Having the right information in the right context in the right format at the right time is critical to making business decisions these days, and increasingly that means access through mobile devices – whether it is the roughly 30% of consumers who own tablets or those tens of millions who get information from a Smartphone. A recent Techaisle survey of over 600 channel partners uncovered several important similarities and differences between how SMB channels are approaching three of the most important trends in the market: Cloud-Computing, Mobility Solutions and Remote Managed Services. In this post we will offer a snapshot of some characteristics of Mobility in the SMB Channel.
From a demand perspective, 60% of partners reported having SMB customers request Mobility Services, with almost 80% of ISV customers topping the list. Not surprisingly, email – the killer app, is the most used and offered service with about 50%, followed by Payment Processing with over a quarter. As we have found in other surveys, the front-office, revenue-related applications of CRM, especially among ISVs, and SFA, especially among SPs and Social Media Marketing, especially among SPs, were all being adopted by almost a quarter of respondents. We expect a rapid uptake in 2013 in the area of Mobile Analytics, which is being embedded into many front office SaaS applications in the form of dashboards and self-configured KPI management with proactive communications, or from the several cloud-based pure-play BI vendors in the market. As mentioned following the recent Citrix announcements, we also believe the market is ripe for adoption of Cloud-based Productivity Suites, which will also drive adoption of mobility among SMBs.
In many areas of Cloud Computing and especially Remote Managed Services, the big inflection point in both adoption and average spending does not happen until the 100-249 employee segment, but not so with Mobility; approximately 60% of the demand comes from the 1-9 and 10-49 employee segments, with the increase in email (across the board) and Social Media Marketing and Mobile Advertising (ISVs, SPs) driving the trend.
There are differences in the approaches, needs and challenges between SMB channel types when offering Mobility Solutions to customers, typically falling into Cost and Complexity, Management and Employee, Network and Device and Security categories. In this example, we see some key differences between the VAR/SI and SP partners related to the provision of Mobility solutions. Poor Network Service is the biggest challenge for VAR/SI partners, followed by Insufficient Network Speeds, Lack of Integration/Compatibility, and Immature Platform Choices. Both were challenged equally by Slow Performance of Mobile Apps and Device Management issues. SPs biggest challenges relative to VAR/Sis included Lack of Applications Availability, followed by Poor Mobile Web browsers, and Network and Device Issues.
As the market matures, these challenges should dissipate with increased mobile responsiveness built into websites and applications, more affordable device and data plan pricing and wider adoption of smart mobile devices. For now, the perennial SMB issue of cost and complexity of new technology balanced against perceived and demonstrated return on investment remains the most important barrier for channels to overcome.
Techaisle Blog
Symnatec just announced its Endpoint Protection Small Business Edition 2013 which effectively moves Symantec's flagship security solution for SMBs to the cloud. The solution has an on-premise solution as well giving SMBs the flexibility to start with an on-premise solution or use directly a cloud-based solution with no additional hardware requirements and no special IT staff or training needed.
Techaisle Take
In the SMB space, the trend is definitely moving to the cloud, with SMBs reporting growth in the average number of cloud applications rising from 2 in 2010, to 4.3 last year and expected to hit over 7 this year. Symantec has seen flat revenue in a growing market and needs to take advantage of this trend in cloud services. Security is among the most widely deployed cloud application (~60% of Cloud Users). Symantec has a very broad portfolio of products and despite a management shakeup and unwanted attention from hactivists; they have been able to maintain stability over the past few years. Having said that, there is always some uncertainty when migrating from one architecture to the next; it will be very important to maintain a solid opportunity for channel partners and they will have to execute well as they make this move.
Symantec needs to ensure that their channel partners are well trained in the difference between between the 2013 cloud edition and the 12.1 on-premise version to avoid any SMB marketplace confusion. Symantec also needs to make sure that their marketing campaigns present the choice of offers as a benefit rather than a hard decision; there are benefits to both cloud and on-premises versions depending on the SMB customer need. We have found that there is a gap in demand from channel partners for cloud security services based on what they are hearing from their SMB customers – Vertical Applications, Security and Storage and Backup solutions top the list of requested applications.
All software companies are wrestling with or implementing cloud services strategies. After Cloud Security, which is a strategic imperative for Symantec, the largest opportunities within Cloud Infrastructure are in Remote Storage & Backup services, unless they step far outside their core business. SMBs recently reported that although their business priorities have remained fairly constant, 77% want vendors to reduce complexity in IT so they can focus on business and customers. It seems Symantec wants to enable that by offering both (all) their services through a common interface which is delivered through the channel and allows remote management of both On-Premises installed base and Cloud versions. If they can do this successfully, it should be a win for both small businesses and channel partners. Even so, the devil is in the detail, and if they fail to bring both of these to the market successfully they risk losing credibility in their core security market.
Anurag Agrawal
Taken from a 2009 White Paper, this image shows the new competencies required from partners to make the transition from traditional reseller to Cloud Aggregator or Cloud Reseller. What Techaisle described was the opportunity to become either an aggregator, by becoming the equivalent of a “first tier” distributor (positioned between the vendor and resellers who then sell to end-users), or as a Cloud Reseller, selling directly to end users.
