Techaisle Blog

Senior executives in midmarket organizations care about digital transformation – and as a result, channel members can leverage their understanding of key DX objectives and roadmaps into long-term, sustainable relationships with senior decision makers.A Techaisle survey of nearly 900 midmarket firms in the US found that 59% believe that digital transformation is a key to operational efficiency, streamlining processes within the business. In fact, operational efficiency is the most important issue driving digital transformation for most advanced, mainstream and least advanced midmarket firms.

Looking at the figure above, there is a clear progression as firms move from ‘siloed’ to ‘holistic’ DX strategies. The focus of innovation moves from containing IT costs to establishing IT sustainability – the ability to effectively manage IT delivery into the future. And primary business objectives also evolve, moving from a need to control operational cost to focus on profitability and product/process quality. IT advisors who can ‘connect the dots’ from tactical to strategic DX outcomes earn the opportunity to work with executive sponsors on long-term transformation roadmaps.

It is important that the channel step up to helping clients to build DX strategies – because midmarket firms are wrestling with a wide range of obstacles to digital transformation adoption. The ‘top 10’ list of midmarket DX inhibitors includes a lack of skills (the #1 impediment, cited by 31% of midmarket firms), reluctance to change current practices and corporate risk aversion, inadequate installed technology and a lack of investment capital for new systems, and an inability to build a compelling business case; lack of an executive sponsor and of technical leadership to support adoption of DX are also significant constraints.

Trusted channel members can help executive clients to address at least half of the top DX impediments. By working with executives to plot a DX path to operational excellence, the channel can provide the business case that underpins executive sponsorship for DX initiatives. And by investing in the technology skills needed to facilitate digital transformation – by delivering technical leadership – the channel can bridge the gap between the capabilities needed to achieve the DX vision and the constraints imposed by legacy systems and change-wary staff and management.

It’s said that Henry Ford once claimed that “If I had asked people what they wanted, they would have said faster horses.” But that’s not really true. Ford knew that people wanted to move faster and farther – they wanted to see and do things that they could not previously achieve. He was responding to the underlying, driving desire, and moving beyond the current constraints.

The midmarket is clearly looking for its own innovative suppliers – firms that are able to deliver the operational excellence associated with digital transformation by finding ways to move beyond current constraints. In collaboration with suppliers who are capable of supporting the whole journey from legacy to DX, channel leaders will establish the technical and operational roadmaps that their clients need to make the leap into the ‘next stage’ of competition – helping the clients who depend on them to build capabilities that are attuned to the needs of the digital business world.

The question of whether an SMB IT buyer benefits most from a strategy of working with a single or primary supplier responsible for integration and management of all resources, or whether it is better to procure individual components, systems and services from a larger group of ‘best of breed’ suppliers, is nearly as old as IT itself. The question is especially important to SMBs, which generally have limited internal resources, and would benefit from third party integration and streamlined procurement processes. Techaisle has observed a trend towards a more holistic procurement strategy as small businesses encounter increasing requirements for cross-product integration supporting digital business practices and develop greater appreciation for the value of a trusted technology advisor.

Preference for a single supplier

Over time, Techaisle’s SMB research has consistently found that a large proportion of SMB buyers would be comfortable dealing with a single primary vendor if that firm was able to supply all of the technology required to deliver on the full scope of IT/business requirements. Taken as a whole, the commentary from those in favor of a single supplier strategy highlight three imperatives:

1. Breadth of product portfolio matters
2. Services matter
3. Economics matter

The SMB IT solution stack

Figure below illustrates the Techaisle SMB & Midmarket IT solution stack. It is comprised of four main sections. At its core, the stack defines an SMB’s core systems (compute infrastructure) requirements. The software stack is positioned at the top of the systems components. The left-hand side of the figure highlights major categories included in the services stack. The right-hand side of the figure contains many of the major categories that comprise the security stack. A clearly-defined IT stack matters to a definition of what the ‘art of the possible’ looks like in the SMB IT world.

Increasing profitability, improving workforce productivity and reducing operational costs are among the top five business issues for SMBs in the Asia/Pacific region. Cost is sometimes a tricky item to nail down as too often SMBs focus on short term costs. In most cases this approach is absolutely valid but it can lead to situations that cost them more. The choice between maintaining older PCs and replacing them with newer PCs is one such area. Techaisle, conducted a Pan-Asia survey of 2156 SMBs in five countries to understand the comparative differences in costs of maintaining older & newer PCs and associated quantifiable productivity lost and the impact of newer PCs. Findings from the survey, commissioned by Microsoft & Intel, and driving Microsoft’s “Make the Shift Campaign” in the Pan-Asian region, uncovers that the cost of upkeeping a PC older than four years can be used to purchase at least two new Modern PCs.

The study reveals that the cost of owning a 4 year or older PC by an SMB is US$2,736 which is 2.7 times the cost for a PC that is less than 4 years old. The study also revealed that an average of 112 hours is lost due to downtime of an older PC, a number that is 3.1X of newer PCs. This is a “stealth” cost that drains cash flow and adds to the operating cost of an SMB which they can hardly afford. Cost implications vary for SMBs of different sizes.

IBM’s acquisition of Red Hat makes sense on several levels: it adds a high-growth software portfolio to boost software and recurring revenue, and provides IBM with a bit of a ‘halo’ in the tech community, as it now controls the industry’s leading Open Source supplier.

Moving down a level, though, why might this acquisition matter – and to whom? Techaisle’s take on the most important angles that shaped and will determine the success of the deal. (Download Techaisle Take report)

Who does this matter to?

Imagine you are an enterprise with a large legacy infrastructure, possibly in a regulated industry (like financial services or government). You see that IT service delivery is advancing faster outside your walls than within your firm, as other businesses aggressively adopt cloud, Agile, DevOps and containers.

You are motivated to try to integrate these advanced platforms/products/methodologies into your environment as well – to capitalize on the advantages that they can deliver, or because you’re afraid that if you don’t act you’ll be left behind, watching competitors introduce new IT-enabled capabilities faster and at lower cost than you can.

In an organization like this, IT executives are unlikely to want to dive headlong into a deep/committed relationship with a public cloud provider like AWS. They will understand the importance of building a multi-cloud, hybrid IT infrastructure, but will want to manage that environment internally, with a focus on existing capabilities (both installed products and skills). “Cloud first” won’t be a living mandate – it might describe an approach to new and non-critical applications, but won’t be a serious consideration for core systems of record.

Advantages (and some potential pitfalls) of a combined IBM/Red Hat