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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.

Seven Key Trends and their Meaning: SMB Endpoint Device Market in 2014

IT markets tend to be complex and fast-moving – but even by IT industry standards, the endpoint device market in 2014 is extremely complex, and subject to significant and abrupt changes. Consider the following trends – some of which have played out over several years, and some of which are scant months old – and how they might affect buyers and suppliers of client technology this year:

#1: Migration to multiple screens: It is clear that today’s SMB endpoint device user is looking to perform specific tasks with the best possible device

    • Impact/implications: The ‘Swiss Army Knife’ appeal of the notebook – which doubled as both a mobility device and as a content creation platform – is waning. Tablets, not notebooks, are seen as the key productivity tool; and there is evidence to suggest that the desktop may have resurgence as a content creation option.



#2: Migration away from the traditional Wintel platform: For decades, “endpoint device” has been synonymous with “PC,” and “PC” has implied a device based on Microsoft Windows and Intel microprocessors. Through the course of this decade, that definition has been eroding. With the iPhone and iPad, Apple established iOS as a key smartphone and tablet technology. Google’s Android, with the support of powerful OEMs, has built a leadership position in the smartphone market, and has a great deal of market strength in the tablet market; Techaisle SMB End-Point survey results indicate that it is gaining momentum in the PC market as well. Meanwhile, low-power ARM chips have spread beyond portable devices into the PC, and even the data center.

    • Impact/implications: The proliferation of operating systems and underlying architectures creates opportunity for a wide range of suppliers – and confusion for a large number of SMB and mid-market IT managers who need to integrate, support and secure these devices. Suppliers should both exploit niche opportunities and look for strategies and tools that help IT managers to wrap niche products into existing, evolving client device portfolios.



#3: Incursion of new form factors:The acceptance of multiple screens, coupled with the availability of new platform technologies, has created a market where “endpoint devices” span a wide range of device categories: desktop PCs, notebook PCs, tablets and smartphones, as well as thin clients, All-in-Ones, and other device types.

    • Impact/implications: These form factors are differentiated by more than size and input technology; they move through different SMB channels at different price points; they appeal to different kinds of SMB buyers, who use different means to learn about and source them. The complexity associated with the proliferation of form factors will challenge marketing organizations that are accustomed to using a limited number of marketing vehicles and channel options to reach a relatively-predictable buying audience.



#4: Opportunities to redefine product categories: Buyer openness to new screen types has emboldened suppliers to redefine categories, or to create entirely new device classes. Some of these attempts (like the Ultrabook) have had limited success, but others, such as the 2-in-1 tablet/PC, show promise.

    • Impact/implications: There is arguably more opportunity to define net-new endpoint offerings today than there has been for decades. There is an additional requirement on suppliers to segment accurately, to be in tune with the needs and preferences of target segments, and to move quickly to address new demand drives – but there is also new opportunity to translate this acumen and agility into substantial marketing-driven success.



#5: Solution opportunities: As endpoints become more capable, buyers – especially the emerging class of SMB business decision makers (BDMs) who wield increasing power in IT decisions – will move past the device itself, to a need for solutions (such as mobility) that capitalize on the capabilities of the new units.

    • Impact/implications: To date, endpoint device suppliers have focused on building and selling screens, not the solutions that connect the screens. Marketers who understand how to connect their products to business-relevant solutions have an opportunity to differentiate those products, attracting new SMB customers and partners.



#6: Changes in buying points: The impact of SMB BDMs was mentioned above, but this point really should be considered as a trend unto itself. The IT industry has been told for years that BDMs (and especially, CMOs) would displace CIOs as the key IT decision makers. This certainly has not come to pass, and it is not clear that this shift will ever result in CIOs being displaced from their technology strategy roles. However, it is very clear that BDMs possess a great deal of power in many environments, and that their preferences and requirements are an important factor in shaping overall IT priorities.

    • Impact/implications: If BDMs gain power by joining rather than supplanting the IT decision maker (ITDM) “at the table”, the net effect is that the decision making unit within SMB customer accounts is getting bigger and more diverse. This may offer new opportunities for one-off point technology sales, but is likely to increase decision time and complexity in many organizations – particularly, within larger businesses.



#7: Product and information distribution logic: In a market dominated by the ITDM, vendors could rely on IT-focused information sources to reach prospective buyers, and IT channels to manage relationships with these buyers. Like the ITDMs themselves, these requirements persist in the current market – but are joined by a new set of inputs. SMB Business buyers do not look for the same types of information that ITDMs require, and they are looking for different kinds of information to help shape requirements and preferences. Meanwhile, the traditional channel plays an essential role in distributing traditional endpoint device types (desktop and notebook PCs), but other channels (carrier, retail) are key conduits for other product types. Effectively managing the mix of information and buyers, and products and channels, is becoming a key factor in vendor success.

