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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.

IBM – motivating midmarket firms to think strategically about cloud security

A blog “Big Data in the Cloud - an ideal solution for SMB banks” that we wrote touched a nerve, in a good way. Post blog, in our several discussions with both large and community banks we find that cloud objection is largely based on the size of the bank. In addition, regulatory compliance concerns are huge as most midmarket businesses and banks in particular spend a lot of money being compliant. With the move to cloud they want to make sure that the investment extends to the cloud without being exposed to security breaches and from a regulatory point of view.

What is clear is that migration to cloud is forcing businesses to think differently about security, in very standardized ways because the delivery of cloud service is standardized. It is also pushing them to automate security because utilization of cloud is dynamic, elastic, automated and fluid thus making manual or even semi-automated security processes unmanageable. However, this approach creates multiple vulnerabilities. The bad guys themselves are taking advantage of all the cloud technologies and are becoming a lot faster and more automated than the businesses. Security therefore becomes a moving target and cloud security is a perfect opportunity for businesses to improve defenses and reduce risks.

While most midmarket businesses are reactive, hunting after point solutions when something goes wrong, others are taking a proactive approach to risk and threat so that they have more fluidity in the way they respond when a threat occurs.

IBM security is on a path to help businesses think differently about cloud security. It is moving the businesses along a maturity curve from reactive to proactive to optimized. Optimization refers to the difference between being able to weather an attack and continue with business and how much time could one can shave off and how much cost could be optimized for being able to respond to that event in reducing risk.

As Sharon Hagi, Global Strategist and Senior Offering Manager, IBM Security, said in an interview “the state that IBM is advocating goes beyond reactive or proactive. We call it the optimized state where organizations use automation coupled with predictive security analytics to drive towards a higher level of efficiency. By mixing the elements of proactive approach, automation and security intelligence businesses can actually get to the point where they are a lot more efficient and they actually reduce time and cost to respond to risk.”

IBM is differentiating and trying to distance itself from others in a number of different ways. IBM has a managed security services practice with ten plus security operation centers around the world servicing 133 different countries with 6,000 security professionals and its research lab X-Force provides actionable threat intelligence and insights for business and IT leaders. IBM monitors 10,000 security customers globally, 70 million end-points with 20 billion events per day, has made enormous investments in security intelligence analytics platform that allows it to distill information, identify threats and respond quickly.

But for banks and businesses that come under deep regulatory scrutiny, security goes beyond managed services and is a major psychological barrier to cloud adoption triggering a high level of fear-factor. Recently, we posed a fundamental question of “Why do you want security” to banks and midmarket businesses in general. The responses received could easily be bucketed into five categories:

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BYOD in the SMB and its impact on mobile device purchase

Techaisle SMB and Midmarket Mobility Adoption Trends data shows that BYOD is not a factor in every SMB’s mobility strategy: more than half of small business (1-99 employees) respondents to the Techaisle SMB survey report that all or essentially all of the mobile devices in use are owned by the business, and nearly 25% of midmarket enterprises own 90%+ of their mobile device portfolios. However, BYOD is widespread within this group: 36% of the devices used by small businesses and 43% of those in use within midmarket firms are owned by employees.

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The term BYOD has only been around since 2009, when it is said to have originated at Intel – but it has since become ubiquitous. A web search on the term will return nearly 10 million hits, and IT managers at organizations of all sizes and from nearly all industry sectors are very familiar with demands for connecting employee-owned mobile devices to corporate IT networks, applications and data resources.

Techaisle survey data shows that BYOD within SMBs comes in several ‘flavors.’ One of them is where employee both selects and pays for a new device, delighting the SMB finance, but causing problems for IT. Another flavor is CYOD, where employee pays for the device but selects it based on guidelines or an approved list. It appeals to both the SMB and IT but is not completely satisfactory for the employee. Third flavor is where it is a mix of two with some level of reimbursement for the purchase from the company and/or technical support for the devices. This has an upside because the employee selects technology that he/she is comfortable with but the downside is that the cost burden rests, at least to some extent, with the company rather than the employee.

