Techaisle Analyst Insights

Techaisle Take

VMware won – handily – the battle for leadership in server virtualization. The company attained broad acceptance within companies looking to bridge the gap between growth in compute demand and contraction in CAPEX budgets, and then drove penetration within these accounts, to the point where virtualization is the default approach to servers, and VMware is the de facto standard for virtualization within the data center.

The issue for VMware now is – what next? There is still some opportunity for growth in server virtualization, but customers are starting to hedge their virtualization bets by moving to multi-hypervisor strategies, including Hyper-V, Xen, and/or KVM within their environments. While successfully competing in its core market is essential, the “next big thing” for VMware isn’t found in beating back smaller server competitors – it’s expanding into the two big adjacent markets, client virtualization and cloud infrastructure management.

The client virtualization space poses some interesting challenges and opportunities, especially in the SMB market. Mobility has become a “must have” capability in today’s IT portfolio, but there’s no single, well-established path to deploying it: the visible hardware vendors (Apple, Samsung) don’t provide enterprise-grade solutions, and there is no existing standard for the various software components required to seamlessly support corporate and BYOD devices in an enterprise network. At the virtualization layer, Citrix is the current and clear leader, but anticipated growth provides enough opportunity for multiple competitors and strategies.

With its Horizon portfolio, VMware is attempting to position itself as an enterprise-grade answer to mobility requirements. The approach is interesting – but will it resonate with the channel serving the millions of SMB customers that fueled VMware’s success in server virtualization?

End-user Computing

Last week’s VMworld was a showcase for messaging about execution. Bite-sized announcements centered around three key areas – end-user computing, hybrid cloud services and software-defined data centers.  End-user computing is perhaps the most exciting for small and mid-market businesses as it directly feeds into their voracious appetite for mobility.

Techaisle study shows that the worldwide SMB Mobile Workforce will grow to 298 million by 2016 at 6.3 percent CAGR from 2013. Nearly 150 million SMB employees will be telecommuting and 120 million will be traveling on business. We are in a mobility cycle now that is characterized by intense competition for hardware, system software and applications leadership. The wave is young enough to offer margins on hardware, software and services, but as de facto standards become more entrenched this market will consolidate, and reseller focus will move to recurring service revenue as the margins erode in the hardware space.

With rapid increase in number of mobile workers, there are five main concerns that are percolating to the top of SMB's concerns: Cost of solutions that support mobile workers, security from theft and data privacy, mobile data pricing, transaction security and mobile device pricing. Recognizing some of these issues, Sanjay Poonen, VMware EVP & General Manager, End-User Computing said, “Mobility is a management and security problem”.

To cover its bases, VMware is currently betting on its Horizon Suite consisting of three products:

1. Horizon View: VMware’s Desktop-as-a-Service (DaaS) offering powered by View
2. Horizon Mirage: VMware’s physical desktop management tool based on its Wanova acquisition
3. Horizon Workspace: VMware’s mobility management solution enabling mobile users to access corporate data, applications and virtual desktops from different endpoint devices

As Ben Goodman, Lead Evangelist, End-User Computing told Techaisle, “Workspace is a single space for getting your stuff”. It will include MDM (Mobile Device Management), MAM (Mobile Application Management) and plans are afoot to develop MIM (Mobile Information Management) and MCM (Mobile Content Management).

VMware is slightly late into the SMB mobility space as most SMB-focused channel partners are offering Citrix solutions and a plethora of niche MDM solutions for SMBs. But Sanjay Poonen’s aggressiveness was palpable. He plans to invest heavily to drive growth in VDI. VMware is bullish on the potential for its installed base of 500,000 customers, many of them SMBs, to become customers for its mobility solutions. It plans to focus on IT (not just end-users) who are open to centralized policy management and who agree with VMware’s vision that mobility is part of a larger platform. This strategy has its advantages and disadvantages. By VMware’s own admission, Horizon Suite lies in the chasm between Innovators and Early Adopters along the adoption curve. For VMware, Early Majority to Laggards is a big white space. But this highly fragmented, disjoined white space within the SMBs is getting filled with its competitors. To achieve success, VMware must:

1. Target its customers that have yet to adopt mobility management solutions
2. Target its customers who are willing to rip and replace
3. Target SMBs that are still investigating viable mobility management solutions

MDM and MAM are by far the most prominent top-of-mind issues for SMBs across different geographies. Surveys conducted by Techaisle reveal that SMBs worry about these issues a lot, but fail to protect themselves adequately. A Techaisle survey of 9,500 SMBs across different geographies found that accidental loss of device followed by imminent danger of mobile viruses are the top concerns of SMBs while using mobile applications. This clearly demonstrates the need for remote mobile device management, authentication, and remote erasure of data.

For a vendor like VMware, the route to these SMBs is through channel partners, who are themselves increasingly turning towards their vendor suppliers as their trusted advisors. Techaisle’s channel partner study shows that on the technology side of the business, 50 percent of channel partners want training on mobility solutions including VDI, DaaS and BYOD. Partners are also looking for help in marketing: to help position these solutions to customers, 42 percent of channel partners are looking for case studies that are relevant to their own client base. In addition, channels want to acquire capabilities to be able to customize mobility solutions for their SMB client base. Affordable maintenance and support, ease of use and features and functionalities suitable for SMB needs are top sales messaging that are being used by channel partners to sell end-user computing solutions.

