Techaisle Blog

Various organizations define Big Data differently. Some use “petabytes of data” as a benchmark to isolate big data from other normalized and structured data sets that exist within an organization. However, this measure quickly boxes big data analytics into the large enterprise market segment. Small and mid-market businesses certainly do not have this extent of data but Big Data still relevant for them. In fact Big Data solutions are more relevant for Small and Mid-Market businesses. However, it will take some creativity on the part of solution providers to make Big Data accessible, easy to use and comprehend for segment that constitutes 97 percent of global businesses.

Cloud computing started as an enterprise play, however, it was quickly discovered that SMBs will be the more relevant target segment with a faster path to adoption. Similarly, as Virtualization market started getting fully penetrated within the enterprises, vendors shifted their focus to the SMBs with some very creative solutions. As far as big data is concerned SMBs are starting to show interest and even adoption. However, there is a stark difference in approaches between mid-market businesses and small businesses. While mid-market businesses are experimenting with bespoke solutions, small businesses are gravitating towards a multi-tenant, aggregated and federated big data solution that has a mix of publicly available data and their own internal data.

It is expected that in year 2016, global SMBs would spend US$1.6 Billion on big data solutions exhibiting a growth rate that is faster than what was exhibited by cloud computing solutions. Cumulatively between now and end of 2016, SMBs itself would have shelled out US$3.9 billion on big data solutions. This spending includes hardware, software and services.

So why are many big data solution providers ignoring SMBs? Simply put, because of perceived complexity and inability to create bite-sized messaging that directly address SMBs pain-points. But they should not forget that business intelligence has now become one of the fastest solutions to be adopted by SMBs. If done right, Big data address three key pain points of SMBs: Increase sales, Efficient operations, Improve Customer service.

Promise of Superior Decision Making

Let us take Techaisle’s recent global mid-market businesses’ Big Data Adoption & Trends study which clearly shows that the promise of superior data-driven decision making is motivating 43 percent of global mid-market businesses to either invest in or investigate Big Data technology. Out of these, 18 percent of mid-market businesses are actively investing in big data related projects. The possibilities of analyzing a variety of data sources, producing action-driven business insights is too big to ignore for these businesses.

Similar to cloud, the attitude towards Big Data is transitioning from “Over-Hype” to “Must-Have” technology with the size of business. Even within the businesses that consider big data to be over-hyped, 29 percent think that it will be an important part of their business decision making process in the future.

Extracting Business Perspectives

Business intelligence by itself has provided enough business insights, however, mid-market businesses are now looking for extracting business perspectives to drive superior decisions and ultimately achieve superior results.  Extracting business perspectives has become important as they rethink their marketing strategies because mobility, social media, and other transactional services have increased the number avenues for connections with their customers and partners.

CRM solutions had first established the analytics for analyzing customer data. However, the data was mostly two-way transactional data. This changed when customers began visiting business websites to explore, browse and perhaps make purchases thus leaving behind a trail of information. IT vendors and mid-market businesses figured out the need to analyze the data and combine it with transactional information.

However, everything changed with the onset of social media, blogs, forums, wikis and opinion platforms where the identification of false positives and negatives became difficult and knowledge about the customer and resulting segmentation became an inaccurate undertaking.

Big data analytics presents the possibilities of connecting together a variety of data sets from disconnected sources to produce business insights whether be for generating sales, improving products or detecting fraud.

It is therefore not surprising that global mid-market businesses are turning towards big data analytics to analyze social media data, web data, customer and sales data along with click-stream machine generated data and even communications data in the form of emails, chat, voicemails.

Leap of Faith or Solution Readiness

Analyzing data from diverse sources leads a mid-market business to naturally consider linking structured and unstructured data. This also drives them to evaluate and select the technology that can be used for simplified implementation. Simplified implementation is important because mid-market businesses do not yet have in-house capabilities to analyze unstructured data and those that have them consider the capabilities at best rudimentary.

Big data therefore is a major leap of faith for mid-market businesses resulting in treating big data analytics projects usually as separate to the existing analytics within the business. More aggressive adopters are planning to use big data analytics along with other analytics in a coordinated manner so that one does not become an inhibitor for the other.

In recent years technology and technology options have evolved extremely rapidly for an average business to understand, evaluate, purchase and implement. The complexity gets further exacerbated with lack of experience, lack of skilled manpower and innate difficulty in identifying external consultants that would be the most right fit for their business objectives and budget availability.