Techaisle SMB and Midmarket mobility adoption survey data also shows that BYOD has implications on desktop and notebook purchases.

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Influencing the SMB technology buyer – rapidly shifting information sources

There is one common issue that IT firms across the spectrum face: the need to find an effective way to attract and engage prospective SMB customers. Techaisle’s global SMB survey research shows that there is no one method that will engage technology buyers within the small business or midmarket segments: in both markets, SMBs use a mixture of multiple reach and multiple depth vehicles to understand and evaluate options.

Over the years, Techaisle has been asking survey respondents to identify their “sources of information for technology solutions” in their technology buying journey. Respondents are prompted through a list of 14 options, spanning traditional and online media and advertising, websites, whitepapers and case studies, face to face sales calls, personal recommendations, blogs/forums, and search engines.

Comparing data across several years provides a fascinating trend. As the number of technology options, vendor choices and sources of purchase channels continue to increase both in number and complexity SMB technology buyers have also progressed in their choice of types and numbers of trusted, reliable and useful information sources for technology guidance.

Look at the figures presented below comparing data across two years, 2013 & 2015. Several observations immediately jump out for both small and midmarket business.

In 2015, small businesses are using completely different set of information sources than they relied on in 2013. A consistent top source from 2009 to 2013 - “Recommendations from friends, colleagues or partners” has fallen to seventh position in 2015. This is certainly not surprising as most of the “recommenders” are in the same predicament as the small business buyers, that is, grappling to understand the rapidly changing technology options and corresponding ability to solve with business issues. The role of TV advertising has percolated to the top and the usefulness of articles in technology websites and magazines cannot be understated.

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The midmarket segment has increased the number information sources in 2015 than in the previous years. Data presented in the figure below shows some interesting observations for midmarket. Although percent of midmarket businesses using “IT Company website” has remained unchanged its relative position has fallen from 1st in 2013 to 5th in 2015. It is neither the most dominant source nor it is the first point of influence for midmarket businesses. Similar to small businesses, TV advertising and technology websites, magazines have percolated to the top for midmarket businesses.

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Use of content marketing avenues such blogs has remained unchanged at between 8% - 14% of SMBs. Its position in the list of information sources has also stayed the same, between 12th and 14th in terms of ranking. It is of course true that different vendors (and SMBs) use similarly-named options in different ways – for example, visits to an IT company website can be cursory or can be an intrinsic part of a detailed supplier evaluation, and “blogs/forums” encompasses both some of the most superficial and some of the deepest content on the web.

The data provides several important perspectives on the challenges facing technology marketers generally, and cloud marketers in particular, who need to attract new SMB customers to their offerings.

The first issue is the sheer number of vehicles used by buyers in both the small and midmarket segments: in each case, the data suggests that they use an average of more than five sources of information when evaluating potential solutions and suppliers.

The second issue that is evident is that marketers need to use a mix of mass-market tactics to attract initial interest, transitional marketing options to deepen and shape that interest, and in-depth materials to establish preference within buyer accounts. Clearly, there is a “buyer’s journey” that needs to be overlaid across these many marketing vehicles, to manage the process from initial interest to sale.

Thirdly, to complicate the influence points further, BDM influencers usually differ from ITDMs. No one information source is used by more than 65% of members within the four buyer segments considered in the research (small business ITDMs and BDMs, mid-market ITDMs and BDMs).

The findings also show that “shallow” vehicles represent about one-third of overall sources used by small businesses, and just less than 25% of those used by midmarket buyers; that “moderate” vehicles capture 41% of total small business attention, and about one-third of midmarket buyer interest; and that “deep” options represent just over 25% of the information mix in small businesses, and 45% in firms with 100-999 employees.

