Techaisle Blog

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

Dusting off my notebooks (the notepad variety) I came upon some carefully documented notes of my conversations with Dell’s Channel team, in particular with Greg Davis, Vice President and General Manager of Global Commercial Channels.  Just reviewing the notes of the previous two years it hit me squarely in my face that Dell’s channels team has been on a restless pursuit of:

• Simplicity,

• Training & enablement,

• Winning datacenter together with the channel, and

• Partner profitability

Fall of 2011

Although Dell’s Partner Direct program was formally launched in 2007 with aggressive channel recruitment and courting happening in 2008, we will pick up on our conversations with Dell’s Greg Davis and Paul Shaffer, Executive Director Global Channel Marketing & Demand Generation from the fall of 2011. Partner enablement, training, certification and integration of acquisitions had percolated to the top of the team's agenda. For an IT company which is notorious in selling direct, drastic measures were needed to become “one” with the channel. Dell delivered 75,000 training modules to its partners, 30 percent of Dell’s commercial business had started to come from channels and 58,000 registration deals were closed. With the acquisition of Force10 Networks Dell announced enhanced network certification programs and 130 premier partners got their certifications. Emphasizing that the training modules were working, Greg Davis had mentioned that top 10 partners who invested most in training had seen 110 percent growth in revenue. Fall 2011 was also the time when partners started seeing the first glimpse of gentle motivations from Dell to push deeper into healthcare segment and drive revenue from datacenter solutions. Inroads were being made into smaller partners for SMBs as much as national and larger partners.

Cloud Channel

During the same time period while Dell was building out its confidence and trust with the channels, enterprises and SMBs were moving to cloud, thus dis-intermediating the channel. Especially the VAR channels (which typically form the largest percent of channel partners of an IT Vendor) had been finding their traditional business models threatened by products and services that could be sold direct by a vendor over the Internet. To continue to adapt to the changing times and never taking its eye off the channel partners’ livelihood Dell launched cloud channel programs in the spring of 2012:

• Cloud Builder,

• Cloud Provider, &

• Cloud Service Enabler

A technical services team was also put into place to help partners sell data center solutions namely, server and storage. Dell now had roughly 250 premium partners and had delivered 135,000 training modules in the year.

Work was far from complete. More acquisitions were taking place; these acquisitions had to be integrated and above all emerging market countries had to be targeted. Both Greg Davis and Amit Midha, President, Asia Pacific and Japan, Chairman, Global Emerging Markets underscored the fact that they were working to ensure a consistent channel engagement across every market covering:

• Deal registration

• Compensation neutrality

• Conflict escalation process, and

• Executive priority

Asia/Pacific

The channel commitment work in Asia/Pacific countries in our opinion is far from complete. There are still some major strides to be made, specifically in the Asia/Pacific region. By its own acknowledgement, Asia/Pacific is the fastest growing regions for Dell which requires a constant confidence and trust building process with the channels. In many of Techaisle’s analyst interactions with channel partners in 2012 in Asia/Pacific, it was found that channels had warmed up to Dell but some questioned Dell’s sincerity whenever bigger contracts were involved.

In both summer and fall of 2012 we asked Greg Davis and Amit Midha where they thought they were with consistency and confidence. Not only were they bullish but also recognized that they have some hills to climb. They were also candid that services remain a big component of any channel’s revenue mix and while typical services such as warranty, break-fix, and insurance were straightforward re-sale of Dell Services, partnering in consulting was a bit more challenging.

Summer 2012

By the summer of 2012, efforts were paying off, 62,000 deal registrations per quarter were coming through partners with 72 percent approval rate, 35,000 training modules were being delivered per quarter, the number of premier and preferred partners had jumped to 2500, Asia/Pacific channel programs were being strengthened, SonicWALL was integrated and specific courses were introduced on how to talk to a CIO, value of integrated datacenter. Above all social media training programs were launched for the benefit of the channels.

