Techaisle Analyst Insights

Techaisle’s latest SMB and Channel partner research shows that Dell more than doubled its approval scores among channel partners since 2013, and improved 15% among SMB tech buyers compared to 2014. 52% of US SMBs say they like Dell, which is up from 45% in 2014 and 53% of SMB channel partners, up from 26% in 2013. Dell is still vying to acquire a seat at the enterprise CIO table but at least within SMBs and midmarket firms Dell’s impact is being felt.

Dell is in a good place. Bolstered by its decade of purposeful targeted acquisitions and thrust into the center as its competitors disintegrate and regroup. Perhaps, without the confluence of these fortuitous events Dell may have been the engine that could but did not. While it has some ways to go before it reaches its destination, Dell’s end-to-end solutions train is on the move, on the right track and making good progress. Faster, stronger, better infrastructure solutions that span from the center of IT to the edge of network can only fuel growth to a certain extent. In an industry which is vying for the mindshare of buyers, Dell has to rise above with expanded branding and general awareness initiatives, including thought leadership campaigns, and not rely exclusively on its massive sales strengths. There is some good work being done by Dr. Jai Menon, Chief Research Officer & Vice President on technology evolution such as SBDC (Software-based Data Centers), HVC (High Velocity Clouds), NVM (Non-Volatile Memory) and DLP (Data Loss Prevention). Dell is also doing a great job of leading conversations on the importance of entrepreneurship around the globe to help spur innovation, employment and economic growth. Dell acquired more patents in 2014 (20+% growth) than any year in Dell history. However, most SMB buyers are yet unaware about Dell’s full capabilities and investments in these areas and how they affect the future readiness of SMB and midmarket firms' own IT.

Let us break down some key areas of SMB IT investment and Dell’s relevance.

Mobility

Mobility is a top IT priority for 76% of global SMBs and in US alone SMBs spent US$50B on mobility in 2014 (Source: Techaisle 2015 global SMB and Midmarket Mobility Adoption Study). There is no doubt that Dell has a strong presence in the mobile device segment with its laptops (especially XPS13), and Venue tablets. Dell has chosen not to participate in the Smartphone segment and rightfully so. But question remains: How does Dell stay relevant in emerging economies such as India which have moved overwhelmingly to the mobile phone and are moving rapidly to the smartphone, where Dell is not a significant player? The answer may lie in Dell’s focus on commercial PC segment where the market is both under-penetrated and has low PC to employee density.

SMB mobility is usually defined not by devices but by the workplace where those devices and their users are. Accordingly, SMBs are not only planning to adopt mobility applications, but are also seeking mobility solutions that enable their mobile workforce - specifically solutions that provide management, security and infrastructure needed to connect mobile devices and applications into corporate IT environment. Mobility solution is Dell’s strongest suite of offerings built from various components such as Dell KACE, Dell SonicWALL, Dell Cloud Client Computing (Wyse thin clients), Dell Data Protection software and Dell Mobile as well as Desktop Workspace (Wyse vWorkspace).

However, Dell is not the first mobility solution supplier that comes to mind. A category that is in high growth mode today, which responds to a rapidly-growing SMB market need and drives high spending levels within SMB accounts is clearly attractive to a wide range of potential suppliers. Ordinarily, one would expect to find that large horizontal IT vendors like Dell with its portfolio of mobility security and mobile management offerings have staked out the high ground in a market of this type, and that channel members are acting as guides to their SMB clients. However, data from Techaisle’s SMB Mobility Adoption survey shows that SMB buyers are predominantly turning to specialized firms for mobility solutions.

Recognizing the need to be front and center Dell is investing in training its channel partners on mobility solution offerings but to be really successful Dell must define its offerings in more commonly understood categories - Mobile device management, Enterprise mobile management, Windows-as-a-service, thin clients and mobile app security.

Cloud

Cloud is no longer a trend that is discrete from mainstream IT. Techaisle’s global SMB and Midmarket Cloud Adoption trends survey data shows that cloud computing is viewed as an IT priority by 96% of US SMBs and a similar percent globally. Within the US alone, SMBs spent US$30B on cloud in 2014. Cloud is established as essential IT infrastructure for SMBs and Techaisle expects cloud momentum to continue as cloud addresses some of the key IT issues faced by SMBs.

