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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.

Distribution Channels - SMBs Search for the New Trusted Advisor

Optimization Nation...


“The production of too many useful things results in too many useless people.”
― Karl Marx

Rarely will I quote Karl Marx, but in this case it works too well to ignore. Reviewing the latest research and surveys of technology adoption in the SMB space in an attempt to see a bigger picture, it struck us that the “decades-long Black Swan event” represented by accumulated IT investment impacting all at once, as mentioned by Nicholas Taleb in his great book: ”The Black Swan: The Impact of the Highly Improbable”, has come to pass. This, in combination with moving manufacturing industries offshore en masse and concentration of distribution away from small business retail into super warehouse outlets - whose singular objective is lower price - contributed to the economic upheaval. After ten more years of disproportionate IT investment in the Financial sector that enabled profits out of thin air by moving markets with super-high-speed trading and creation of financial instruments with no underlying value, we were almost there. Then optimization of every penny that could be squeezed from government programs – stated-income negative amortization ARMs, home equity extraction, wheelchairs, diabetes sensors, catheters, Social Security benefits, etc. - “at no cost to you whatsoever, we will even take care of all the paperwork”. These are all examples of how the economy has been changed forever using Information Technology as the key enabler.  But this post is not about the economy, it is about the influence of network technology and the resulting Virtual Solution Stack for Small and Medium Businesses (SMBs) that allows them to leverage the new IT adoption model that has emerged with Cloud Computing.

Things were getting a little expensive…

The Cloud Computing model has firmly emerged out of the ashes of the dotcom implosion and financial crisis of 2008 with the unrelenting objective of increasing production and reducing costs - more for less. Information Technology had become a critically important part of being competitive in a global marketplace, even for SMBs, but unfortunately it had also become increasingly expensive and complicated to implement. By the time we started to realize the benefits of distributed network computing in the mid 2000s, we had created an insatiable appetite for this new technology that could eliminate space and time to truly optimize business. Ironically, by doing so we also created a huge business pain point: How to feed the Beast?

A New Financial Structure Please…

The reality is that no company, large or small, could drink from the fire hose of new technologies flooding the market and bringing the ever-increasing IT investment beyond reach. It begged the question of how to access these benefits through leverage rather than outright purchase.  What has emerged - directly or indirectly - is a Cloud Services model where infrastructure such as computing power, disk space, system software and databases can be centralized and distributed much like electrical power was at the beginning of the 20th century, allowing companies to stop buying their own generators; a new model where physical location of data is less important than the security protecting it, and where robust business functionality can be delivered remotely over the network using only a browser and an internet connection, with highly qualified experts at the other end whose costs can be distributed among many clients rather than a single company, and last but not least -  the ability to access all of this capability at very low risk, with low cost start-up and pay on a subscription basis rather than from capital budgets. Beginning with web hosting and co-location on the infrastructure side and CRM in the applications arena, SMBs began committing to the model and  we have arrived  at a stage where the majority of SMBs have adopted the new architecture using IaaS, SaaS, PaaS, and other services based on their needs; many in surveys already use multiple services, averaging over 3.5 per for small business and doubling every year. And there is an extremely high level of satisfaction - much higher than when customers owned and operated all of the solution components.

Being the Trusted Advisor for the Virtual Solution Stack

We have found that in the rush to implement Cloud Services, users especially among Small Businesses, are beginning to rely much more on independent IT Consultants as their new source of advice, threatening to dis-intermediate the traditional channel. SaaS and horizontal application service providers, such as Salesforce.com, Citrix and Central Desktop are putting pressure on at the other end with vendor-direct, centralized inbound marketing that also threatens opportunity for third-party value add in many cases. Although, it must be said that Salesforce.com has built a massive following of channel partners from independent consultants to corporate VARs. And it contributes to the success of Salesforce.com. We have also found that once decisions are made for Cloud Services, the incumbent channel has a big advantage for future business as both advisor and implementer. The critical issue, now more than ever, is to be the trusted advisor early in the SMB’s lifecycle. The following are some suggestions on how to accomplish this as a Cloud Services Vendor or partner.


1)  The old Asset-Intensive model of IT Adoption is over; to be successful vendors and their partners will need to deliver and explain cost-effective Infrastructure and Applications, either together or as separate components, depending on offer and customer needs.

2)  IT as Cost Center is rapidly evolving into IT as Profit Center; applying Cloud Services to drive competitive advantages based on new marketing and business intelligence technology will usually be far more productive than having IT staff updating PC software, swapping out PCs, adding disks to storage, configuring a new server, etc. Offloading these tasks from SMB IT Teams and becoming the trusted advisor while the company is young will pay long term dividends for both vendors and channels.