Competencies required for the aggregator include the ability to aggregate services and integrate them across services, either data across applications or building solutions between infrastructure, communications and application services. In addition, core competencies were/are needed in the areas of service provisioning and datacenter management. Then an Aggregator needs to be able manage reseller relationships with structured sales and marketing programs, implementation and post-implementation support for the channel, and tier 2 customer support for end users. Given these demanding requirements and the price pressure, it is not surprising that larger organizations like Dell have been the companies to aggressively pursue this strategy and taking advantage of an existing hardware and storage business to offer a full solution stack to resellers and Enterprise customers. As we have written on several occasions, the SMB channel is being squeezed by several trends including the rise of the Digital Channel, Self-Service Applications, Remote Management Dashboards, Plug-and-Play Horizontal Applications, and others. These make the aggregator approach difficult and susceptible to commoditization, more so given the additional challenges of recruiting, managing and supporting an additional tier of resellers. As a result, there has been a lot of confusion around how to make money as an aggregator, and the assumption that a solution has to include all layers in the stack: Computing, System Software, Storage, Network and Application. Even considering wholesale remote infrastructure availability, channels are confused about which layer to start with, how to choose the vendors, where to recruit staff, how much investment, how to migrate existing customers and many other questions have prevented many channel partners from making the move.
The other option for SMB channels is to move existing and new customers to cloud-based services, which still requires embracing new technologies, and figuring out how to add value through specialization, integration, customization and/or all-in-one provisioning, maintenance and support. With that as background, we can move into the topic in the headline: What the SMB channel needs from Cloud-based Service vendors. The partners here represent VARs/SIs, ISVs and SPs, and are more typical of the Reseller category rather than the Aggregator.
In a recent survey of SMB Channel Partners who offer Cloud-based Services, the most important need from Cloud Vendors was for an SLA that guarantees availability. SLAs were cited as most important by Service Providers and VARs/Sis with 61% and 59% respectively, which brought overall average to the top of the list at 53% of all partners surveyed. This is consistent with what we have heard directly from SMBs, who are using the SLAs as a proxy for the brand of underlying infrastructure and system software of the applications. The effect of this is strongest on hardware vendors, whose equipment is becoming increasingly commoditized by plug-and-play infrastructure and exacerbated by a digital channel that uses self-service interfaces and management dashboards instead of on site visits. In a similar vein, the next requirement also comes directly from SMB customers, who want access to 24x7 support services. As SMBs move to SaaS and Remote Services, outsourcing infrastructure and applications exposes them to more risk and loss of control, increasing the need for the security of a 24 hour Support Desk to reduce the perceived risk of “offsite everything”. These first two needs line up with SMB purchasing criteria, ironically two of the other most important factors are Price and Data Security. That they are not passed on as needs to the vendors probably suggests that these are largely under control – users also typically rated high levels of satisfaction in these areas.
Most of the remaining issues relate to two categories: Product Related and Partner Program Related.
Product Needs included better methods of integration, a broader catalog of applications and single sign on across applications.
Partner Program Issues included better notification of upgrades, changes and downtime – providing onsite training, having a policy concerning data migration to competitive products, and ability to offer discounts for paying annual fees upfront.
Vendors and Cloud-Services Aggregators should keep these needs in mind to develop the best Cloud Partner Programs, and SMB Resellers should use these vendor capabilities to select the right Vendor/Aggregator to work with as they migrate customers from a traditional offers to Cloud-based solutions.
Delivering Work-Life Harmony through Enabling Technology
Citrix calls it Life Slicing, a form of work-life harmony. And it is on a relentless pursuit of creating continuities between devices, location, apps, data, events and culture irrespective of place, time and environment. Mark Templeton, CEO says that he and his team are busy designing solutions that create customer experiences that will differentiate Citrix from its competitors and in the process reduce cost and increase simplicity for end-users.
It is not an easy objective to achieve. However it is the right objective. Citrix is either a leader in some categories or second in others and a relatively new entrant in yet other areas. It is confident that a focus on delighting the customer with tools that conform to the way end-users work in a multi-modal collaborative world, pining for utmost simplicity will make Citrix the winner.
To achieve its vision, Citrix has set its eyes on six key areas.
- Social Collaboration: with carefully selected and integrated product line consisting of – GoToMeeting, GoToTraining, GoToAssist, GoToWebinar, ShareFile and Podio. While GoToMeeting was Citrix’s first foray into collaboration (when collaboration was not yet a must have), recent acquisition Podio extends the collaboration to teams.
- Data Sharing: ShareFile is Citrix’s answer to enterprise-grade Dropbox that Citrix hopes will win on security, ease of use and customer service. ShareFile enables employees to send, share, sync files with business features such as follow-me data, access from any device, encrypted in transit and at rest, remote wipe and account locking.
- Enterprise Mobility: a strategy built on Citrix Receiver, a client software app that allows access to data, apps from any device for the unbridled, fast growing BYOD market. Citrix Receiver uses XenApp and XenDesktop to deliver self-service apps and data to over 3 billion devices. Add to it CloudGateway for provisioning that is identity-based, scenario-based and secure serving of data on apps whether the device is windows, mobile, web or HTML5.