Data shows that the larger SMB cloud trend is towards deeper use of SaaS. There is still scope for additional use of cloud infrastructure to replace and/or supplement physical back-office gear, but there is a limit to how much infrastructure is required by an SMB. Dell is a cloud infrastructure supplier with a formidable set of offerings and services which includes its converged infrastructure solutions, cloud client computing capabilities, and infrastructure management and integration solutions for cloud environments. But again, despite its investments, Dell is not the most widely recognized suppliers of converged infrastructure by SMB end-users and SMB channel partners (Sources: Techaisle SMB Converged Infrastructure Adoption Study & SMB Channel Partner Trends study). Nor is it mentioned among the top 5 IT suppliers for cloud infrastructure solutions by SMBs as per Techaisle’s recent survey.

But for those SMBs and midmarket firms that are moving rapidly to private or hybrid cloud deployments Dell combines the scale and efficiencies of its PowerEdge FX portfolio with solutions like Active Systems Manager and Dell Cloud Manager to deliver the infrastructure building blocks and management capabilities needed for private or hybrid environments. Furthermore, Dell works closely with partners, such as VMware (for EVO: RAIL) and Microsoft (for Azure) in delivering tightly integrated and engineered cloud solutions. There is tremendous merit in what Dell is doing and specific SMB segments are paying attention. As per Techaisle’s SMB attitudinal segmentation, Dell is becoming a go-to supplier of on-premise cloud infrastructure for “growth-aspiring” and “innovation-driven” SMBs and Midmarket firms.

Big Data

Techaisle’s study on SMB and Midmarket Big Data Adoption and Trends shows that 7 percent of small businesses and 20 percent of midmarket businesses are currently using Big Data solutions and that another 17 percent & 38 percent respectively is planning to adopt within the next 1-2 years. The promise of superior data-driven decision making is motivating SMBs to invest in Big Data technology. This represents a sizable opportunity considering that the segment is relatively new, it requires a certain level of IT sophistication and a history in linear investment in IT enablers to be successful. In 2014 US SMBs spent slightly over US$3B on big data. Specifically, midmarket attitude towards Big Data has transitioned from “over-hype” to must-have technology with the increase in employee size.

Dell has certainly dipped its toes into big data analytics with its acquisition of StatSoft and its Statistica advanced analytics solution. Its other two big data products Dell Kitenga and Dell Toad Data Point are incidental yet complementary to Dell’s big data solution stack. It is not out of place to mention that both Kitenga and Toad Data Point came from acquisitions. But the overarching anchors of Dell’s big data strategy are its partnerships with Cloudera & Intel (integration of Dell’s in-memory appliance with Cloudera Enterprise) and Dell’s professional services. Statistica may have one leg up on SAS due to its visualization capability and another leg up on Tableau with its statistical functionality. But it will be interesting to see where and how much of resources will Dell commit to drive its big data solution stack adoption beyond the healthcare vertical (where it has tremendous strength due to acquisition of Perot Systems). For now, most SMBs and midmarket firms are turning to Dell for their big data infrastructure platform. In a most recent set of depth interviews conducted with midmarket firms, Techaisle found that almost 9 out of 10 big data implementations were on Dell platform. Techaisle’s expectations are that, in true Dell fashion, Dell may be best positioned to commoditize big data solution and bring it out from the farmers’ market to the freezer aisle for SMBs to accelerate adoption.

Supplemental to big data, IoT is another relevant area for SMBs. Techaisle’s most recent global SMB technology adoption study shows that 52% of US midmarket firms and 18% of small businesses are either currently investing or planning to invest in IoT predominantly for security, fleet management, asset tracking and supply-chain visibility. Dell has a new IoT division and its first product is a US$500 gateway (re-purposed Wyse Thin Client) which supports Ubuntu, Wind River and Thinkworks PTC. Although one may argue that Dell is going back to its product DNA and building commoditized IoT solution but Dell may well have an advantage. By combining security from SecureWorks, analytical engine of Statistica and wrapping with Dell professional services, it may be well ahead with an end-to-end IoT solution. At least, Dell’s IoT offering is easy to understand and deploy for small and midmarket businesses.

