Techaisle Blog

SMBs are being deluged with IT solutions that aim to address their pain points of reducing costs, improving sales and marketing, penetrating new markets, improving employee and group productivity as well as managing more IT with less. The channel comprising of SIs, VARs, SPs, MSPs and IT Consultants form the essential cogs of an IT vendor’s eco-system that puts products and solutions in the hands of the SMBs.

Today’s SMB channel has numerous vendors to partner with to build and grow its business especially if they are targeting the SMB segment. Each channel partner has usually has multiple vendor partnerships. It is therefore essential to have a positive mindshare of the channel which would potentially translate to wallet share.

Techaisle’s SMB Channel BES-360 provides an actionable path for IT vendors to manage their channels. Techaisle’s BES-360 Model looks at the equity of the brand on six overall independent dimensions:

1. Emotional,

 

1. Likeability,

 

1. Rational,

 

1. Dispositional,

 

1. Visibility, and

 

1. Human Connect

The data is collected by conducting a primary research and thereafter using ANN (Artificial Neural Networks) we model the responses on several variables with action variable using a non-linear model. Action variables are crucial to measuring brand equity, since having a brand equity which does not lead to action is useless. Techaisle’s BES 360 uses ANN for computing the dimensional weights as opposed to assigning arbitrary weights or no weights at all.

Cisco’s Brand Equity Score with SMB Channel Partners = 41

The model reveals that the BES of Cisco is 41 on a scale of 1-100. The question is, is this good or bad? Since the highest BES is 56, 41/56 is “Good”. Two other IT vendors including IBM have a higher BES than Cisco.



 

 

 

 

 

 

 

Breaking down the data for Cisco we find that almost 25 percent of Cisco’s channel partners have a BES of 80+. They form Cisco’s core partners. The customized report can delve deeper into the typical profile of these SMB channel partners of Cisco. 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 with to try and raise the brand equity. Further research could also be conducted to check and see what these partners contribute to Cisco’s business and their relative importance.

If we look at Cisco’s equity among its own channel partners and non-partners, the difference in equity is substantial. The BES of Cisco among its partners is 55 and among non-partners the BES is 29. A polarised equity pushes a brand in to a niche status, which may not be desirable for all brands Cisco’s BES is the highest among the channel partners of Avaya and even among the channel partners of SAP too the BES is quite high. These could be potential channel partners for Cisco. 

  

 Techaisle’s BES-360: Why is Brand Equity Score Important?

Companies no longer produce products and services but deliver a brand experience through their products and services. It is widely recognized that the status of a brand in the mental space of the customer is best measured through brand equity. If the brand equity is good then a product or service that is similar to another brand with lower brand equity will sell better. Additionally, a brand with a good product or service but lower brand equity has a lower customer satisfaction compared to a brand with a higher brand equity that offers the same, if not an inferior, product or service. Hence measuring and tracking brand equity score is of critical importance to brand management.

What is the key information that I will get from Techaisle’s BES-360 to manage my brand?

Our customized report answers following nine relevant questions:

1. What is my BES and my competition in the industry?

 

1. What is my BES among my channel partners? Understanding overall equity is fine but this equity should also be good among its own channel partners and the difference between the equity among a vendor’s own channel partners and the non-partners should be significant. Otherwise it indicates a non-exploitation of the market completely.

 

1. What is my Brand Equity profile of my channel partners? The data and analysis provides critical information for assessing the potential for expanding the foot print of the brand to the other channel partners. The composition of the BES among the channel partners of a brand indicates the core strength of the brand. A brand needs to know what proportion of their customers are at, say, half the total BES? If a small portion of the channel partners have high brand equity and a large number have low brand equity then the customer base is shaky.

 

1. What is my BES among the partners of other channels?

 

1. What is the composition of my channel partners at various levels of BES? A brand would like to know the business that their partners generate at different levels of brand equity. For example: what is the number of solutions offered by a channel partner whose equity is twice the average brand equity? Such information can be quite useful to build a complete business strategy by better equity management.

 

1. How is the BES affecting my business among my channel partners?

 

1. What do I do to improve my brand equity? We measure brand equity on nine variables. We can dive and pick up the dimensions on which the brand needs to score. In fact we can even suggest using an optimization scheme the best values of the dimensions that the brand should achieve.

 

1. What business improvement do I expect at 5% increase in my brand equity from my channel partners? We can do a detailed analysis of our data to indicate what will be the impact of an increase of 5, 6, 7 or more points on the business, using the survey data.

