Techaisle Blog

The channel industry examined by Techaisle’s 2018 SMB & midmarket channel research survey (separate studies conducted in the US and Worldwide) is very different from the community that existed a decade ago. Once a staid domain in which technologists provided IT infrastructure support to local customers, the channel is being reshaped by five key issues: cloud, and its wrenching effect on all aspects of the channel business structure; managed services efficiencies, especially vs. the pending opportunity associated with digital transformation; increasingly-complex data center technologies; integration demands that are expanding in multiple directions; and the need to sell on and deliver to business rather than technical outcomes. Let us discuss four key questions arising out of the research that is of interest to IT vendors and distributors.

Question 1. What are the top channel trends?

The channel is being reshaped by five key issues:

1. cloud, and its wrenching effect on all aspects of the channel business structure;
2. managed services efficiencies, especially vs. the pending opportunity associated with digital transformation;
3. increasingly-complex data center technologies;
4. orchestration & integration demands that are expanding in multiple directions; and
5. the need to sell on and deliver to business rather than technical outcomes

A lot has been written about cloud so let us discuss the other four areas and the remaining three questions.

It is evident from even a casual tour of a modern SMB office that IT has become integral to business activities. Email and communications systems that meld conventional, web-based and mobile phones; and social collaboration tools on the web and within offices provide the basis for connections between companies and customers, across processes and with suppliers, and between staff members. Productivity applications like spreadsheets, graphic presentation packages and word processors enable users to complete tasks, while enterprise applications capture and report on financial data and organize processes.

Given the nearly-ubiquitous nature of IT, it is fair to wonder: are we “there” yet? Have all of the technologies that one needs been deployed? Results from a recent Techaisle survey of 1455 North American SMB IT managers (ITDMs) and business decision makers (BDMs) conducted by Techaisle indicate that there is still a voracious appetite for new IT-based business solutions. Asked to evaluate the business importance of current IT developments, 77 percent of SMB survey respondents reported that new IT systems would have a very high to high impact to their organizations. Only 6 percent believe that new IT products and services will have little impact on their businesses. Clearly, SMB BDMs and ITDMs agree that new technology will play an important role in making their businesses more profitable, and their employees more productive.

Techaisle's most recent survey of 1600 SMBs & Midmarket firms (defined as 1 employee to 1000 employees), found that only 18% do not have any form of digital transformation initiative. Which means that 82% of SMBs are already on their digital transformation journey. And interestingly, 42% are taking a holistic view of digital transformation. What it means is that these 42% believe the Internet and digital technologies impact every aspect of the business and must become a core part of organizational strategy. What is more encouraging is that SMBs believe that in the next 2 years, 32% of their business activities would be digitized and increase of 30% from 2 years ago. Globally SMBs are expected to spend US$250 billion on digital transformation in 2018.

Techaisle’s extensive research also identified that successful implementation requires a journey through digitization and digitalization, from substitution to augmentation to modification and redefinition, spanning all of the functions in an organization and all of the technology used to support its activities. Based on both quantitative survey and depth-discussions with SMB and midmarket businesses on the transformation journey Techaisle has developed the twin ladder view of digital transformation. Figure below presents a single-image depiction of the ‘twin ladders’ of digital transformation. The bottom set of steps is labelled “the technology ladder,” and stretches from the deployment of modern, flexible infrastructure to advanced IT-enabled capabilities. The technology ladder begins with the building blocks needed to establish infrastructure that is capable of supporting digital transformation. It includes mobility, virtualization, hyperconverged infrastructure & converged infrastructure and other technologies essential to provisioning advanced IT services. Businesses need to deploy and make use of the building blocks and platform technologies before they can launch initiatives that are truly transformative for their businesses and customers.

SMB and Midmarket businesses are adopting Converged Infrastructure solutions for reduced cost and imrpoved IT efficiency. For slightly more than 1/3rd of small businesses and slightly less than 2/3rd of midmarket businesses, converged infrastructure solutions are among the top 10 IT priorities for 2018. Granted that by the end of year the actual penetration would be less but the very fact that CI/HCI has percolated to the top 10 is an interesting point to note. Cloud is everywhere, but Techaisle believes that efficiency is a reflection of the compute platform, not simply whether it is housed on-premise or at a remote facility and converged infrastructure contributes to the compute platform. SMBs are adopting converged infrastructure for one or more of five primary reasons:

1. To benefit from 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
5. To respond to core requirements for cost savings and improved security.

In fact, 39% of midmarket firms said that converged infrastructure helps lower total cost of infrastructure ownership.