In late summer, in a conversation with Greg Davis and Bob Skelley, Executive Director, Global Certified Partner Program & Channel, they reiterated their commitment to make Dell “easy to work with” and restated their deep & maniacal focus on training and competencies. This focus resulted in 34 percent of global commercial business funneling through Dell channels, up from 30 percent in the fall of 2011. Number of deal registrations had jumped to 71,000 and an enhanced deal registration tool on mobile platforms was rolled-out. 47,000 training courses had been delivered in the quarter and Dell now had 113,000 channel partners. Initial focus on healthcare segment had resulted in a surge in end-user customers. A 40 percent growth in certifications was also achieved when compared with previous quarter. With the integration of Wyse, a desktop virtualization certification program was introduced. Dell channels had truly arrived and there was never a question of ever turning back.

One year later, Fall 2012

One year later, by fall of 2012, Dell had 130,000 channel partners, 35 percent of commercial business revenue was funneling through channels, 142,000 training courses had been delivered in the year, number of deal registrations had shot up to 65,000 and there were now 3600 preferred and premier channel partners. In the words of Greg Davis, “Dell has the most confident and competent channel partners in the world”. One year later, I saw an urgency to deliver with a profound focus on datacenters, systems management and cloud services. Virtualization was also beginning to take center stage. Kathy Schneider, Executive Director, Global Channel Marketing & Programs, drove home the point that she and her team were focused on driving best practices across four strategic pillars:

1. Easy to do business with One Price and Sales Tools

1. Win in the Enterprise using a comprehensive sales tool aptly named as Enterprise Master

1. Training & enablement through expansion of training beyond Dell’s standard solutions to include social media

1. Partner profitability through a simple, effective and rewarding incentives program

It has been a long way from direct PC selling to indirect solution selling. Real progress has been made. Dell’s channel executives are an end-to-end solutions empowering team for the channels. Not all channels will thrive but those that are equally committed to learn, adapt and practice will certainly succeed.

Anurag Agrawal
With contribution from Gitika Bajaj in Asia/Pacific

 

In a very interesting move, Apple announced that they would invest in returning some production to the US. At first blush, this seems like a bold tactic  which will certainly improve Apple’s brand reputation in the wake of long-standing criticism for moving skilled manufacturing jobs to China, where worker pay and conditions are bad enough to drive some to suicide. And as the number one technology company in the world it is also heartening to see some jobs come back home, but there are a few caveats:

The Apple MacBook is the top of the line notebook with a premium price point, out of reach for most small businesses unless there is strong justification, such as for professional designers and developers who need to pay double that of a similarly equipped Wintel device to do their work effectively. That share of the market has always been small relative to Wintel machines, both desktop and notebook. Apple manufactured Macs in the US until the mid-nineties, after most competitors had moved production offshore. The caveats include 1) whether this experiment will grow to the more strategic iPhone and iPad product lines, and obviously, 2) whether Apple can turn a profit that makes the decision stick after the first $100M is spent.

Apple cites the inability to find the level of skills and manufacturing equipment in the US to be able to turn out production rapidly and with high quality. No doubt Foxxconn, Apple’s Chinese production partner, who already operates some plants in the US, will be looking to expand operations here. They had issues ramping up production to meet demand for the new iPhone and there were hiccups, followed by reports of Foxxconn negotiating multi-billion dollar deals in Brazil, to manufacture there. Regardless of how that materializes, today’s announcement will dampen some criticism that would accompany the final press releases from Sao Paolo.