 

1. Which brands’ partners should I choose to enlarge my foot print?

For SMBs, channel partners are the trusted advisors. Addressing the channel partners directly contributes to raising the brand equity among SMBs (measured separately by Techaisle). We call it BES-360 because it covers all the dimensions as well as competition.

If more information is needed for developing a comprehensive and successful marketing strategy Techaisle has the capability to provide the necessary information. From the current data itself we can get more information by looking at the scores on each of the nine variables. However, we can also do a dedicated BES 360 Survey for a specific brand and get a comprehensive picture of the brand that can identify and answer strategic questions like “Why my score is low on the VISIBILITY dimension and what should I do about it?”

 

ML110 Proliant from HP is a favorite of VARs/SIs in India to sell to SMBs, especially small businesses. It is “robust, configurable and affordable”. In India where there has been considerable drop in sales of commercial servers within enterprises and government segments, VARs/SIs have turned their attention to the ever-elusive SMB market segment.

VARs/SIs from Delhi to Chennai, Mumbai to Kolkata, Lucknow to Jamshedpur, Pune to Hyderabad – you get the picture – hold the key to opening up demand for first server opportunity within the SMBs. They are doing so by delivering two key messages:

1. Servers help in Business Process Consolidation: With an on-premise server SMBs can install software solutions such as locally available ERP (not SAP), accounting and financial management, CRM and many different vertical applications to improve business processes and thereby grow revenue

 

1. Servers help in Email Consolidation: With an on-premise server SMBs can use email applications that promote scheduling, calendaring and sharing within the same domain name. There are still way too many SMBs in India that have employees using individual emails with no common folders

The messaging seems to be working. Channels are optimistic that the small business server spend in India will reach US$75 million in 2013, a jump of 13 percent from previous year. But they also say that the path to influence small businesses will not be easy.

The question is, why have the VARs/SIs taken the lead in creating server demand.

Let us take the example of VARs/SIs in Kolkata. West Bengal is a “dead state”; State government is not spending on IT, Central government is not giving any budgets to the State to spend on IT; therefore VARs/SIs instead of sitting idle are busy pounding the streets of Kolkata, seeking out SMBs and discussing the above two key simple messages which seem to be resonating well. On the other hand, in Delhi NCR region, a hot bed of technology adoption, VARs/SIs are targeting pockets of areas such as Gurgaon and Noida.

Selling to SMBs is a very time consuming and pain-staking process. As one SI put it mildly, “there are no green pastures anywhere; we have to plant the seeds”. These channel partners have to overcome three important barriers to adoption:

1. Lack of awareness of technologies: Too much information and technical jargon is being thrown at the SMBs forcing them to “tune-off” creating lack of awareness. VARs/SIs therefore are engaging SMBs, one at a time, to make them aware what servers can do for their business

 

1. Lack of time: SMBs generally do not have time on their hands to search for a channel partner to help them understand technology. Even if they have the time, business priorities in many cases trumps technology and decisions get pushed to the proverbial eleventh hour

 

1. Affordability: Price is still a major factor for purchase of servers and accompanying solutions.

At the other extremes are cities in southern India (beyond Bengaluru and Chennai) such as Kochi, Madurai, etc. where channels are fighting a different battle, the infamous “power-cuts” for nearly 8-10 hours each day. The SMBs in this region are first focused on their usual business continuity before turning their attention to IT adoption. But the relentless channels are not giving up on their pursuit and messaging.

Server vendors like IBM that do not have affordable server products for the small business segment are paying attention to the messaging from VARs/SIs and have begun working with them selectively to organize road-shows in Tier 2 cities from northern to western India, from Lucknow to Nagpur and Bhopal.

Still there are many SIs across the country in India who are unhappy by the continuous evaporation of margins on hardware. Some even have gone to the extreme and said that “the way some vendors are working on lowering the margins on servers and storage, SIs will be forced to alternate business models in the next few years”.

India is a more complex IT market than we usually imagine. Based on local infrastructure capabilities and capacities, India has three different segments:

1. Totally mature,

 

1. Immature, and

 

1. Not Mature at all

Nevertheless, the SMB server market is still a massive, slow-moving glacier which has not yet reached the precipice of a waterfall. Till that happens, VARs/SIs are creating the demand and trying to grab the opportunity.

