Techaisle Blog

Techaisle’s SMB technology adoption study shows that 72 percent of SMBs find Virtualization to be one of the most relevant technologies for their business, 2^nd only to backup and disaster recovery. The actual adoption gets hindered because 56 percent of SMBs find Virtualization to also be one the most complex technologies to understand and adopt. (See infographic)

SMBs cite several reasons for adopting server virtualization; key among them are reducing operating cost, backup and disaster recovery and reducing cost of IT support. Improving existing server and hardware systems utilization is mentioned by 32 percent of SMBs.

In our survey of SMBs either currently using or planning to use Virtualization technologies we found that SMBs currently using Virtualization tended to have a mixed brand Virtualization environment, not relying on a single vendor for the solution, but mixing and matching as they saw appropriate based on their specific requirements.

For example, the above chart shows that within VMware Server Virtualization environments, 66 percent of SMBs also use VMware client Virtualization technology, with both Microsoft and Citrix making up the difference for the client side. Similarly, 78 percent of SMBs that use Microsoft server Virtualization also use Microsoft client Virtualization. Several other findings become apparent from the above chart:

• VMware and Citrix have the most relatively mixed virtualization environment as compared to Microsoft


• Citrix and Microsoft may have a slightly deeper partnership that enables SMBs using Citrix server Virtualization to be combined with Microsoft client Virtualization more easily and cost effectively

However, we cannot look at the above chart in isolation. SMBs have been using Virtualization technologies as the market developed.

In the words of one VP of IT for a mid-market business, “We use Citrix, VMware, Microsoft Hyper-V, and emulation from Ericom. There are ‘n’ numbers of products that are being used in the whole gamut of things”.

The Venn diagram below not only exposes the vulnerabilities faced by Virtualization vendors but also demonstrates that the market is big enough for solutions from all vendors to work in a heterogeneous IT environment.

For example, the above Venn diagram shows that only 12 percent of SMBs use only VMware Virtualization solution which is twice that of Citrix and almost one-fourth of Microsoft. And 9 percent of SMBs use Virtualization solutions from VMware, Citrix and Microsoft. Once we start to include solutions from Parallels, NComputing, Oracle and others the overlaps become very complicated to map.

Our research found that SMBs usually go through a round of server consolidation before moving to Virtualization.

“The very first step was actually to go for server consolidation. Once the servers were consolidated, then the desktop virtualization was performed. So, typically for VDI architecture or any other technology, the first thing is the server consolidation and after that the procurement of solution and licenses were done from VMware and Citrix for the VDI and after which the user terminals were changed”, this according to one IT Director, Mid-market business.

Not all Virtualization projects finish smoothly. SMBs have also had different experiences with each of the three major brands for server Virtualization projects as shown in the chart below:

The factors affecting each of the projects could be dependent upon:

• SMBs’ readiness


• Channel partners’ capabilities

However, the top 3 most common areas that need addressing are Compatibility Issues, Cost Overruns and Lack of Experience, which are perennial issues as all SMB users adopt new technologies.

“The major challenge was the cost, because the initial hardware investment was huge. Getting rid of the system and moving to the cloud and installing virtual servers required purchasing of physical storage and upgrading the system. Another challenge that we faced was the initial configuration which was addressed timely and efficiently by our partners”, Vice President, IT (500 employee size company).

But SMBs have gained tremendous advantages from using Virtualization. “It certainly has helped us to avail richer network services without increasing our capital investment and has increased our operational efficiency. Moreover computing and networking are much simplified now”.

For additional information on this and other topics from the blog, please feel free to contact us for a discussion and gratis consultation.

To purchase Techaisle’s SMB Virtualization Trends and Adoption study or engage Techaisle in a deep-dive custom research please send an email to This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Techaisle’s SMB Cloud Adoption survey shows that SMBs that are using Cloud applications are experiencing tremendous improvement in customer acquisition, retention and work satisfaction. In fact, 1 in 4 SMBs say that customer retention has improved, and nearly 1 in 3 says that customer acquisition has improved.