In spite of challenges, the study shows that there have been some successes when business units, IT & data analysts exhibit extraordinary alignment. Our study shows that mid-market businesses typically started their big data journey in one of four ways. Highest success rates for project implementation and generating new insights have been achieved when IT and data analysts work with external consultants from project inceptions.

SMBs as the Path to Big Data Simplicity

The global SMB spend on big-data related deployments will cross US$1.0 billion in 2013 which is a 32 percent increase from 2012. SMBs are still experimenting to see if big data analytics can provide newer insights into their operations and better knowledge about their customers. It is still very early days for small and mid-market businesses to fully embrace big data but they are planting the seeds in terms of re-architecting their IT infrastructure to plan for the future. But we believe that SMBs may very well race ahead of enterprises with their deployments as technology becomes simpler and consultants become experienced.

 

Techaisle’s global mid-market businesses’ Big Data Adoption & Trends study shows that the promise of superior data-driven decision making is motivating 43 percent of global mid-market businesses to either invest in or investigate Big Data technology. Out of these, 18 percent of mid-market businesses are actively investing in big data related projects. The possibilities of analyzing a variety of data sources, producing action-driven business insights is too big to ignore for mid-market businesses.

Big Data requires a certain level of IT sophistication and a history in the linear investment in Information Technology enablers to be successfully. While these factors predispose larger accounts to Big Data, the competitive imperative to understand customers, innovate products and improve operational efficiencies has already started to reach down to the mid-Market, forcing a search for how to leverage primary and secondary data that is generated by the business.

The current and planned investment represents a sizable opportunity considering that the segment is relatively new and requires a certain level of IT sophistication and a history in linear investment in Information Technology enablers to be successful. North America has both the largest market and the highest level of investment in Big Data overall in SMB and mid-market segments. Mid-Market attitude towards Big Data transitions from “Over-Hype” to “Must-Have” technology with the increase in employee size. However, nearly one-fourth of lower mid-market businesses consider big data to be over-hyped and yet 29 percent think that it will be an important part of their business decision making process in the future.

Business intelligence by itself has provided enough business insights, however, mid-market businesses are now looking for extracting business perspectives to drive superior decisions and ultimately achieve superior results.  Extracting business perspectives has become important as they rethink their marketing strategies because mobility, social media, and other transactional services have increased the number avenues for connections with their customers and partners.

In addition to understanding customers, mid-market businesses are also considering big data analytics as an important initiative to help them improve operational efficiencies.

Techaisle’s study shows that there are many different tactical objectives for deploying big data projects but the top among them are sentiment monitoring, generating new revenue streams & improving predictive analytics. It must also be said that businesses have figured out that there is a lot of publicly available data which could also be analyzed to their advantage.

The mid-market businesses actively investing in big data technologies are expecting some clear cut benefits from big data analytics such as increased sales, more efficient operations and improved customer service. These objectives differ slightly by different geographic regions. As the growth rates continue to lag in mature economies, the pressure to increase revenue grows resulting in developing robust analysis and extracting insights from all sales and customer data including transactions.

When specifically asked about preferred deployment choice in terms of on-premise vs. cloud, mid-market businesses are unsure as they are still navigating through their technology options. However, Hadoop dominates as the preferred platform but confusion exists.

In terms of analytics skill-set and long-term vision, the potential of linking structured and unstructured data sources to create new business insights is being considered very useful but at the same time mid-market businesses are not really prepared for it. In fact one-third of mid-market businesses agree that linking structured and unstructured data would be very useful for big data analytics but over 70 percent mention that they have either none or very limited capabilities of analyzing unstructured data. This is where they are turning to external help for guidance.

Needless to say, survey reveals that big data deployment is posing tremendous challenges. Technology confusion, lack of skilled resources and potential unclean data are being considered as the biggest roadblocks for big data project implementations. Big data technology and its far-reaching capabilities are being viewed by mid-market businesses as very complex resulting in very steep learning curves.

In spite of challenges, the study shows that there have been some successes when business units, IT & data analysts exhibit extraordinary alignment. Highest success rates for project implementation and generating new insights have been achieved when IT and data analysts work with external consultants from project inceptions.

Detailed Global Mid-Market Big Data Adoption and Trends report is available for purchase. Details are given here.

In what we saw as an awesome display of moving the bar higher, Evan Goldberg, NetSuite’s CTO, demonstrated in his Keynote Thursday that NetSuite continues to deliver industrial-strength innovations and solutions using tools that are increasingly easy to use, intuitive and particularly well suited to fast-growing Mid-Market companies with global aspirations.