Security and Virtualization are two other areas of importance for an SMB organization. Dell is present in both these areas. In security Dell has its own IP whereas for virtualization Dell is platform agnostic and has designed a set of blueprints that works with VMware, Citrix and Nutanix. However when the security market is growing at double digits, Dell’s software security growth in the area has been 7% (Dell does not disclose its entire security revenue details). Dell may well be suffering from a 1 vs. 1 selling as opposed to wider knowledge of Dell’s security offerings.

Final Techaisle Take

Dell has successfully put together a full set of flexible and scalable technology solution building blocks. Its sales organization is learning how to use these “blocks” successfully to build robust and future ready IT solutions for its SMB customers. Dell’s channel organization has also been focusing on equipping its channel partners with the same level of understanding. Dell has also set up cross-functional teams as Centers of Excellence that are empowered to educate and guide channel partners. These blocks may look very easy to assemble but articulation of their capabilities is very tough unless a complete picture of the end outcome is shown beforehand. And Dell has its homework assigned – demonstrate business outcomes through use cases and show thought leadership by expounding forward thinking because within the eyes of many SMBs and SMB channel partners, Dell still lags other IT suppliers on innovative and cutting edge technology front (Source: Techaisle 2015 SMB survey). That said, Dell Blueprints, for integrating piece parts into whole solutions, may just be the answer that SMBs and channel partners are looking for.

Techaisle’s quantitative study (survey of nearly 900 SMBs) on SMB & Midmarket Big Data Adoption and Trends shows that 7 percent of small businesses and 20 percent of midmarket businesses are currently using Big Data solutions and that another 17 percent & 38 percent respectively are planning to adopt within the 1-2 years. These businesses are looking at a big data solution from 3 perspectives:

“First, what are the organizational needs, second, what could be served as a solution and, third, what could be the best combination of the tools and technologies available today which will provide value add. Based on all one should decide on a solution because the Big Data space is very enormous and could be applied for any domain,” aptly quoted by CIO of a midmarket firm who has successfully implemented big data solutions in his organization.

Common findings that run through corresponding depth interviews (over 60 interviews conducted globally) conducted by Techaisle, Insights from the Trenches of SMB Big Data Implementers, are:

• PoC – more is better, timing is of essence
• Cost efficiencies of Hadoop, especially Cloudera
• Plethora of tools deployment – emergence of Spark and Flume
• On-premise only – now and the future
• Must conduct skills training and gap analysis
• Lessons learned – not to underestimate complexity but uniform voice – go for it

The promise of superior data-driven decision making is motivating 24 percent of US small businesses (1-99 employees) and 58 percent of midmarket businesses (100-999 employees) to invest in Big Data technology.

In addition, the possibility of analyzing a variety of data producing action-driven business insights is too big to ignore for midmarket businesses. This represents a sizable opportunity considering that the segment is relatively new, it requires a certain level of IT sophistication and a history in linear investment in information technology enablers to be successful.

Specifically, midmarket attitude towards big data has transitioned from “over-hype” to “must-have” technology with the increase in employee size. Only 11 percent of midmarket businesses consider big data to be an over hype suggesting that it has crossed the tipping point faster than similar sentiments for cloud adoption at its introduction. However, nearly one-fourth of lower mid-market businesses still consider it to be over-hyped yet 29 percent think that it will be an important part of their business decision making process.

Nevertheless, SMBs face many challenges in implementing big data solutions.

There are many different tactical objectives for deploying big data projects and SMBs are expecting some clear cut benefits from big data analytics such as increased sales, more efficient operations, and improved customer service.

CRM solutions had first established the analytics for analyzing customer data but the data was mostly two-way transactional data. This changed when customers began visiting business websites to explore, browse and perhaps make purchases thus leaving behind a trail of information. IT vendors and mid-market businesses figured out the need to analyze the data and combine it with transactional information.