- Windows-as-a-Service: an area which is the bread and butter of Citrix, a leader in the space with maximum number of products – XenDesktop, XenApp, XenClient, VDI-in-a-Box. Citrix is furiously working on delivering Windows apps and desktops as a true cloud service. RingCube and Kaviza acquisitions helped Citrix accelerate its presence in the VDI marketplace and eliminated the trade-offs with VDI to allow both shared and fixed desktops to be managed. In addition its HDX technology aims to deliver high-definition virtualization experience and its FlexCast delivery technology makes possible individual user configuration.
- Cloud Networking: echoing the thoughts of many others that the future network will be fast and flat Citrix is betting on NetScaler, ByteMobile and CloudBridge solutions to deliver a network fabric that meets or exceeds the demands of a mobile world with ever-growing bandwidth requirements from devices, data and applications that are in constant motion.
- Cloud Platforms: staking on its belief that Open platforms will win, Citrix has CloudStack addressing the needs of both traditional and cloud workloads. Specifically, Citrix has also rolled out a Cloud Portal specifically designed for service providers that is a single self-service interface for cloud deployments.
Routes-to-Market for SMBs
The channel comprising of VARs, Systems Integrators (SIs), dealers, resellers and retailers form the essential cogs of an IT vendor’s eco-system that puts products and solutions in the hands of the customers. This is particularly true in the small and medium business market (SMB) where the vast majority of opportunity can only be addressed through the channel. Selling direct is not economical. So it makes complete sense that Citrix is trying to find ways to engage and involve the channel in their cloud efforts. With over 10,000 channel partners globally Citrix is concentrating on three different yet complementary efforts: 1/ Strengthen the VAR and SP channels; 2/ Build strategic alliances; 3/ Reach the SMB channels. The third point is most noticeable as Citrix has launched two new channel programs:
- SMB Specialist
- Cloud Advisor
SMBs have made the leap to cloud-based infrastructure and will rapidly move to multiple services that leverage their investments. The new solution stack is virtual and relatively standalone at this point; the next stage will require integration of more complex applications. As new Cloud Services are rolled out it will not be possible for most SMBs to maintain the internal expertise to make the most appropriate choices. Helping customers emerge without being overwhelmed and providing relevant knowledge of how to effectively apply the new technology will strengthen the SMB customer-channel-vendor relationship. And Citrix is building that channel handbook to enable its partners to be those trusted advisors.
In addition it has developed and released a Partner 360 Dashboard with real-time analytics. Its channel measurement and incentive metrics are based both on fulfillment and influence. Borrowing a leaf from the SMB transformation phenomenon, Citrix is enabling its partners to shift their focus from just operating to implementing and therefore helping them define their respective roles in the cloud.
Techaisle Take
SMBs are going through a transformation in terms of their work style, behavior and IT usage. Citrix is addressing the transformation. SMBs traditionally started off their journey into IT unknowingly using single building block concepts. The process for an SMB growth and its relative steps to absorb IT were steady and predictable. Some SMBs stacked their blocks faster than the others but the steps to get to the top block were always the same.
Enter flat IT. Cloud, mobility, virtualization, managed services have effectively toppled the blocks down in one fell swoop and have laid everything flat on the table. SMBs have moved from enablement to empowerment. Now it is not a race to the top, but how can an SMB reach its full potential in the shortest period of time. The process of an SMB’s growth and steps to absorb IT are no longer steady and predictable.
The SMBs are looking for value shift, moving from enablement to empowerment. They have moved from individual productivity to group productivity. Work from anywhere, anytime is more prevalent today than ever before. SMBs are no longer clustered in one location. It took 10 years for percentage of SMBs allowing telecommuting to double itself but only 3 years to again double to reach 77% in the US. The average 
number of locations has gone up from 1.05 to 1.85 in 5 years. Another important number to note – 15% of SMB employees always work from home, that is, 11 million SMB employees. SMB executives have also accepted work at home culture. And they see it as a benefit for the company as well as employees. 46% agree that it benefits companies, 37% say that tasks can be accomplished from anywhere. And 28% say that the technology used by employees is more advanced than that offered by workplace. It is known as Consumerization of IT but it has implications on how IT is absorbed and how IT vendors offer support and training. SMBs use multiple devices & applications to collaborate when traveling or telecommuting, many of which did not exist 5 years ago. Mobility is at the SMB doorstep.
To address the SMB transformation Citrix has it all: Collaboration, Data sharing, Mobility, Virtualization and even flavors of managed services. In the process, it is introducing simplicity and mobility along with driving down the cost. But what about the routes-to-SMB-customer? This is where Citrix has some work to do. Recognizing the shortcoming, Citrix has launched a somewhat thought out campaign to serve the needs of the channel partners that cater to the SMB community. What it already has in its favor is the tail wind. But any fellow traveler can easily testify that the tail wind can turn into a head wind. Citrix has its work cut out for itself, making sure that the channel partner tail wind is maintained.
Anurag Agrawal
Techaisle