Picking up from a summary paragraph from a 2009 blog post I wrote on NetSuite in a previous life:

“After looking at this demo it will be a little clearer why IMHO this is what the future looks like – all applications will have built in BI and reporting capabilities much stronger than has previously (been available) – without third party BI and lots of integration services – a big differentiator for SaaS vendors that provide this type of visibility as a standard component of their value proposition.”
- Collaborative Innovation Blog post, April 4, 2009

Among others, there are two things that seem like very good strategic moves for NetSuite: Fishing where the Fish Are, and being in a unique position to leverage the new Enterprise Applications Platform for companies that are ready to expand into global markets.

Fishing where the Fish Are
NetSuite positioned itself from the beginning as an Enterprise Software company, starting with ERP and then building other complex, traditionally on-premises software applications into the platform as successive SaaS waves hit the market and customer acceptance increased; Customer Relationship Management, Supply Chain Integration, Customer Service, Professional Services Automation – all tightly coupled with Billing and Fulfillment for a truly integrated workflow that almost covers the gamut of the Traditional Multi-user Systems requirements (Integrated Front and Back Office). Now adding deeper focus to e-Commerce, Global Financial Reconciliation and Industry Vertical implementations, NetSuite can enable Mid-Market firms to be truly competitive in a global market; leveraging speed and agility to outperform larger slower companies.

We have seen a very steady increase in the willingness (and need) for SMBs to embrace Cloud Computing and SaaS Models that move them out of the annual cycles and cost-center mentality that used to define IS Departments. A good indicator of this is how eager the SMB Channel is to offer a wide range of products and services and here we have seen amazing growth; even from last year to now surveys show the laggards are rapidly jumping on board, as seen in this table:

Of the 615 US-based SMB Channel partners interviewed, 86% were now offering or planning to offer Cloud-Based Services, those Not Planning to Offer Cloud dropping from 38% to 14% of the channels. This data represents aggregate results for VARs, SIs, MSPs, SPs and ISVs. In addition to Cloud Services fast growing areas for the SMB Channel include Mobility Solutions, Managed Services and a wide variety of applications in all three of these categories.

SMBs are Hungry for Enterprise-Level Capabilities
Based on early success in SaaS and basic Cloud Services such as Email, Storage, Back Up and Recovery, and CRM/SFA, Small and Medium Businesses have seen the light at the end of the tunnel. Security, availability and usability objections have been overcome and the cost to implement with lower complexity and higher focus on the core business have resulted a very compelling value proposition in widespread adoption worldwide.

To survive in an increasingly globalized and optimized business environment, SMBs need to be growing faster than the market and their competitors, reflected by their Priorities:  #1 Increasing Revenue (56%), #3 – Increasing Productivity (34%), #4 – Penetrating New Markets and Customers (32%), and #6 – Speed to Market / Keeping Pace with Competition (28%). On the other hand, rapid growth without an increase in efficiency is unsustainable, so the rest of the priorities revolve around scaling the business efficiently; including #2 – Reducing OPEX (45%), #7 – Collaborating Efficiently (29%), and Reducing Cost of IT (27%).

 

Because Cloud Computing has been able to deliver these benefits much more effectively than the previous generation of Client/Server architecture did, SMB customers report between 75-80% satisfaction levels of “Satisfied” or “Very Satisfied” with their Cloud-based implementations.

All of this bodes well for NetSuite as the market matures and moves further into the cloud looking for Enterprise-Level capabilities. And timing is also very good as we can see from the additional results of the 2013 SMB Channel Partner Survey:

For Channel Partners Offering or Planning to Offer Cloud Services (85%), the left column shows the top 12 applications cited by Partners based on currently offered Cloud Applications, the middle column represents Cloud Applications that Partners plan to offer this year, while as the title suggests, the “No Plans” column shows the share who say they have no plans to offer the Application. It is pretty clear that the areas of focus and strength for NetSuite are lining up with the opportunity, or put in another way, the Mid-Market needs are maturing to a level that can benefit from NetSuite’s focus. And while there are many companies in the market who can provide these as point solutions, there are very few who can provide them in a unified suite of applications, with an integrated group of cross-department KPIs that can be used to get at a single version of the truth.