However, everything changed with the onset of social media, blogs, forums and opinion platforms where the identification of false positives and negatives became difficult and knowledge about the customer and resulting segmentation became an inaccurate undertaking. Big data analytics presents the possibilities of connecting together a variety of data sets from disconnected sources to produce business insights whether for generating sales, improving products or detecting fraud. It is therefore not surprising that globally SMBs and midmarket businesses are turning towards big data analytics to analyze social media data, web data, customer and sales data along with click-stream machine generated data and even communications data in the form of emails, chat, voicemails.

Techaisle routinely conducts depth interviews with actual SMB and Midmarket customers using technology to understand their business issues, challenges and lessons learned. For the first time, Techaisle is opting to publish select interviews (five in each report) under its SMB Spotlight Series reports - Insights from the Trenches of Implementers.

These reports are:

20 Questions with SMB NetSuite ERP Users
20 Questions with SMB SAP Business One ERP Users
20 Questions with Midmarket Big Data Users
20 Questions with SMB PaaS Users: SoftLayer, Azure, AWS

In a parody of Start Trek, Silicon Valley technology companies describe their business goal as “Scale, the final frontier…”.  Mid-market companies, defined as those having 100-2500 employees, may indeed provide an opportunity to emerging technology vendors to scale their business. According to Techaisle, a market research firm, these 800,000 global companies spend $300B on IT and are sought after by technology vendors big and small. In the last decade, technologies such as Cloud, SAAS and Virtualization have reached scale with a large number of mid-market companies as early adopters. Intuit, Salesforce.com, NetSuite and Amazon are just a few examples of companies who have relied upon mid-market companies as a key building block for their business.

What does this mean for Big Data? To find out, Carpe Datum Rx spoke to “SMB Guru”, Anurag Agrawal, CEO of Techaisle and the former Head of Worldwide Research Operations at the Gartner Group. Techaisle recently talked to 3,300 global businesses about their Big Data adoption plans. Here is an excerpt from our discussion.

The SMB Market is considered the Holy Grail for technology vendors because it is hard to penetrate. Does your research show that mid-market companies will adopt Big Data before large enterprises do? Are they the early adopters of this technology?

Yes, you are right the SMB Market is the Holy Grail as it is hard to penetrate but with the highest potential. To elaborate, there are slightly over 70 million small businesses and 800,000 mid-market businesses worldwide. They constitute over 97 percent of the business segment. And their collective IT spend is projected to grow by 6.5% between 2013 and 2016 which is quite a lot faster than the Enterprise segment. To really identify the SMB segments and their type of technology spend is a mind-numbing exercise due to the sheer volume of data points. This is compared to the enterprise segment where there are fewer companies and larger dollar amounts being spent.

To answer your second question about whether mid-market businesses will adopt big data before large enterprises, let us look at some facts. Cloud computing started as an enterprise play, however, it was quickly discovered that SMBs would be the more relevant target segment with a faster path to adoption. Similarly, as enterprises adopted Virtualization, vendors shifted their focus to the SMBs with some very creative solutions. Mid-market companies, defined as those with 100 to 2500 employees could certainly be the early adopters of Big Data. We recently did a study where we surveyed 3,360 mid-market businesses worldwide covering all regions – North America, Europe, Asia/Pacific and Latin America. What we found is that the promise of superior data-driven decision making is motivating 43 percent of global mid-market businesses to at least look at Big Data technology. And above all, 18 percent of mid-market businesses are now investing in big data related projects.

In the mid-market segment, there is also a competitive imperative to understand customers, create innovate products and improve operational efficiencies. They are not burdened with too many silos and large legacy systems deployments. The absence of large legacy systems is an important point to consider because it makes mid-market businesses more agile to implement new types of solutions that solve their business problems. It is expected that in year 2016, global SMBs would spend US$3.6 Billion on big data solutions exhibiting a growth rate that is faster than what was exhibited by cloud computing solutions.

We understand that you cast a very wide net to get your 43% number. Is there a consistency in the sentiment on big data across different parts of the world? 