IT marketers today will need to take a portfolio approach to marcom targeted towards SMBs. There are some areas that clearly need to be covered and executed well and some sources that should be of particular focus for specific SMB segments. The stakes around effective communications are high; with estimates currently holding that SMB buyers are 60%-80% or more of the way through their evaluation processes before they contact an IT vendor.

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SMB Converged infrastructure: Poised for growth at the expense of traditional servers?

The ongoing migration to server virtualization – within small businesses that have not yet adopted virtualization and within midmarket enterprises that are consolidating workloads on new, virtualization-ready infrastructure – will drive substantial near-term demand for converged infrastructure. Techaisle survey data shows that adoption of converged infrastructure is expected to double within the one year planning horizon. This is unlikely to represent ‘net new’ server demand; instead, Techaisle expects converged infrastructure growth to occur at the expense of traditional server products.

While the migration from separate server, storage and networking products to converged infrastructure is still in its early stages, the Techaisle SMB & midmarket converged infrastructure adoption trends survey shows that it is beginning to gain traction, especially within more sophisticated accounts. In the US, converged infrastructure is currently used within 32% of midmarket businesses, with another 31% planning to acquire within a year. Techaisle’s segmentation by IT sophistication demonstrates converged infrastructure adoption rises steadily with increased buyer sophistication in both the small and midmarket segments. US SMBs spent US$3.8B on converged infrastructure solutions’ implementation in 2014.

Additional survey data illustrates that suppliers of converged infrastructure should be proactive in making potential customers aware of the benefits of their technologies. While roughly half of both small and midmarket businesses describe themselves as being in the information gathering stage, one-third are currently identifying potential solutions, and 15%-20% are evaluating suppliers. It seems unlikely that buyers will ‘mix and match’ converged infrastructure technology, so it is important for suppliers to win initial orders – and the data shows that many of these purchase decisions are already underway.

While there are technical advantages that make converged infrastructure products more effective virtualization hosts than traditional servers, Techaisle’s research shows that SMB buyers adopt converged infrastructure for one or more of five primary reasons:

  1. to benefit from converged infrastructure’s integrated design and efficiency,
  2. to tap into its ability to enable centralization/management of resources,
  3. to capitalize on performance/time-to-benefit advantages,
  4. to improve IT agility and its ability to meet business needs, and
  5. in response to core requirements for cost savings and improved security.

In another section of the Techaisle SMB 2015 research, respondents were asked to identify projects that prompt consideration and purchase of converged infrastructure products. Comparison of small and midmarket business drivers finds both some commonality and some variations. Both small businesses and midmarket enterprises are most likely to acquire converged infrastructure to support data center consolidation, and virtualization applications as well as impetus for data migration. Key applications – Big Data and unified communications, SharePoint, and in small businesses, custom applications – are also project types that can drive adoption of converged infrastructure.

To enhance the scope of comparisons Techaisle also posed similar question to channel respondents in Techaisle’s SMB channel partner trends survey. The data provides yet another perspective reflecting the situations in which the channel is drawn into converged infrastructure decisions. Big Data – which requires a relatively wide range of competencies – is the project type that will most commonly require the channel to deploy converged infrastructure systems, and SharePoint projects which also demand a broad skill set, are the third most common project cited as a converged infrastructure adoption driver.

Question is “what sales channels are best positioned to intercept this demand?” Data shows that converged infrastructure routes to market will likely follow the pathways used to acquire software management layer that controls these physical resources. Both small and midmarket businesses are most likely to turn to hypervisor and networking vendors. Systems integrators have a substantial presence in the supply of these solutions whereas as VARs and managed service providers (MSPs) have more limited presence/appeal as virtualization solution sources.

In many ways, the key market issue surrounding converged infrastructure isn’t vendor-vs.-vendor competition, but rather, the ability of converged infrastructure as a system class to gain share quickly vs. traditional server products, while not being obviated by the cloud before attaining mass market penetration. However, suppliers are competing for share in this growth category, and understanding SMB what buyers are looking for – and what they struggle with when they adopt converged infrastructure – is important to positioning a brand as a credible solution.

 

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