In terms of product coverage and timing, we feel the rapid adoption in the Mid-Market towards Cloud Infrastructure, successes in overcoming basic Security, Functionality and Availability concerns and the need for Mid-Market customers to grow rapidly and efficiently, all support NetSuite’s strategy and roadmap as presented at the conference, providing a lot of runway for the next few years.

Leveraging A New Enterprise Applications Platform
The second major point is that by building their platform from the very early days of the Internet as a transaction platform NetSuite has been able to been able to take advantage of both technology and market advances. In 1997, the critical weakness of the Internet was that while it was very good for moving brochureware around the world quickly, more mature applications that required a lot of integrity and accuracy – such as OLTP in Financial Reconciliation and Supply Chain Integration – were not reliable enough; the Databases, Middleware and Network Management needed to improve and there was a serious shortage in programmers who could do this kind of heavy lifting.

Fast forward five years and the dotcom bust had made commercial broadband access ubiquitous and the tools and skills had (almost) caught up to the hype. CRM, the Killer App was being brought online to the SMB community through SalesForce.com and the benefits of a SaaS model were becoming very clear, albeit with some remaining hiccups and most enterprises waiting on the sidelines for critical applications.

NetSuite started with one of the most difficult challenges back in 1998; ERP Applications with all the Enterprise-level OLTP and Database Management challenges that came with them. By doing this, the ability to grow an integrated set of applications using a single foundation, has paid off in terms of functional leadership. Others in the market, most notably SAP for Back Office and Oracle for Front Office, have taken an “Acquire and Integrate” approach, which is complicated and time consuming in comparison. The fact that NetSuite has survived and thrived in this environment is testament to vision, determination and execution.

Without getting too abstract, we see long term patterns in the software market that seem to ring true over time – the first is to win a narrow space, shore up the position, look left and right and take the adjacent space that is most lucrative and easy to assimilate (by hook or crook). Repeat. The second is that network effects rise in proportion to the number of users: Market Share is King. The third is to focus on the Scalable model and ensure to develop an ecosystem of partners who can add value profitably. Finally, at a very abstract level, the history of IT has been a steady, long march to Data Integration for Process Automation and Optimization. Whether you call Big Data, Distributed Database Management, Supply Chain Integration, Enterprise Performance Management or Google Search, it boils down to integrating disparate data and making it useful for decision making, with a relentless concentration on efficiency. As seen in the Business Intelligence segment, those who started with an Internet-based implementation approach rather than one of everything to every mapping, have ended up with an easier road to implementation; consider Siebel vs. SFDC, SAP vs. NetSuite, BoA Merchant Banking vs. PayPal, or Cognos vs. Domo. New, better tools and focus on specific data integration points rather than mapping every possible permutation of interaction between systems has resulted in faster time to value, less complexity for the channel and much less risk for customers. Breakthroughs such as scalability with Multi-Tenant Architecture have also resulted from solving the problem from a clean slate.

In our 2012 SMB 2020 Technology Report, we described our perspective of the IT Environment of the future, Client, Server and Network. This graphic shows a functional view of the Multi-user System, traditionally called the “Server” within a Client/Server Architecture. This view has CRM as the Hub component, surrounded by an increasingly integrated suite of Applications areas that eventually cover the complete information requirements of the Front and Back Office to run the business using a highly customized group of integrated KPIs. This type of integrated Nirvana has been an objective for a long time; however, it seems to be closer, clearer and much less complicated than it used to be when looking at the NetSuite Roadmap, i.e., we are not counting the dozens of modules that need to be installed, configured and integrated (and who is responsible to manage it). NetSuite’s rapid increase in large customers and decision by the traditional big Systems Integrators to jump on board seem to indicate that timing is good and the functionality is there.

Channel Implications
As the functionality and capabilities of the platform have changed with Cloud Computing, so have the dynamics of the Channel, especially in the Small and Medium Business space. Access to capabilities that were previously far out of the reach of SMBs has fueled the adoption of increasingly complex applications. Ironically, the benefits of the SaaS architecture have compressed and digitized the sales process, allowing companies to sell directly through an online channel, with demand generation, research, pre-sales, sales demonstrations, etc., conducted through inbound sales organizations rather than relying on channel partners to push products and services to the market. The proliferation of horizontal SaaS applications, such as email, webinars, Storage and Back Up has spawned a generation of self-configured apps that have made the customers question the need for third party involvement. It has also shorted the decision cycle substantially; many times cutting the channel out completely and giving rise to a “trusted advisor” role, especially in the lower Mid-Market.

