begins with the building blocks needed to establish infrastructure that is capable of supporting digital transformation. It includes mobility, virtualization, hyperconverged infrastructure & converged infrastructure and other technologies essential to provisioning advanced IT services. Businesses need to deploy and make use of the building blocks and platform technologies before they can launch initiatives that are truly transformative for their businesses and customers.