3)  Staffing is usually the most expensive variable among business expenses. Demonstrate ROI and TCO models that emphasize the ability to reduce staffing, travel and distance from the equation and allow IT to be more productive with fewer staff.

4)  As they expand, SMBs typically have to grow their operational and IT footprint by hiring specialists in different domestic and international locations; helping customers reduce the growing pains by centralizing many IT operations and managing infrastructure, communications and applications from a headquarters location is a good approach to helping them expand more cost effectively.

5)  Purchasing, managing, configuring, updating, and patching software licenses is a major expense and headache for small companies and can be a full time position in many medium-sized organizations, not to mention internal user satisfaction, and ongoing maintenance fees. Cloud Services, particularly SaaS solutions, do an excellent job eliminating the majority of these issues, one reason why they continually rank extremely high on the satisfaction scale in our surveys. These are easily built into the ROI/TCO model.

6)  As new Cloud Services are rolled out across Infrastructure, Communications, Productivity and Vertical Market categories in ever changing variations of public and private clouds, it is not possible for most companies to maintain the internal expertise to make the most appropriate choices. Helping customers emerge without being overwhelmed and providing relevant knowledge of how to effectively apply the new technology will strengthen the relationship.

7)  SMB customers have made the leap to cloud-based infrastructure and will rapidly move to multiple services that leverage their investments. Much like the early days of client/server systems where HP had the hot box and Oracle provided the fastest affordable database engine, offers will consist of integration of infrastructure and software layers of the solution. Also as with client/server, users want the ease of dealing with a single supplier where possible, for simplicity and “one throat to choke”. The new solution stack is virtual and relatively standalone at this point; the next stage will require vendors of more complex applications (Integrated CRM, ERP, SCM) to make it as easy as possible for customers to buy their services, even if it means giving up some control and profit in exchange for more volume.

8)  The independent IT consultant as trusted advisor is a phenomenon that has arisen as a slew of relatively easy-to-deploy SaaS applications have matured to where individuals can configure them quickly. The current economy has also spurred a lot of activity among individuals to support their SMB friends with web presence, hosting, social media, part time IT support, etc. Although the influence wanes as companies grow in size, and with the complexity of their deployments, the independent IT consultant has emerged as a force to be reckoned with at the low end of the market and vendors should develop these evangelists while channels bring them into marketing to combine strengths for the benefit of the customer.

Davis Blair
Techaisle

  0 Comments

Demand Supply Gaps exist in Cloud & Mobility Solutions between Channel Partner offerings and SMB needs

VARs, ISVs and Service Providers (SPs) are going full throttle in providing cloud computing and mobility solutions to SMBs. Techaisle’s detailed Channel and corresponding SMB Research shows that there are some demand supply gaps between Cloud & Mobility offerings from channel partners and what the SMB customer needs. This gap between channel supply and SMB demand is illustrated below:



Red bars indicate a gap shown by a higher percentage of SMBs asking for solutions than Channels offering them, which creates shortage and channel opportunity, while the green bars indicate a higher percentage of Channels offering solutions than SMBs demanding; creating surplus capacity and increasing price pressure.

Higher demand-supply gap for Mobility Solutions

The demand-supply gap is higher for mobility solutions than cloud computing. SMBs are demanding mobility solutions; however, both the Channel Partners and their vendors have not yet developed sufficient expertise and solutions to supply them. Cloud computing technology has had longer to develop and mature while mobility has taken center stage (and resources) only in the last two years, resulting in a focus on access to application data rather than development of new applications. Techaisle research suggests that SMBs are particularly interested in mobile applications in the areas of Productivity Suites, Time and Billing Management, Social Media Marketing, Logistics and Field Service applications.

This is giving rise to many smaller, flexible and niche players that are providing point mobility solutions to SMBs, but their main weakness is channel reach. Conversely, large IT vendors with vast number of channel partners such as Cisco, Dell, HP, and IBM are still working on viable mobility solutions offerings and corresponding messaging. Many solutions available today from these vendors are targeted towards secure device management, BYOD enablement, and virtualized access to applications across multiple devices. Techaisle analysis shows that SMBs, although excited about these offerings, prefer to have them embedded in overall mobility solutions to reduce complexity in managing and administering multiple layers of IT.

Vertical Cloud Solutions

In the area of cloud computing, SMBs are requesting vertical industry solutions. In order to accomplish this, channels need to go beyond technology knowledge and really understand the dynamics of industries in which their customers operate and become industry subject matter experts. Channel partners would do well to focus on cloud solutions that help SMBs with their industry verticals, disaster recovery, accounting, and new forms of communication such as video conferencing, web conferencing and hosted VOIP. These combinations of cloud services make it easier for SMB customers to handle vendor relationships without having to manage separate account reps, billing and agreements across Infrastructure, Business Productivity, Communication and Industry Vertical Solution categories.