Enter the Dragon

Another reason this makes sense to us is that China’s technology vendors are on the rise – no surprise there. But consider that within 7 years of buying the ThinkPad brand and manufacturing rights, Lenovo has become the #1 PC vendor in the world in unit shipments, (#1 by Gartner, #2 by IDC) squeezing 10% out of the global share in a stagnant market in the last few years alone while jumping to 30% share in China, 3X the nearest competitor.  It was also announced today by Reuters that Apple fell to #6 in the Chinese smartphone market, which is growing in leaps and bounds to 60M units per quarter, with intense domestic competition and Samsung leading the pack. Lenovo is number 2 in the smartphone market as well as having the overwhelming first place position in PCs mentioned earlier, #5 smartphone seller Huawei, is gobbling up global market share in the telecom equipment market at an alarming rate.

We have written several times about the rising competition from China in the hardware manufacturing end of the IT market, and of its’ growing importance as the second largest PC, and largest Smartphone market in the world, with a billion users and 60 million units sold per quarter. As shared with our readers in a September article about Internet adoption and managed economies, China and Korea have many similarities that make for a reasonable scenario of things to come. Take it from someone who lived 15 years in Asia and has been watching Korea for 30 – the voracious appetite for material wealth, pragmatic style of government and East Asian capitalism will leave no stone unturned. Take Samsung for example: between 1990 and now they have become the number one maker of TVs in the world, starting from scratch and displacing the Japanese faster than they displaced American manufacturers, #1 in memory chips and some other semiconductors, #1 in Smartphone handsets (almost double Apple in unit shipments), a global leadership position in screen technology, squeezing Sharp, Toshiba and others for the keys to the future standard, and a global frontrunner in CE and white goods. These guys are US Steel in their heyday. And they are a major supplier to Apple for the most important products. And the legal battles are not over yet, according to this CNET News video. They have Foxxconn on the left and Samsung on the right. With friends like these who needs enemies?



CNET on Samsung Apple Lawsuit.

Strategically Apple’s move is understandable, at least from the outside looking in. Steve Jobs’ genius for aesthetic design, usability and commitment to quality helped create the PC revolution, arguably the single most important technological advance aside from the Internet since the Industrial Revolution. It also got him ousted from Apple as decisions about long term architecture were made. Although Apple always had (and still has) a very loyal following in the computing arena, they did not gain more than 10-12% market share from 1980 to 2000. This meant that Apple had to drive enough margin to support R&D for operating systems, a proprietary microprocessor, end user applications and non-standard chassis and other components.  By contrast, the rest of the PC market leveraged standards and Scale Economies as investments were diffused in the market. The Microsoft standard OS and a maturing suite of interoperable applications were the lynchpin of the ecosystem and resulted in hundreds of companies joining the competitive fray. White box and private label manufacturers sprang up everywhere, eventually producing branded competitors like Dell and Compaq who were selling practically as fast as they could produce. By 1996 Apple was being counted out by many analysts as an also-ran. Eventually in 1997, Jobs was brought back in to save the company, which was considered a very risky personal move at the time.

In his second stint as CEO, Jobs turned Apple around and helped solve a problem that almost put the recording industry into insolvency; how to make money in the music business when new technologies allowed free files to be distributed at will and pirated on a global scale. Apple introduced iTunes in conjunction with EMI, and solved the Digital Rights Management issue. Under Jobs they had to kowtow to Redmond and adopt compatible MS Office Application Suites, which were not interoperable to that point – no swapping files between Apple and Microsoft users, and move to an Intel architecture. Despite several earlier failures, such as the Newton, Apple achieved a breakout hit with the iPod, and iTunes began printing money. Next came the iPhone, which almost immediately become the third largest handset brand in the market, followed by iPad in 2010, and several versions of iPhones. The products have produced a ravenous worldwide customer base and made Apple the most valuable (tech) company in history with a half-trillion dollar war chest.

The point is that Apple’s meteoric rise is more a function of the transition to CE and Smartphones than its’ leadership in computing and now they are in a bind; they are stretching their existing supply chain, they rely on advanced manufacturing resources and skilled labor that have been developed offshore, their largest potential market (China) is controlled by arch-rival Samsung, with whom they are in a nasty legal battle and depend on for key components. Prepare to Repel Boarders.

