Techaisle Blog

Channel is okay. Channel is not okay. The answer depends upon whose perspective you listen to, how they define channels and how they are measuring channel transformation. Techaisle studied 814 US channel partners with revenue ranging from US$500K to US$50M and number of employees from 9 to 1200. Measured against 12 points of Techaisle’s channel transformation imperatives, only 5 percent of partners are nearing completion of their transformation journey. Data also shows that the channel transformation is split right in the middle. 52 percent of partners are transformation followers and 48 percent are transformation leaders. 45 percent of partners are in initial stages of transformation working on an average of 5.3 of the 12 imperatives.

Most vendors including Microsoft, SAP, IBM, Cisco and distributors such as Ingram Micro are focusing their efforts in helping their partners transform their business models but the channel has been slow to adapt to rapidly changing environment.

Let us discuss three areas that are priorities for IT suppliers, where channel is falling short and what is Techaisle’s recommended transformation timeline.

1. Transforming from "sales quotas" to "book of business" - whole customer
2. Transforming from "value addition" to "value creation", - business performance
3. Transforming from "lead generation" to digital discovery" - reducing reliance

Today, at Cloud Next 2019 in San Francisco, Google’s annual industry conference, Google announced its Cloud Services Platform, Anthos, for managing hybrid clouds that span on-premise and cloud data centers, and across multi-cloud environments. It is a big deal. It uses Kubernetes to enable migration across environments, is hardware agnostic, supports Amazon AWS and Microsoft Azure, and is subscription-based with a starting list price of $10,000/month per 100 vCPU block.

There is a thought that Anthos is a shot across the bows of AWS and Azure – and certainly, an approach that abstracts functionality from underlying cloud architecture will impinge on the ‘data gravity’ customer retention approach being used by these vendors. But IBM is at risk with Anthos as well, as the positive reception of its recent Red Hat acquisition is rooted in the promise of a single-vendor approach to providing hybrid and multi-cloud management and orchestration capabilities.

Clearly, Anthos has been developed with large enterprises as the target segment; some enterprise accounts are already early beta customers. To ease the addition of cloud as a core infrastructure platform in these accounts (by simplifying migration across in-premise and cloud environments) Google introduced Anthos Migrate, a service which will auto-migrate VMs from on-premise or other clouds into containers in the Google Kubernetes Engine.

It’s important to note, though, that hybrid cloud management is not only a point of pain within enterprise customers – it is a challenge (and arguably, a more acute issue) within midmarket (100-999 employees) firms. Consider these stats from Techaisle study of 510 US midmarket firms:

• 52% of midmarket firms are using multi-cloud
• 45% of midmarket firms have hybrid cloud environments
• 38% of midmarket firms are using multiple public cloud providers for IaaS and PaaS
• 27% of midmarket firms are planning to adopt G-Suite
• 25% of midmarket firms are challenged by how to migrate from one cloud platform to another
• 18% of midmarket cloud workloads are on hybrid clouds

Data for Europe and Asia/Pacific also very interesting current and planned adoption percentages for hybrid/multi-cloud.

The multi-cloud, hybrid-cloud journey began within midmarket firms much before it became fashionable within enterprises.

Techaisle’s US SMB and Midmarket SaaS adoption trend data shows that 73 percent of small businesses (1-99 employees) and 97 percent of midmarket firms (100-999 employees) are using one or more SaaS application categories. 37 percent of SMBs (1-999 employees) are using < 5 SaaS categories, however, 28 percent are using more than 10 SaaS categories (driven by midmarket firms). Overall 72 percent of SMBs are currently using 10 or less SaaS application categories but planned adoption indicates there is room to grow for the SaaS market within the SMB segment. The pace of SaaS automation is being governed by business & IT challenges, security posture, deployment and integration capability and point of purchase. Initial SaaS adoption has been for non-core business processes; however, 57 percent of mature adopters are using SaaS for core business processes. Techaisle survey data also shows that 64 percent of SMBs are using collaboration-focused SaaS solutions and 60 percent finance focused, however, future plans indicate that 62 percent will use customer-focused SaaS solutions.

As per Techaisle, US SMB and midmarket firms are forecast to spend US$25.6 billion on SaaS solutions in 2019.

Techaisle has released its annual research infographics on top 10 IT priorities, business issues and IT challenges of SMBs (1-999 employees), midmarket firms (100-999 employees) and small businesses (1-99 employees) for 2019. In its detailed SMB survey Techaisle investigated 21 different technology areas and several technology sub-categories, 23 different IT challenges and 21 different business issues. This is the 9th year of Techaisle’s annual survey research initiative that probes for top business issues, IT priorities and IT challenges. Tracking history provides a fascinating evolution in which new business goals drive new IT priorities and uncover challenges that must be addressed to enable progress on business objectives.

Primary research was conducted among senior IT and business decision makers from Techaisle network of 1.2M B2B IT professionals spread across 30+ countries.

There are some interesting differences in IT priorities as compared to 2018. IoT and VR/AR fell below top 10 (but still within top 15) and replaced by Voice/Digital assistants as well as Open source solutions. Across all regions (US, Europe, Asia/Pacific, Latin America) digital unified workspace and software-defined are becoming a priority for both SMBs and midmarket firms. Security many places within the top 10 IT challenges in different forms – cloud security, mobile device security, data protection/recovery/business continuity – with Cloud security as the top IT challenge.

Global SMB & Midmarket IT spend (excluding telecom services) in 2019 is projected to be US$665B and corresponding cloud spend is expected to be US$115B. Research also found that IT budget growths in 2019 will be the highest in Asia/Pacific (6.2%) and lowest in Latin America (1.8%). While IT budget constraint is not the top challenge within SMBs in the US and Asia/Pacific, it is the top concern in Latin America.

Managing data growth is continuing to pose challenge for SMBs and when probed further Techaisle research found that only 11% of SMBs and 29% of midmarket firms have evidence-driven culture with data-driven decision-making business processes in which data defines requirements or opportunities and management then determines the best option for moving forward. In the US, 17% of small business and 34% of midmarket firms consider themselves to be innovative.

2019 Top 10 SMB business issues, IT priorities, IT challenges