Clearly, VMware has to use every trick it has in its arsenal to address these issues if it is to make end-user computing market segment the “next step” in its overall growth strategy.

For more information on Techaisle mobility and/or channel research, please email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

It is stunning to see how much corporate IT realities have changed in the last five years. Today, an increasing proportion of infrastructure is rented rather than purchased, sourced with OPEX funds from remote suppliers. Agility has become the watchword for new automation projects, and acceptable timeframes are no longer calibrated in months. End-users can source applications, infrastructure and other needed services from a wide variety of online resources. And workers are tethered to the corporate infrastructure by their smartphones and tablets, not by the cables attached to their desks.

Most of these changes are attributable in part or in whole to cloud computing. Cloud infrastructure provides the basis for OPEX-based, flexible-timeframe infrastructure rentals. SaaS providers are able to deploy new automation in hours rather than months. Mobility is not really a discrete initiative so much as it is a key attribute of ubiquitous infrastructure. And IT now competes for corporate IT influence and budgets – it is no longer the “final word” on IT/business solution strategies.

Spurred by these changes, Techaisle conducted a unique survey of SMBs. To better reflect the reality of distributed IT influence and authority, we surveyed roughly equal numbers of business decision makers (BDMs) and IT decision makers (ITDMs), asking both groups to provide a “360° perspective” on the critical IT/business trends within their organizations. Key findings from the cloud adoption research included:

1. Why is cloud being used by SMBs: In many organizations, cloud may have first been introduced as a means of reducing CAPEX and/or overall IT costs, but today, it is viewed by SMBs as a means of increasing business agility and of introducing capabilities that would have been cost or time-prohibitive to deploy on traditional technology. Companies in the “middle” of the SMB market – those with 50-250 employees – emphasize the ability of cloud to make IT staff more productive, while smaller and larger organizations are primarily interested in enabling business staff.
2. Who is driving cloud adoption: Techaisle’s research shows that ITDMs are primarily responsible for cloud’s platform technologies – IaaS, and virtualization and mobile device management – and that they share authority for SaaS with BDMs. However, the capabilities based on these foundational technologies – mobility, Big Data, BI/analytics, collaboration and social media – are largely directed by BDMs. BDMs also have taken a leadership role in the solution process steps  (need identification, strategic and operational planning, even evaluation) that lead to a sale. ITDMs retain responsibility for deployment and training, but optimization is now also primarily the responsibility of BDMs.
3. What kinds of cloud are in use: Our research shows that SMBs use a mix of public, private and hybrid clouds – and that organizations often use two or three of these approaches simultaneously. The data suggests that the cloud deployment process starts with the business requirement, and moves back to the deployment model – rather than starting with a platform, and expanding across incremental workloads. If cloud selection is not a “religious issue”, then accounts are not won or lost at a single platform decision – they are won or lost on a workload-by-workload basis.
4. When will cloud usage patterns change and how: Our analysis demonstrates the coming dominance of hybrid as a delivery model – which drives increased demand for both public and private cloud as well – and projects high-growth forecasts for cloud storage, data backup and cloud security at a workload level, and for vertical applications, content publishing, CRM and BI/analytics in SaaS.
5. Roles and responsibilities through the cloud security process: A troublingly-substantial proportion of small businesses either does not know who is responsible for specific security activities or believe that the requirements do not apply to their businesses, and both small and medium businesses demonstrate an over-reliance on cloud suppliers.
6. Attributes of successful cloud solutions: Techaisle's survey results clearly demonstrate that small and medium businesses view support for mobility (and information access generally) as a key attribute of cloud success. Small businesses are also focused on the inherent cloud capability to deliver backup, continuity and disaster recovery, while mid-market firms view access to scalable compute and storage resources as a key cloud success attribute.  BDMs view continuity/backup/DR (and security) as key cloud deliverables – likely, as a result of a need to bridge the gap between setting policy and managing security processes while ITDMs demonstrate relatively acute interest in whether their cloud providers can deliver integration with physical systems and support for managed IT environments.
7. Key inhibitor in using cloud: Security and control over data are two key inhibitors for accelerating the use of cloud, but the data indicates that BDMs can be persuaded that cloud contributes to better security.

While unveiling a very lucid product and service strategy today, Citrix announced several significant products and alliances that fill gaps in the SMB Cloud Computing marketplace. These include:

• An expanded Me@Work mobile applications suite, with new and improved apps,
• A strategic alliance with Microsoft to distribute Windows and Office365 as Cloud Services through XenDesktop,
• A VDI-embedded and secure Ultrabook Client,
• Next generation Gateway and next generation cross-cloud bridge,
• A certified cloud platform developed in collaboration with Apache CloudStack,
• Improvements to the NetScaler line.