Next Chapter in the Bits vs. Atoms Saga

Apple’s success with iTunes came as a result of a property of the Internet that is now at the root of their problem: value moves at the speed of light when it can be digitized, and even when that value is in the form of an optimized supply chain, there are physical limits imposed by materials and the movement of products that ultimately make manufacturing a challenging business. On one hand you have companies like Apple, who source, manufacture, sell and distribute 125 million smartphones, along with millions of other devices. On the other hand there are companies like Google, whose value can be delivered over a network, relying on increasingly large server farms and unfettered access to electricity, but with much less need for operational infrastructure. Cisco and Oracle are another example although not as stark. Huawei is exerting substantial pressure on US firms as a global competitor and causing Congressional sabre rattling, as we noted here.  Telecom equipment has been a hardware-oriented business but is less at risk because of innovation toward software and network integration – moving toward bits and away from atoms, demonstrated by Cisco's recent alliance with Citrix. Earlier we discussed Lenovo, which has overtaken first Dell and now HP and is the global leader in PC unit shipments.

As noted, we think moving some manufacturing back to the US will bring some benefits, not least of which is the PR value of bringing some jobs back home. It is slightly diluted by the fact that production of the most important product lines will not be possible for some time to come and does not decrease reliance on Foxxconn or really help with the Samsung conundrum. However if the experiment succeeds and a profitable advanced manufacturing sector can be developed and others follow suit it will be a very good thing for all of us in the technology industry.

Solution for End-to-End Lead-to-Cash Workflow

As part of our Pick of the Week series, we requested an online demonstration of what sounded to be too easy, and were privy to a demo of Dell’s DCBA (Dell Cloud Business Applications) to see the lead to cash process from building customer awareness to sales contract. We were impressed at how far the industry, and Dell, has come in the last few years at solving the practical challenges around marketing and sales integration. Dell is providing enterprise-level CRM capabilities to SMBs that might have run into seven figures (and a year-long implementation) only 10 years ago. And going even further by tying all this front-office activity together with accounting to synchronize invoicing and billing into the process, insuring that sales staff can be paid without spending 12 hours a week updating their CRM records, and Finance does not have to chase down account managers for collections and accounts receivable updates on the 29^th of every month.

Small and Mid-Market Companies Choose Online CRM as the Shortest Path to Revenue



The killer Enterprise Application to emerge at the end of the Client/Server era was CRM, which spawned a huge ecosystem of sales process, configuration and customization experts. The next step was online CRM solutions led by Salesforce.com, a true multi-tenant architecture and Cloud ecosystem in and of itself. The ample supply of CRM expertise, along with the market needs to generate revenue as quickly as possible resulted in a wave of online CRM start ups and then pure-play Marketing Automation vendors that were eager to plug into the accelerating number of customers opting for a services model.

 

Falling Through the Cracks

Even with the best CRM software and a lot of customization, even for those who spent the most on these systems, and especially large organizations, getting to a state of accurate and current information has always been a challenge. The perpetrators tend to be too many steps in the process, unclear roles and responsibilities, limitations in the software that force workarounds, ineffective hand-off of customer relationships, different levels of process and software maturity, and many others. Much of this was caused by contention for capital budgets, the complexity and expense of internal systems integration and never being able to get ahead of the technology curve, resulting in a large percentage of CRM implementations failing outright. Properly selected and integrated Cloud-based Applications like this one from Dell have already gone a long way to eliminate many of these challenges by offering a shared customer database approach from the very beginning.



 

Following the image above, it is quickly apparent that the demand and supply cycles are covered by this approach: Lead to Opportunity, to Proposal, to Customer Support, which is good for the customer. The internal operational cycle is also enabled from Marketing to Sales to Invoicing and Billing, to Customer Service, which makes life a lot easier for everyone involved.

