Techaisle Blog

In all sectors, the last two years were tough – and as a result, 2022 is challenging from a market planning perspective. As we enter 2022, IT product and service suppliers are looking to create a context for understanding the range of outcomes that the new year may bring. Techaisle is launching its "2022 in Focus" research series to support that effort, which illuminates issues and requirements in the vast SMB and midmarket segments. To begin with, here are our top 10 (and additional 3) predictions for 2022. After surveying thousands of SMBs and midmarket firms, having hundreds of depth calls, we identified over thirty trends. After that, we systematically prioritized ten predictions for your consumption.

We look forward to working with you in the year(s) to develop fact-based perspectives on the issues that shape the success of the IT industry.

'Knowing what we don't know' is often the thorniest complication in decisions. A unified and contextual insights strategy mitigates this risk by ensuring that data from within the organization is aggregated, giving decision-makers the most complete and up-to-date information possible. Zoho One promises to deliver contextual critical business insights for Midmarket firms and SMBs.

Zoho has 500,000 customers, over 70 million users, and 40,000 customers on Zoho One, a product introduced to the market in 2017. One of the customers has 32,000 employees using Zoho One. What is Zoho One? It is a collection of 45 apps that span all primary business functions, with CRM, analytics, and communications being the most used, followed by accounting, helpdesk, and Sales IQ. Driven by the need for increased team collaboration and conversation in the last year, Zoho Cliq, a chat app, has become the third most used app within Zoho One. Having great success in the services vertical industry, Zoho is making quick inroads into the real estate, banking, and other financial services market segments.

Do businesses subscribe to Zoho One all at once or plod and pedal from one app to many? The answer lies in the market segment. Small businesses adopt and use all apps simultaneously, mainly because they see Zoho One as a path to transformation and digitalization with the least friction. It is relatively easy to adopt a single app, connecting its inputs and outputs to relevant internal systems and processes. Likewise, it is possible to adopt a handful of apps, hand-wiring the interconnections between them and adjacent applications. But this craft-built approach to digitalization is not aligned with longer-term visions of scale, flexibility, and agility. It creates management overhead and performance and security risks for small businesses. Zoho One, an integrated platform, quickly offers a cohesive approach to addressing several business pain points concurrently.

Midmarket firms often explore multiple apps before committing to Zoho One. Either through experience and education, one or several Zoho application parleys to adopt Zoho One or many midmarket firms prefer to work with only a few apps. Zoho's integration with its competitors helps the midmarket firms immensely, making it a more straightforward decision than identifying resources for automation and integration.

While we generally consider "SMB" as a single segment, there are often differences between the "S" and "M" segments – and their approach to cloud business application adoption illustrates one such difference. Midmarket businesses usually have complex deployments. The most common midmarket cloud application workloads provide a technology platform for enabling processes rather than an application platform for expanding the depth of specific tasks within the organization. Small businesses look to the cloud to primarily enable agility, while midmarket firms are also interested in improving IT efficiency.

What is next for Zoho One? There are five new apps, three new services, and seven platform enhancements to help "businesses unify systems, data, and teams." Two announcements interest me the most because they are universally applicable to all small and midmarket businesses regardless of cloud maturity, size, and vertical industry.

One of the most exciting insights available from Techaisle channel partner survey research and corresponding SMB and midmarket survey research is the extent of divergence between what customers value in their relationships with channel partners and how the channel presents its value to its customers. The extent to which the two sides do – and don’t – connect is again diverging, first noticed by Techaisle in 2012. Data shows that the channel is emphasizing benefits that have relatively minor effects on customer/channel relationships.

As seen in the data, quality of services provided by the partner and technical expertise are the most important reasons why customers embrace their channel suppliers, followed by industry knowledge and long-term relationships, understanding of business needs, deliver business outcomes, and pricing. On the other hand, “features and functionality,” “affordable price,” and “availability as a subscription service” are messages used by more than 50% of the channel, “ease of use,” “robust security,” and “industry/vertical-specific relevance” by about 40%, and “affordable maintenance and support,” “customizable to meet business needs” and “deliver business outcomes” by 30%-36% of channel members. Thus, the messaging by partners differs from what customers value.

Another interesting pair of findings from the channel survey compares customers’ most critical technology requirements with the positioning channel firms strive to attain within their customer bases.

It was once thought that the cloud would reduce the technology deficit SMBs face relative to larger firms – but it is difficult to say that this has proved to be the case. Indeed, the cloud has lowered the barriers to adopting new systems, giving SMBs access to applications and infrastructure resources that would have been well beyond their means five years ago. However, Techaisle’s SMB and Midmarket Cloud adoption trends research data show that cloud, and hybrid IT, has posed other challenges: difficulties in integrating systems with each other and with business processes, and in integrating data across applications (ensuring that data created by one application is input automatically into others); difficulty in securing systems that are based in multiple locations and managed by various organizations, each with their own set of operational rules; difficulty in applying appropriate levels of security and governance to an ever-expanding pool of data that moves at accelerating pace through an ever-more-complex constellation of systems, users and locations. Large organizations have IT teams dedicated to addressing specific issues within this shifting and complex set of requirements. SMBs rely on limited internal resources (often, small groups of generalists), supplemented by fractional headcount support from third-party channel members, to keep pace with the change that results from the constant advance of cloud and hybrid.

Despite these challenges, though, evidence suggests enormous scope for cloud growth in the global SMB segment. Data indicates an apparent leader/laggard dichotomy between midmarket and small businesses concerning IT-enabled innovation. Over 20% of midmarket firms have internal teams dedicated to “finding ‘what’s next?’ technology-driven innovations,” and 40% “have IT budgets specifically for technology-driven innovation;” 11% report that they have embedded IT professionals charged with finding innovations into business units. Small businesses are, on average, about half as likely to have taken these steps; instead, nearly half of firms with 1-99 employees state that their organizations do not expect IT to drive innovation actively.” Making the assumptions that a) midmarket firms will benefit from the express linkage of IT and innovation, and b) that the gap between large enterprises and midmarket firms is likely as significant as the delta between midmarket and small business. Additionally, large enterprises will, over time, capture IT-enabled business innovation benefits even more rapidly than midmarket competitors. Data illustrates the foundations of a cascade, where IT-enabled innovation drives business success and further cloud investments in larger firms, defining success patterns that small organizations then adopt.

The findings also expose the uncertainty that SMBs face as they structure their IT/business strategies. The most significant proportion of SMBs – 42% of small businesses and 32% of midmarket firms – state that they are unsure of what the next 10-15 years will look like for their industry. Other SMBs worry about their ability to cope with the pace of change: an average of about 25% of SMBs report that they “are struggling to keep up with the pace of change,” and nearly 20% state that they “do not know if they will be able to complete over the next decade.” Against this backdrop, a cadre of forward-looking organizations – 15% of small businesses, roughly a quarter of midmarket firms – “are battling barriers to become a digital business by 2030.” The successes that these firms realize over the next several years will increase their appetite for further cloud investments and encourage their peers to commit additional resources to cloud-based business initiatives. Techaisle expects that if and as these digital leaders realize tangible benefits from cloud and hybrid, the cloud will become an essential element of SMB business operations. As a result, SMBs will become a significant force in the cloud market. Moreover, suppliers to the SMB market and the SMBs themselves can align to bring about this positive change. Techaisle believes that mutual benefit will drive commitment and innovation on both the supply and demand side of the cloud equation.