CRM is one of the most adopted cloud business application by SMBs and is also extensively offered by channels. Initiated by Salesforce.com and followed by SugarCRM, Zoho, Microsoft and many others, cloud CRM has already permeated the SMB landscape. IT Vendors like Dell are taking CRM to the next level by providing packaged solutions such as Salesforce.com CRM along with marketing automation from Pardot and Dell Boomi integration platform to increase the functionality, productivity and customization.

However, Techaisle research suggests that channel partners need to focus on delivering solutions that have higher relevancy to SMBs.

The above data is taken from Techaisle’s report titled “US Channel View – Challenges and Trends in Offering SMB Cloud, Mobility and Managed Services Solutions”. The US report is based on 604 channel interviews, and similar detailed surveys and analysis have been done for the Germany, UK, China, Brazil and India Markets.

Tavishi Agrawal
Techaisle
  0 Comments

Dell confirms its position as an end-to-end solutions company

End-to-End Solutions Company
Convincing conference, unified messaging from all executives, substantial customer success stories including SMBs, considerable partner alliance conversations, convergence showcase, expanding geographic footprint, emerging technologies, mid-market design point, and end-to-end solutions story. What can I say?

At the recently held Dell Annual Analyst Conference, in Austin, the centerpiece of messaging was Dell’s relentless pursuit to be an end-to-end IT solutions provider and a trusted partner. Michael Dell in his conversation with the analysts proved that Dell has changed the conversation from product to services.

“Many new change vectors are going on - Data centers are becoming server centric/compute centric, networking is being combined with computing and storage and security are becoming one – Dell has the ability to understand where the puck is going”, said Michael Dell. To that extent Dell is busy building products and solutions from which customers can capture value.

Dell has made 20 acquisitions since 2008 to build a solutions delivery capability. Its R&D, which is increasingly being focused on storage, server, security and networking convergence went up by 40 percent in the last year alone.  A key aspect of the strategy is to develop converged solutions that include storage, security, servers and wrapping it all together with services and deliver end user solutions that help customers compute in environments with pervasive data access.



 

 

 

 

 

 

 

 

Since his return as CEO, Michael Dell has steadily moved Dell into new areas for higher growth and profitability. Although Dell’s revenue has remained within a narrow margin, growing by only 1.5% from 2008 to 2012, its net income after taxes has grown by 18.5% within the same time period. Dell today has greater diversity in its solution offerings and broader geographic footprint. Both storage and security are higher margin products and with the acquisition of EqualLogic, Compellent and recently SonicWall, Dell’s margin story continues to improve.

Dell’s end-to-end solutions story is also beginning to look complete with portfolio having evolved from PCs and servers to services. Dell’s software portfolio is not where it should be but Dell is building out its capabilities for on premise software, cloud applications and software embedded in hardware. Consistent with the overall theme it wants to offer software solutions that are easier to buy, easier to use and easier to extract value.



 

 

Even the channels organization is perfectly aligned and focused on continuing to grow its PartnerDirect program that was started five years ago and is now approximately US$14 billion business for Dell. The channel’s organization headed by Greg Davis is continuing to make its rules of engagement very partner friendly and empowering and training its channels to provide value to their customers. Greg is ensuring that there is consistent
channel engagement across both mature and emerging markets with deal registration, compensation neutrality and executive priority. With over 135,000 training modules delivered in the last year alone it aims to provide simplicity, enablement and a strategy to win datacenters together. To take advantage of new social media networking platforms, Dell has also launched a new social media training program for its channel partners. The training program, developed based on Dell’s own experiences, provides its channel partners access to a number of useful social media tools and tips, including links to all of PartnerDirect’s social media platforms, a Q&A forum, registrations for both a live virtual training session and on-demand refresher courses.

Executing on its vision
Dell’s vision is being driven by five key market dynamics:

  1. Emerging markets growth

  2. Consumerization of IT

  3. Explosion of data

  4. Alternative computing platforms

  5. Corporate IT complexity



Dell has not only been able to integrate the businesses it has acquired but also has successfully scaled them. Dell Boomi, a middleware for cloud, originally acquired for its ability to bring cloud integration to SMBs, is equally at home in large enterprises. A  recent example is OneWorld Alliance which has implemented a new information technology (IT) hub based on Dell Boomi AtomSphere cloud integration, designed to substantially reduce complexity, cost and time involved in linking new member airlines into the alliance.