Yes, we had to cast a wide net to really understand the adoption and trends within mid-market businesses. And yes, there is a difference across geographies and employee sizes. North America has both the largest market and the highest level of adoption in Big Data overall. In terms of actual deployment activity, the market grows in relation to the size of the companies. Additionally, mid-market business attitude towards Big Data transitions from “Over-Hype” to must-have technology with the increase in employee size. Let me give you some examples. A small-to-mid-sized bank is developing a Proof of Concept for fraud analytics. Another example is of a small advertising agency that is trying to deploy digital advertising analytics. So big data is not only within the radar of enterprises, the same problems exist across all sizes of business, only the volume of data, available budget and the required simplicity varies. The problem is that we all get caught up in technology which instills a sense of fear. We have to shift the conversation from technology to solving business problems.

Big Data adoption is often stalled by a lack of knowledge or understanding of the technology and its capabilities. Do mid-market companies have a better understanding of this technology than large enterprises? Do they have an advantage over large enterprises in implementing effective solutions?

You are right. Three things – Technology, Resources and Data are the biggest roadblocks for big data project implementations within mid-market businesses. In recent years technology and technology options have evolved extremely rapidly for an average business to understand, evaluate, purchase and implement. Big data is no different. Mid-market businesses consider big data as very complex resulting in very steep learning curves. The complexity gets further exacerbated with lack of experience, lack of skilled manpower and innate difficulty in identifying external consultants who would be the right fit for their big data business objectives and budget availability. In spite of challenges, the study shows that there have been some successes when business units, IT & data analysts exhibit extraordinary alignment.

Our study shows that mid-market businesses typically start their big data journey in one of four ways and the highest success rates have been achieved when IT and data analysts work with external consultants from project inception. It is still very early days for these businesses to fully embrace big data but the seeds are being planted. And we believe that these businesses may very well race ahead of enterprises with their deployments as technology becomes simpler and consultants become experienced. As we like to say it, SMBs could be the path to big data simplicity.

You talk about the linking of structured and unstructured data. Why is this problem so important compared to all the others? 

The issue of analyzing data from diverse sources leads a mid-market business to naturally consider linking structured and unstructured data. If we look back, CRM solutions had first established the need for analyzing customer data. However, the data was mostly two-way transactional structured data. This changed when customers began visiting business websites to explore, browse and perhaps make purchases thus leaving behind a trail of information. And everything changed with the onset of social media, blogs, forums, wikis and opinion platforms where the identification of false positives and negatives became difficult and knowledge about the customer and resulting segmentation became an inaccurate undertaking. Big data analytics presents the possibilities of connecting together a variety of data sets from disconnected sources to produce business insights for generating sales, improving products or detecting fraud. Thus the importance of linking structured and unstructured data to analyze social media data, web data, customer and sales data along with click-stream machine generated data and even communications data in the form of emails, chat, and voice mails. But extremely limited expertise creates a major challenge. If they can figure it out, one-fourth of mid-market businesses say that they will use big data as an integral part of their overall analytics efforts. The possibility of analyzing a variety of data producing action-driven business insights is too big to ignore for mid-market businesses.

How are big data projects getting started globally? Are they championed by LOB managers? Are they getting adequate support from executive management? Are customers demanding it?

The study reveals that the initiators are marketing, finance or operations and the ultimate user of the analytics is the business user. Big data requires a new type of alignment between business heads, namely, marketing and finance (main drivers of big data projects), IT and a completely new set of players known as data scientists or data analysts. As I mentioned before, once the decision is made mid-market businesses show an extraordinary alignment across departments. Our study shows that mid-market businesses typically started their big data journey in one of four ways. However, the highest success rate was achieved when an external consultant or organization was brought in to develop proof of concept, advise on database architecture and ultimately develop the big data analytics solution right from the moment of project inception.

What is one piece of advice or Carpe Datum prescription can you share for our members?

You have adopted cloud, you have adopted mobility, you have adopted social media so do not be afraid to develop Big Data analytics proof of concepts. Do not ignore big data just because of perceived complexity and big data solution providers’ inability to create bite-sized messaging that directly address pain-points. Do not forget that business intelligence has now become one of the fastest solutions to be adopted by SMBs and mid-market businesses. If done right, big data will address three key pain points: Increased sales, More Efficient operations, Improved Customer service.