In general SMBs have experienced improved customer acquisition and retention after using cloud applications, however, SBs (1-99 employees) and MBs (100-999 employees) differ. Typically, SBs are more hard-pressed to acquire customers, a top business issue for them. With the adoption of cloud, 32 percent SBs say that they have seen improvement. MBs on the other hand, have better direct sales force for customer acquisition, but after equipping the sales force and marketing with cloud applications they have seen marked improvement in customer retention. Additionally, an important point to note is that 29 percent of SBs have reported improved group productivity and 34 percent improved employee satisfaction.

The survey also showed that B2C and B2B SMBs have had different experiences in customer acquisition and retention.  Specifically, B2B SMBs have reported nearly twice as high improved experiences as B2C SMBs. Many B2C SMBs are using social media platforms such as Facebook and twitter and marketing automation solutions to build a set of followers to improve their customer retention and acquisition. On the other hand, comparatively higher percentage of B2B SMBs are using LinkedIn, Twitter and specialized platforms such as Chatter, Yammer and GageIn to track news and conversations with their customersaction.

CRM has become the central application and the core around which other features and functionality are deployed as required by an SMB organization, department within an SMB or an individual user within the SMB. CRM is that core cloud business application. After the SMB CRM base has been built (or simultaneously), the order of implementation depends on the SMB’s focus but is likely to be business intelligence, marketing automation, Financials, HR/Payroll, customer service for service companies, ERP, fulfillment (SCM) and industry vertical applications.

There are four key areas of SMB cloud usage and deployment. Each has got many sub-sets of applications. These four areas are:

1. Infrastructure and Platforms (US$13.0 Billion SMB Opportunity by 2016)


2. Communications and Collaboration (US$7.9 Billion SMB Opportunity by 2016)


3. Business productivity & Applications (US$15.5 Billion SMB Opportunity by 2016)


4. Industry specific applications ((US$2.7 Billion SMB Opportunity by 2016)

While there are many niche vendors addressing each niche area, the complexity grows manifold as businesses move from one application to another, from one device to multiple devices. As Cloud computing adoption among SMBs grows, the real issue of data integration continues to come into play and it will become imperative for each of the four areas to communicate with the other. And once that “integration enlightenment” happens SMBs will witness even higher improvements in productivity, satisfaction, acquisition and retention.

Anurag Agrawal
Techaisle

Announcement

Cisco has announced a new Cloud and Managed Services Program (CMSP) that integrates its currently existing Cloud Provider, Cloud Services and Managed Services Channel Programs (MSCP) into one. Besides streamlining incentives, discounts and payments for its partners, the program also aims to simplify pricing for Cisco-based cloud and managed services offerings. The program will also enable collaboration and sharing of complementary opportunities between partners through a microsite via Cisco’s partner portal. All partners are expected to transition to the CMSP by August 2013.

Techaisle Take

We believe that with one master move Cisco is strategically addressing the US$94 billion global SMB opportunity by 2016.

Techaisle’s global channel surveys have shown that Cloud, Mobility, and Managed Services Solutions together are changing the SMB channel landscape as these solutions are revolutionizing IT utilization by SMBs. The new paradigm would be the "3-in-1" Channels offering Mobility, Cloud, and Managed Services as a single offering. We first wrote about the 3-in-1 channel here. And now Virtualization is quickly becoming a potent arsenal in the SMB channel partners offerings.

Techaisle’s corresponding SMB research has consistently shown that SMBs want mostly integrated solutions to limit complexity and therefore seek partners that are capable of such deliverables but very few partners currently do so as they are all camped in either one or two solution corners and few seem to embrace a holistic solution view - and this is making SMBs unsure of overall benefits and desire to spend.

With its current announcement Cisco is removing some of the barriers by bringing channel partners serving managed services and cloud needs of SMBs under a common cluster. Since many SMBs want to obtain all services from a single provider, it is important for broad product/solution vendors to evaluate all their partners, seek and cluster partners based on where they are with regards to capabilities of delivering complete solutions and introduce programs to support development. As the dividing line between cloud and managed services is becoming thin, Cisco has just done it, that is, created a single program that should:

• Enable channels to build more dynamic and serious partner-to-partner collaboration to collectively address complementary opportunities


• Enable Cisco partners to add capabilities, such as, managed services to an existing cloud services


• Attract newer partners to join Cisco program


• Help current channel partners qualify and move up Cisco’s channel partner pyramid

The data on the right from Techaisle’s channel study (N=2851) shows that channels that serve the SMB segment are keen to offer multiple services that straddle cloud and managed services. Cisco’s new program should open up opportunity for its channel partners to offer both cloud and managed services using Cisco platforms.