SMBs' "CIO in a box"
Whenever an IT vendor presents customer stories I look for sincerity in the customer’s dialog and contribution of the IT vendor to customer’s success. Current Motor, an Ann Arbor, Michigan based SMB stole the show and my heart. With only 12 employees it uses full end-to-end solutions from Dell in the most interesting yet fundamental ways. Remember that it is only a small business; nevertheless Dell put a team together to bring to fruition integration with salesforce.com and digital dashboard enablement of Electric Scooters six months sooner than expected. Solutions used – mobility, cloud, hardware, software, services. As Laura Flanagan, Executive Chairman, Current Motor put it, “Dell is her CIO in a box.” And it all started with Laura approaching Dell with a business pain point. The result -- sincerity in dialog and value-add by Dell.

As Dave Johnson, SVP, Corporate Strategy said in his presentation, the “heart of the customer is the CIO.” No worries, SMBs, if you do not have a CIO, Dell can play that role for you.

Next Steps for Dell

  • The entire Dell team has to work harder to get its messaging and capabilities heard by its current and potential customers because I feel Dell’s end-to-end
    solutions story has not yet reached the crescendo it deserves

  • By focusing on mid-market design point Dell should not forget that small businesses have different needs and the last thing they want is a scaled-down version of product meant for mid-market businesses. Other IT vendors have tried in the past with zero to limited success

  • Dell should formulate and articulate its mobile strategy beyond its planned introduction of tablets and smartphones, especially for the SMB segment that are adopting mobility solutions faster than enterprises

  • Technology pain points have now overtaken business pain points for SMBs. Dell can be that unique IT Vendor that helps SMBs sort out and identify relevant technology options (cloud, mobility, infrastructure, managed services, virtualization, social media, business intelligence, marketing automation) by becoming a trusted advisor and business consultant


Anurag Agrawal
Techaisle
  0 Comments

Dell Defines Channel’s Role in its Cloud Strategy: Partners Can Play a Role Based on Their Resources and Competencies

On March 29th, 2012, Dell announced a new Cloud Services and Solutions Certification program for its channel partners that want to transition to cloud-based business model. This program specifies additional sales and technical training required for the new certification and is initially directed at channel partners who already have a certain level of infrastructure-related skills and sell Dell’s enterprise products.

Dell’s Cloud Services & Solutions Certification is comprised of three primary pillars in providing cloud services and solutions:

  • Cloud Builder – for channel partners that can provide services to design and develop a cloud infrastructure for their customers. This is typically suitable for VARs.

  • Cloud Provider – for channels that have the capabilities or want to acquire skill-sets to operate a cloud networking operating center (NOC) enabled with Dell technology to provide cloud services. These include:  Infrastructure as a Service (IaaS), Platform as a Service (PaaS) or Software as a Service (SaaS).  This is typically suitable for SaaS ISVs, Service providers.

  • Cloud Service Enabler – for those channel partners that want to act as aggregators or brokers identifying, securing and integrating the appropriate set of cloud technologies and services from multiple sources and operating the resulting cloud for their customers through a set of managed services. This is typically suitable for MSPs & Systems Integrators.


Techaisle believes that Dell’s new channel program is a step in the right direction. Techaisle’s research has shown that businesses are looking for advice and guidance from their channel partners on the use of cloud services & solutions. In addition, Techaisle’s channel research has also shown that many channel partners who want to offer cloud-based offerings to their business clients, themselves need help and support from their vendors. The new training requirements will ensure that channel partners have the required cloud-related skills to be the best in business. Dell is also making it easy
for partners to demonstrate their infrastructure-related skills by accepting their membership in channel programs of recognized vendors in technology areas of security, networking and virtualization. In addition to getting preferred pricing, Dell’s Cloud Partners will also have access to financing from Dell as well as support engagement from Dell Direct Sales and Services.

A key feature of Dell’s program is the recognition that channel partners vary greatly in their size, skills and resources. The program allows partners to transition to the cloud computing model in a manner they feel is best suited for them – be it as a cloud builder, cloud provider or as an cloud service enabler (aggregator). The program also allows partners to supplement Dell’s technology with their own technology services, giving them significant flexibility to offer Dell-based cloud offerings without having to write-off up their investment in their existing services.

Dell has steadily evolved its channel strategy over the last five years and this new certification represents an important step in that evolution. Given this steady evolution, Dell’s channel partners can expect Dell to further fine-tune channel’s role in the cloud, develop additional support programs and also expand its cloud-based offerings for the channel.

Anurag Agrawal
Techaisle
  0 Comments

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