Gitika Bajaj

On Wednesday this week, we attended a Channel Expert Hour webinar (sponsored by IBM) and produced by Nine Lives Media, Inc. It made our Pick of the Week for three reasons:

1. Very clear statement of IBM’s Addressed Market
2. Very clear statement of IBM’s Three Tier Mid-Market Cloud Offers
3. Very clear statement of IBM’S SMB Channel Partner’s Opportunity

The format of the webinar was informal, with ongoing Q&A by channel partners and users. We started off with an overview of the SMB move to the cloud by VP Joel Raper of Azaleos, Inc., a 300+ employee, Seattle-based Service Provider focused on Microsoft UC&C Stack Managed Services (Cloud, Design, Deployment and Lifecycle Management) to the Mid-Market.

This was followed by an overview of the IBM Mid-Market Cloud Partner Program, by Ed Bottini, a Cloud Ecosystem Program Director at IBM Global Services. As mentioned, within three or four slides, it was clear where IBM saw the opportunity, what offers were available to address it and what partners could do to take advantage of IBM’s resources to sell into the market.

IBM’s Addressed Market

In typical IBM fashion, this graph represents the big picture very well: They believe half the Opportunity is SaaS growing at a compounded 25% rate, three-quarters is XaaS, compounding at ~25% - IaaS is growing at 35%. The remaining is ~25% Private Cloud and Non XaaS, growing at 20%.

This is not an acknowledgement of the IBM estimates, the point is that they see huge opportunity growing very rapidly in their base and it comes through when they talk about it. This answers WHERE REVENUE opportunity is for SMB Channel Partners.

IBM’s Three Tier Mid-Market Cloud Offers

IBM’s Cloud Solution Stack includes the Foundation layer of Servers, Networking, Storage and Secure Data, using a virtualized environment of IBM hardware, software and networking including PureFlex and Bladecenter Foundations for Cloud, along with IBM Cast Iron to integrate different clouds and applications.

On top of the Foundation is the Infrastructure as a Service layer, SmartCloud Services, which includes Pay-as-you-go Managed Backup Services, Tivoli System Management and Cloud Automation “middleware”,  Managed Security Services, and IBM SmartCloud Enterprise, which according to IBM delivers "enterprise-class public cloud infrastructure-as-a-service (IaaS)—delivers secure and scalable hosted IT infrastructure with on-demand access to virtual server and storage resources."

The top layer is the Applications Tier, Software as a service (SaaS), SmartCloud Solutions,  "a software model with applications centrally hosted in a cloud computing environment and accessed by users over the Internet."  As described in the first section, IBM has identified SaaS as half the opportunity growing at 25% CAGR; this is where the rubber hits the road. IBM has never been known as an Application Software vendor, preferring to invest in Systems Software, Database Technology, Tools, Middleware, etc. – which they have done very successfully. In addition, acquisitions over time have steadily been used to both plug holes and repurpose for gaps in applications - Cognos, CoreMetrics, SPSS and Unica being examples in Analytics, along with Sterling for e-Commerce, Merchandising and Supply Chain Management. The bold decision  (at the time) to fully embrace the Open Source movement in the '90s and leverage it with their tools like Websphere to participate in the rapid growth in web-based computing has also had a positive impact (i.e., SugarCRM). This answers WHAT SOLUTIONS offer the opportunity for SMB Channel Partners.

IBM’s Five Mid-Market Cloud Options for Channel Partners

The approaches SMB Channel Partners can choose to work with IBM is next, and  is  evident in this chart. Ranging from Tools, to Infrastructure, to Cloud Building, to SaaS Application Providers, Partners have a variety of options from which to select. This chart is pretty self-explanatory, so we won’t go into redundant detail here. This third leg of the stool is a clear view of HOW the Opportunity can be addressed by Partners.

This is not meant to be an endorsement for IBM - they are not the only Systems Vendor that 1) has a strategy, 2) has an integrated solution stack and 3) has a Cloud Partner Program. As a firm that helps companies sell more effectively into the SMB space, what appealed to us was the simplicity of the message and the ease with which the story was communicated and re-enforced using  credible, robust and tested Enterprise-level offers. In our opinion, IBM sounded a lot more like a young SaaS start-up than a hundred-year-old East Coast manufacturing company.

Postscript: When thinking through how the industry has consolidated around a few major system vendors, we wonder whether Cloud Computing strategy and execution have impacted confidence in the company?

All leading IT companies - Microsoft, HP, Dell, IBM/Sun, Oracle, Salesforce.com and Amazon (yes, I would call then an IT company) are driving towards providing a variety of cloud based platform and application services. Complementing them are a whole host of new companies that are aggressively developing solutions for this space. No doubt over the next 5 years cloud based services will be the new arena of intense competition. A lot has been written about the pros and cons of the various services so I won't address them in this post. Very little though has been talked about the impact on the channel.