If we look at the survey data at micro-level, we find that is a higher percentage of Channel Partners that are offering some type of Managed Services Solutions than they are offering Mobility Solutions or even Cloud Computing. The channels falling in the green columns will benefit immediately, those in the blue columns will find the program attractive but those within the red columns in the chart would be of immense importance.

It is clear that Managed Services has been the most important offering for Channel Partners, as they evolved from a typical value added channel to offering break-fix services and remote managed services.



The path being chosen by Channels to move from one offering to the next is strongly dependent upon their current offering. Those that are in the mobility space are moving to cloud, while those in the cloud are moving to managed services.

Understanding the channel dynamics and current offerings gives clues in the direction they will move. For those that are offering only one of the services there is a clear path to adding services. In fact Techaisle survey shows that the channels have chosen their path of selection.

Channels are also interested in offering mobility solutions, however, it is also clear that mobility has become possible due to cloud and managed services allowing employees to work from anywhere, anytime and from any device.

 

The responsibility now lies with both the channel partners and Cisco to make the program a success. However, there some other steps that Cisco needs to take as well.

• Extend the reach of its Smart Care to cover cloud based services


• Develop capabilities that not only work with Cisco's networking devices but also with client devices. Although it must be said that Cisco is addressing some of those needs through its partnerships with other vendors


• Further the agenda on not only BYOD but also just BYO


• Market the program aggressively. Channel partners are being courted and trained by many other vendors


• Use the program to establish a strong presence in the datacenter space

With the latest move, Cisco may have begun to shift the tide in its favor more decisively.

Anurag Agrawal
Techaisle

“Clouds come floating into my life, no longer to carry rain or usher storm,
but to add color to my sunset sky.”
- Rabindranath Tagore

 

The Global SMB Cloud Computing market will reach $23.5B this year and double to $47B by 2016, according to our latest forecast which is being updated using several thousands of survey responses and results of and segmentation and predictive analytics studies conducted in the first three quarters of 2012.

Rapid market growth in the Cloud Computing arena, especially for SMBs, is not a surprise to those watching the market, but our latest forecast shows that several segments will offer more than $1B in opportunity, as shown in the attached chart. Among those that will cross the $1B threshold are Other SaaS, ERP/SCM and Storage, the latter growing at ~30% CAGR. Keep in mind that the five types of arrows show relative growth relationships; the actual rates are very healthy and range from 10% to over 30%.

Other important points in the forecast include:

Approximately 60% of the volume growth is expected to come from North American SMBs, or $14B of the incremental volume of the global $23B, while Western Europe is expected to add $3.7B growing at a rate of 11%, and Asia/Pacific (excluding Japan) continues to develop rapidly – in the 20% range - on the back of China’s expansion and Korea’s continued economic strength in IT and global production, and is expected to add almost as much total volume as Western Europe, or about $3.4B vs. the $3.7B mentioned above.

Eastern Europe is expected to develop into a ~$1B market over the forecast period as is Latin America, both growing rapidly from a relatively small base. And as has historically been the case, Africa and the Middle East continue to lag with a very small share of both volume and growth.

“A picture is worth a thousand words.”
- Napoleon Bonapart

With all the movement around VDI, as analysts we tend to think in abstract terms about what is means to the market at large and our clients. With my daughter home from college this week I got a firsthand look at what the next generation is doing with technology and how real it actually is.

The scenario went like this:

With a week before finals in Organic Chemistry and a major paper due after Thanksgiving break, my daughter needed some freeware called ChemSketch, but it does not run native on her MacBook. Nonplussed, she downloaded an Oracle VirtualBox client, Windows XP, and the ChemSketch, created a new system disk and shared folder and was working on her chemistry paper, drawing molecules and all the other things that I don’t pretend to understand.  While I was proud to see how quickly she overcame the problem, what really struck me was that thirty years ago I was in front of a blinking CRT using a timeshare network learning FORTRAN with a prompt – the C: prompt that my daughter used triggered the memory and caused a major episode of deja vu. It is really amazing to see how both the context and content change over time.

We at Techaisle want to wish all of our friends a Happy Thanksgiving and  beginning of the Holiday Season!