Our research has shown that generally the more complex a solution, the more likely it is to have a partner involved in the implementation. Because NetSuite offers relatively complex solutions, it will have to play on both sides of the fence here – avoiding conflict with large partners for direct sales and providing profitable opportunities to the SMB channel partners, this was one area we felt might be a yellow flag in the distance.

Mobility is coming on Strong
With the installed base of Tablets and Smartphones exceeding that of PCs this year and annual sales of the former expected to number in the hundreds of millions higher by 2018, we see a fundamental shift in the way customers access and manipulate data. “Fundamental” meaning the difference between double-entry ledger accounting in physical books to a software application or the move from IBM Selectric Typewriter to PC-based Word Processing applications; nothing will ever be the same, and it is inevitable. There has already been a steady stream of casualties in the wake of Smartphone sales – single function GPS devices, midrange Digital Cameras and landline phone sets have all peaked in global consumption in the wake of accelerating handset sales. Just as the Internet itself essentially changed all business where value could be digitized (Financial Services, Travel, Shopping, and Advertising), so will ALL industries change as the primary mode of information consumption to the Internet is by mobile device.

This is the area that saw the greatest change in our 2013 SMB Channel Survey, from 56% of partners who said they were not planning to offer Mobility solutions in 2012, the number dropped to 8% this year, representing a doubling of Mobility Solution partners in the market as they implement the plans.

We did not hear that much about mobility from NetSuite during the conference, but given their strength in operational visibility through dashboards across departments, we think focus on this area could help both channels and end users.

Techaisle’s SMB Mobility adoption research and corresponding segmentation shows that there are three distinct SMB segments of mobility solution users.

Aggressive Adopters: Mobility is Strategic to their business; these form 13 percent of SMBs

Steady Movers: Mobility is enabled in their business; by far the largest segment at 49 percent of SMBs

Fence Sitters: Mobility is a convenience for their business; these form 19 percent of SMBs

It is imperative for IT Vendors and channels to understand the segments' different attitudes towards mobility, current and planned usage of mobility and firmographics to create an actionable marketing strategey. For example, Techaisle’s SMB Mobility Segmentation shows that for 13 percent of SMBs that fall into the Aggressive Adopters segment mobility is strategic to their business growth and survival. A deep understanding of the three segments will help IT vendors and channel partners identify their target markets and how to sell into them.

Sales Strategies for SMB Mobility Segments



Even in terms of spending, aggressive adopters are spending a higher percentage of their IT budget on mobility solutions. Interestingly, Fence Sitters are spending comparatively higher percentage on mobility consulting assessments looking for advice on the most appropriate solutions before adopting mobility enterprise-wide.

BYOD Policy and Use of Tablets & Smartphones

Not only Aggressive Adopters were the first to use tablets and smartphones but they also have the highest density (mobile devices per employees) and highest average number of tablets and smartphones being used at all employee size levels among all three segments.



There are twice as many SMBs in the Aggressive Adopters segment as Fence Sitters that use Tablets and Smartphones.

Aggressive Adopters have also moved quickly to implement a BYOD policy whereas a large percentage of Steady Movers do not have a BYOD policy but they also do not stop their employees from using their own devices.

 

Aggressive Adopters also have a very healthy attitude towards employees using consumer applications at work as they feel it is a good way to learn about technology that their employees find useful and can be officially integrated into their business.

 

 

Adoption of mobility solutions has also led to a positive effect on work-life balance of their employees. Aggressive Adopters have also seen improved productivity, higher employee satisfaction and improved quality of work.

 

With improved productivity and quality of work there will be a continued proliferation of mobile devices and corresponding solutions that will drive new forms of collaboration of content and communication. As devices become increasingly small, smart, connected and powerful, the server and network become less visible progressively moving offsite both physically and from a management perspective, simultaneously serving more computing power, storage and bandwidth; mobility will revolve around collaboration delivered through an enhanced browser. Therefore, todays Aggressive Adopters will look for integration of communication channels, content and workflow as the foundation on which to build their strategic mobile solutions.

The responsibility lies with the IT Vendors and their channel partners to effectively mine the Aggressive Adopters’ segment at the same time using realized proof points to move each of the other two segments (Steady Movers and Fence Sitters) to the Aggressive Adopter segment.

In terms of market opportunity, Aggressive Adopters show the highest growth rate for mobility spending requiring sophisticated solutions whereas Steady Movers have the biggest size due to sheer volume of SMBs falling into the category.