    • Impact/implications: Increased complexity in information sources poses a challenge for marketers, who must find multiple ways of reaching customers. The imperative for success in this activity is increased by the common belief that buyers are using online resources to get much deeper into the purchase cycle before they contact a vendor; this increases the importance of effective content marketing, as direct sales alone will have difficulty in shaping needs and associated preferences. At the same time, the channel’s support needs are changing, and the vendor’s need to expand its channel by engaging with new kinds of partner businesses is becoming clear. Vendors need to both help traditional partners to succeed in their business transformations, and to establish relationships that reach new buyers within customer organizations.



Any one of these trends would be noteworthy against the backdrop of the SMB endpoint device opportunity, which accounts for a clear majority of all IT hardware spending, and affects literally every user of technology. Taken as a whole, these seven factors indicate potential for substantial market upheaval, creating risk and opportunity for current market leaders and new market entrants alike.

Any one of these trends would be noteworthy against the backdrop of the SMB endpoint device opportunity, which accounts for a clear majority of all IT hardware spending, and affects literally every user of technology. Taken as a whole, these seven factors indicate potential for substantial market upheaval, creating risk and opportunity for current market leaders and new market entrants alike.

To help illustrate potential opportunities and pitfalls in the 2014 endpoint device market, Techaisle has produced the The SMB Endpoint Device Adoption Trends report. This report is based on survey of SMBs, and includes both BDMs and ITDMs across each SMB size category.

About the Report

Coverage:

    • Current and Planned purchase Intentions of client devices

 

    • Tablet OS & Application software adoption – Behind the Screen

 

    • BYOD: Employers vs. Employees, or Micros vs. Larger SMBs?

 

    • Across the OS generations: XP, Windows 8 refresh intentions

 

    • The Android Opportunity: Google in the PC Market

 

    • Converged Mobility PCs: 2-in-1 PCs

 

    • PC Purchase Channel and Sources of Information



More details about the report can be found here.

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Techaisle survey data shows BYOD is a major force in the US SMB Market

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Key Attributes of Successful SMB Mobility Solutions

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Strong Need for SMB Cloud Channel Partners to offer Vertical Solutions

Techaisle’s SMB Channel Partner Trend study shows that there has been a big leap in percentage of SMB channel partners offering cloud computing services to SMBs in the last year across several countries. For example, in the US the percentage offering cloud services has jumped from 38 percent in 2012 to 64 percent in 2013 and another 22 percent are planning to offer cloud solutions. Similarly, in Australia the percentage has gone up substantially from 34 percent in 2012 and in Germany from less than 30 percent to over 60 percent. The biggest change is seen among the VARs. In 2012 only 34 percent were offering cloud solutions and in 2013 74 percent of them are offering cloud solutions to SMB customers. In Germany, the biggest jump has been within the SPs (Service Providers). However, not all channel partners (VARs, SPs, MSPs, SIs) have become successful in selling cloud to SMBs. Techaisle’s Winning Strategies of Successful SMB Cloud Channel Partners study finds that there are quantitative, meaningful and actionable differences between channel partners who are successful in the business of selling cloud and those that have not developed successful cloud practices.

Industry expertise and the ability to offer vertical solution is one such key area that is creating a distance between the successful and unsuccessful SMB cloud channel partners. Techaisle’s SMB studies have shown that SMBs are increasingly looking for vertical industry solutions but channels have been relatively slow in offering such solutions. Year 2014 will be important as this is the first year when SMB business issues have flip-flopped from reducing operational costs to increasing business growth and cloud-based line of business vertical solutions is an important area of investment.

Combining the data from Techaisle's SMB and Channel Partner studies we find that a significant gap exists between percent of SMBs adopting vertical cloud solutions and percent of SMB channel partners offering such solutions though it must be said that the gap has narrowed in the last 2 years as shown in the chart below.

techaisle-smb-cloud-vertical-solutions-blog-3

The Winning Strategies of Successful SMB Cloud Channel Partners study data shows (chart below) that 21 times as many successful cloud partners are offer vertical solutions to SMBs as those that are not successful.

techaisle-smb-cloud-vertical-solutions-blog-2

Most of the successful SMB cloud channel partners have product/service portfolios that are mapped to the full set of SMB technology needs: compute and storage infrastructure, applications, communications, support for test/development, and solutions addressing specific vertical requirements. The majority of unsuccessful SMB channel partners have limited their offerings to storage, backup, and basic SaaS offerings like Office 365 or Google Apps.