The demonstration was recorded and we have included relevant excerpts that follow the process. Dell offers Pardot, a leading Marketing Automation Solution for marketing which connects automatically to Salesforce.com by synchronizing User-IDs from each component, in less than a minute. Sales Funnel, Alerts, Dashboard, Forecast are coordinated out-of-the-box, and rules are customizable between the applications.

Next comes Conga, which merges customer information, selected products and services, proposal template and cover letter into a print-ready quotation that shares all data with the appropriate customer and pipeline records.

EchoSign, an e-Signature solution from Adobe follows, allowing the customer to authorize the order securely and purchase immediately, which is always a good thing in Sales.

The next part of the solution solves the ever-present issue of ensuring the Sales and Accounting Systems contain and report the same information. This is accomplished using the process integration presented below:

 



Dell SMB Lead to Cash Process Automation 1 from Techaisle on Vimeo.

 

As shown in the image, the same information that is incrementally collected throughout the marketing and sales process is used to auto-populate the agreement, invoice and collections data within the accounting package, for our demo, this was done using QuickBooks Online, one of several pre-configured packaged integrations that do not require manual intervention except for company-specific policies and table structures.

Again, seeing it is more impressive than reading about it:



Dell SMB Lead to Cash Process Automation 2 from Techaisle on Vimeo.

What was the name of your company again?

The benefits of sharing information between Marketing, Sales and Accounting are equally or more important with Customer Service, which is the lifeblood of all companies’ online reputation these days. Taking the data one step further into customer service affords the advantage of having the full customer history at your fingertips while fielding support calls – which provides a higher level of satisfaction and smarter service capabilities.

 



Dell SMB Lead to Cash Process Automation 3 from Techaisle on Vimeo.

 

Why this is Important

This is important because it goes back to some basic principles that improve information system management, including:

Move Data, don’t type it more than once. Whether using drop downs to input categories and exact descriptions or whole sections of records or groups of records, moving data will result in fewer errors than typing it into the system. In addition to the accuracy this offers, it eliminates a lot of the drudgery associated with maintaining CRM systems and allows sales people to get back to selling.

Build Information Incrementally. Capturing the same data repeatedly will annoy customers and staff, records should be built up over time and sections of data moved to populate application modules as they are brought online. Dell’s solution does this through progressive web forms for customer records and by sharing data between marketing, sales, accounting and customer service.

Centralize Data. Trying to manage multiple customer databases is confusing, inefficient and causes a lot of frustration. Accuracy, Consistency, Reliability and Timeless are hallmarks of data quality and all suffer from running disparate databases of the same information. While data tends to take on a life of its’ own with volume and increased usage, starting with a design that shares information between systems will eliminate problems down the line and can actually give Small and Mid-Market businessesan advantage over Enterprise customers who have been wrestling with huge CRM database and internal IT for the past 15 years.     

Keep it Simple, Get Going Fast. In a recent survey 77% of SMB complained that even there has been a lot of progress in the past few years, complexity managing IT has grown faster than the problems it is designed to eliminate. SMBs want to spend money on revenue generating activities and reducing costs, which means focus on the core business, not hiring people to manage IT adoption that cannot stay engaged full time on building the business. We were surprised at how easily this whole integrated solution came online, easy enough for a power user to manage and available to use in a matter of days, quicker for those who are familiar with CRM systems.  The Dell solution comes with fixed fee, fixed scope implementation services for all of the applications they sell, making it easy for SMBs to get going quickly with a single vendor for support.

The Bottom Line

Dell’s DCBA solution was announced last September and has come a long way since introduction. In this example the demo provisioned a new account without need for any coding; userIDs tied Sales and Marketing together.  Customers signed the necessary paperwork and and Invoicing data was moved automatically once the new account was opened in QuickBooks. For small and medium sized organizations, finding ways to make best use of their IT investments-- to streamline their sales processes, as in this example here, can be the path to increased sales and help them realize greater business success, and is certainly much easier and cost effective than it used to be.