Some may argue that there is a ‘chicken and egg’ effect: that successful partners have broader portfolios because they have more engaged SMB customers. As with the chickens and eggs themselves, though, it may not matter where the cycle begins, if SMB channel partners that are not currently successful in the cloud wish to compete with those that are, they will need to develop portfolios that extend beyond IaaS to vertical-specific applications.

techaisle-smb-cloud-vertical-solutions-blog

Above chart from the Winning Strategies study shows that 50 percent more successful cloud channel partners than unsuccessful partners report that vertical industry knowledge is a key component of the value that they bring to their SMB customers. These successful channel partners are able to demonstrate knowledge of the SMBs’ industry, and are therefore able to create confidence within their SMB clients. These channel partners are also the most likely to build and maintain long-term relationships with their SMB customers. Unsuccessful channel partners claim that they are able to demonstrate understanding of their SMB customers’ business needs – but at a technical level – and are constrained by a lack of vertical understanding. 70 percent of unsuccessful channel partners emphasize their technical expertise during interactions with SMBs as they lack the understanding of their SMB customers’ industry vertical to be able to offer sophisticated cloud solutions. They emphasize service quality without necessarily understanding what this means in a cloud context. In addition, many of the unsuccessful partners tend to stress price when positioning cloud computing solutions.

Therefore it is imperative for SMB channel partners to go beyond technical knowledge and really understand the dynamics of industries in which their SMB customers operate and become industry subject matter experts.

Techaisle’s Winning Strategies of Successful SMB Cloud Channel Partners study covers critical differences between the activities and approaches of successful and unsuccessful cloud partners in three key areas: Business Priorities and Resource Allocations, Current and Planned Cloud offerings, Sales and Marketing Strategies and Tactics

Techaisle’s SMB Channel Partner Trend report covers: Mobility, Cloud, Managed Services, Virtualization, Backup, Data Integration, Sales & Marketing including Social Media & Lead Generation

 

 
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Brand Equity - A New Prescription for Cisco’s SMB Channel Partner Success

Cisco and the SMB market

Cisco has established an undisputed leadership position in the enterprise market. The company combines a widely-adopted and well-integrated portfolio of networking products with a highly-skilled (and paid) direct sales force to manage/expand its presence within major accounts.

The SMB market is a separate challenge. Here, buyers are less likely to require integration across multiple network components and more likely to emphasize price. They are also more likely to receive advice/management from channel partners, further reducing Cisco’s control over the acquisition process.

Against this backdrop, Techaisle’s SMB Channel Trends research illustrates the strengths and challenges Cisco must manage, as it looks to expand its share in the SMB segment.

Cisco Commands High Trust and Reputation

Within the channel community, Cisco enjoys a sound reputation and a high degree of trust. Techaisle’s latest SMB channel partner survey shows that 78 percent of Cisco’s SMB channel partners trust Cisco, a higher percentage than is registered by competitors such as HP and IBM. Nearly 70 percent of the partners believe that Cisco has quality products – again, the highest ranking recorded within the ‘hardware leader’ group including Cisco, HP, IBM and others. However, only 52 percent mention that Cisco has cutting edge technology, a percentage lower than that for both IBM and Microsoft. Moreover, 60 percent of Cisco’s SMB channel partners say that they Like Cisco, lower than corresponding rates for HP and Microsoft, only slightly higher than is found for IBM.

In its 2013 Annual report Cisco has written, “A substantial portion of our products and services is sold through our channel partners, and the remainder is sold through direct sales.” With specific reference to SMBs, Cisco wrote, “Generally, we define commercial businesses as companies with fewer than 1,000 employees. The larger, or midmarket, customers within the commercial market are served by a combination of our direct salesforce and our channel partners. These customers typically require the latest advanced technologies that our enterprise customers demand, but with less complexity. Small businesses, or companies with fewer than 100 employees, require information technologies and communication products that are easy to configure, install, and maintain. These smaller companies within the commercial market are primarily served by our channel partners.” Techaisle’s data shows that Cisco has attracted positive attention within this channel partner community, but that its technology and relationships do not leave it especially differentiated from competitors.

Technology Shift has Created SMB Messaging Challenges

In recent years SMB technology demands have shifted to cloud, mobility, analytics, social media, collaboration, managed services and virtualization. Cisco is seeking to capitalize on this market transition through the development of cloud-based product and service offerings that enable its customers develop and deploy their own cloud-based IT solutions.

In communications channel partners in the U.S. including those specializing in the SMB segment – Cisco has been steadily driving them to offer products and services that deploy cloud, mobility, virtualization, managed services and data center solutions. This is by no means an easy task as most SMB channel partners are being actively courted by competitive vendors that also want to grow their emerging technologies’ business. SMB channel partners selling advanced technologies have an average of 3.46 vendor partnerships which average jumps to 4.21 for Cisco SMB partners, a difference of 21 percent. With this increased contention for mind/market/wallet share, it can be difficult for Cisco to manage brand identity and its related messaging.

This difficulty is illustrated by study findings showing that of all the Cisco SMB channel partners, 44 percent consider Cisco to be their top partner. The other 56 percent mention Microsoft, Oracle, HP, IBM and several others. Within the VAR/SI community, Cisco’s share of preference is 48 percent and drops to 39 percent amongst the MSPs/SPs that are viewed as critical to the success of future cloud initiatives.

Cisco’s SMB Channel Partner Brand Equity

Techaisle believes that it is time for a new metric to represent presence (and opportunities for growth) within the SMB market. Techaisle refers to this second-generation measurement approach as Brand Equity Management. It is measured by a robust proprietary index, the Techaisle Brand Equity Score (BES-360).

Techaisle believes that it is important for IT vendors to measure their Brand Equity within SMB channel partners as well as SMBs. Techaisle’s Brand Equity Score, BES-360, helps to identify areas where IT vendors can improve to increase share of wallet. BES-360 is a KPI (Key Performance Indicator) that measures the strength of brand within a segment.

Cisco’s Brand Equity Score within its SMB channel partners is higher than most competitors – but lower than scores for both IBM and Microsoft. The implication of these findings is that even through Cisco has high brand equity amongst its channel partners; it is not necessarily true that its entire SMB-focused channel base is firmly wedded to Cisco’s game plan.

SMB Channel Partner Brand Equity Measurement– the New Prescription

Breaking down the data for Cisco, Techaisle’s study finds that almost 25 percent of Cisco’s channel partners have a Brand Equity rating of 80+. This group forms Cisco’s core partners. The data also shows that almost 35 percent of Cisco’s SMB channel partners have equity of less than 40. These are the partners that Cisco needs to work on.

Interestingly, small business focused channel partners give a higher Brand Equity Score to Cisco than mid-market focused channel partners. This is a segment that Cisco should address as the mid-market has become a battleground for most IT vendors and there is yet no clear dominant player.

Among all SMB channel partners of Cisco, VARs are actually driving up the Brand Equity Score. In fact 41 percent of VARs constitute the HBE (High Brand Equity) group. On the other hand, MSPs constitute only 20 percent. In order for Cisco to continue to grow its CMSP program and build on its initial successes, Cisco has to turn its attention to the MSPs that serve the SMBs to understand the key reasons for lower brand equity which when fixed can lead to better wallet share among MSPs.

Drilling down further into the data, Techaisle finds that Cisco is not doing better within the overall managed services community than it is within MSPs focused on cloud. A higher percentage of Cisco’s HBE partners are offering managed services to SMBs whereas a higher percentage of ABE (Average Brand Equity) partners are offering Cloud to SMBs. Cisco’s SMB cloud ambitions would benefit from moving some of these ABE cloud partners to HBE segment. The HBE segment offering cloud services need extensive training on cloud solutions to become more successful in offering cloud to their SMB customers. More than 40 percent of these channel partners are working with SMB customers that have private cloud. This may be good for Cisco in the short-term but it does not represent best practice in this segment, and it is misaligned with the ongoing acceptance of public cloud as a preferred IT delivery platform.

Product resale revenue is 43 percent for HBE partners as compared to 38 percent for ABE. Similarly, recurring revenue is 57 percent for HBE as compared to 61 percent for ABE. Naturally, this bodes well for Cisco’s current revenue as the High Brand Equity partners are driving higher revenues from products. However, if Cisco plans to increasingly promote service-centric partners then a lot more work is required to identify partners with higher services revenues and move them into the High Brand Equity segment.

Practicing the Prescription

Techaisle’s brand management work is anchored in the belief that if a vendor’s brand equity is good, then it can compete successfully with vendors with lower brand equity for sales of comparable products or services. Vendors with sound products/services but low brand equity will struggle to maintain parity with competitors that have higher brand equity, even if that vendor’s products/services are (somewhat) inferior. Hence, Brand Equity Score findings help indicate potential areas of expansion or exposure as vendors, like Cisco, assess their potential for expanding the footprint of their brands within the SMB channel partner community. The composition of Cisco’s BES across its channel indicates the core strength of its brand. Techaisle’s analysis indicates that Cisco has both strengths to build on and areas requiring focus as it moves to position its next-generation solutions (especially, cloud solutions) through its channel to the SMB market.

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2014 Top 10 SMB & Mid-Market IT Priorities, IT Challenges, Business Issues

Techaisle's just completed survey of SMBs and Mid-market companies reveals the following Top 10 IT Priorities, IT Challenges and Business Issues that the IT and Business Decision makers are facing in 2014.

2014-top10-smb-it-priorities-business-issues-techaisle-infographics       2014-top10-mid-market-it-priorities-business-issues-techaisle-infographics

 

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