And the most consequential announcement of the day - a wide and deep strategic alliance with Cisco that if well executed, will offer a true 1+1=3 result for both sides and have a major impact in the industry.

As the Cloud matures, Techaisle believes that integration is key and the market will coalesce around virtual versions of the client and server concepts – with communication at the core of the client suite and a collaborative, front office multi-user suite in the middle of the Server environment. With today’s announcements, Citrix moves us closer to this concept.

We will focus on three of the announcements with a point of view on how we consider them to be both strategic and timely, and finish up with huge potential impact of the slew of new alliance announcements.

Part of the achieving the vision is to ensure collaboration is possible across all hardware environments, that application objects can be executed regardless of proprietary operating systems and formats. By supporting all the formats shown here through their Receiver, Citrix already enables apps and data on three billion devices, which is expected to grow to ten billion in the next five years – Like many Korean manufacturers, Citrix is thinking in terms of screens, and knows that consumers are driving adoption of connected screens as part of the lifestyle – my teenage daughter has a MacBook, iPhone, and Satellite TV running all at the same time, each screen running multiple applications. When selecting a workplace, surveys show this generation would rather give up a more lucrative employment opportunity than give up their devices or right to use social media. As Kevin Kelly observed in his visionary work, New Rules of the New Economy, back in 1998:

“Because communication—which in the end is what the digital technology
and media are all about—is not just a sector of the economy. Communication is the economy.”
- Kevin Kelly, New Rules for the New Economy, 1998

We could not agree more, and the ME@Work announcement shows Citrix is taking the long view.

The ME@Work mobile app suite includes several productivity and collaborative applications, including the #1 web-conferencing solution, GoToMeeting. We found it interesting that Citrix is simultaneously introducing some competitive products in conjunction with the partnership; an email client – most important component of the collaborative desktop – as well as strong offers in file sharing, personal collaboration, and web conferencing. It is a bold move; for those of us who have been watching the industry for a while,  we remember when there was a triumvirate – Windows, Intel and Novell - and then there was NT with OS-embedded LAN capabilities - and then there were two. And then Netscape came out swinging with a better web browser that seriously pressured Microsoft - and then there was Windows-embedded Explorer - and then there was one.

But Microsoft gets a lot out of these announcements, especially if execution can follow strategy. Microsoft revenue is over 25 times that of Citrix, but they can use the excitement brought by a fast-growing, deeply technical, and cloud-focused next-generation partner. Especially in the SMB space - the 100-249 & 500-999 segments of the mid-market are a real sweet spot for this partnership.

By partnering with Microsoft to bring Windows, Office365 and the SkyDrive to market, Citrix benefits from the practically ubiquitous Windows installed base and opportunity for widespread adoption of Office365, (which we expect to have a banner year in 2013). And access to the most mature global software distribution ecosystem in the world. Microsoft gains an ally that provides substantial support and momentum against Google Apps, a catalyst to move away from packaged software,  additional credibility in collaboration, and adds 10,000 channel partners at the same time.

The Ultrabook client is a strategic offer because it supports the tide of BYOD and it is another route to market for XenDesktop VDI. It also aligns Citrix with Intel and the major OEMs who are looking for returns on large investments in the Ultrabook line.

While the Microsoft news is a big deal, the even larger news was a strategic alliance with Cisco that involves major commitments of joint R&D, integration of product lines and joint manufacturing in the future. Key Points:

Citrix and Cisco announced broad cooperation in three major areas: Mobile WorkStyles, Cloud Orchestration and Cloud Networking.

Mobile WorkStyles
The big idea here is any data on any device (the billions of screens mentioned above) to support the growing BYOD wave, and leveraging joint strengths to deliver a unified secure environment for applications, data, voice and collaboration. Cisco contributes Jabber and substantial collaboration expertise gained from the Webex acquisition, Virtual Experience Infrastructure (VXI) technology, and MediaNet Technology. For Mobile WorkStyles, Citrix brings a new and improved CloudGateway and Receiver, a new and improved ShareFile service and XenApp & XenDesktop. The alliance aims to bring a richer experience with seamless security and a leveraged support infrastructure than covers the entire stack 24x7 on a global basis.

From a business perspective, Citrix can ride on the back of the 800 pound gorilla straight into the Enterprise, leveraging the industrial-strength performance of Cisco’s premium product lines at a reduced price point. As with Microsoft, Citrix is aligning itself with an old-guard industry titan, in this case, one whose revenue is 16 times that of Citrix. And as with Microsoft, the deal looks like a win for both sides. Our opinion is that it could help revitalize Cisco, whose foray in to software based business created some great products in Webex, but the model was different enough to shake them up. We continue to write on the rise of the digital channel at the expense of a traditional HW VAR Channel. When Cisco acquired Webex they entered a software-based, inbound sales, price sensitive, online-marketed, sold and delivered, six-week sales cycle, user-configured business model that was almost the antithesis of what they were best at: premium quality enterprise hardware-based solutions that are differentiated by making the value of the whole network exceed the sum of its’ parts - sold by an enterprise sales force and delivered by top shelf VARs and SIs. Especially within SMBs, the right combination of price and SLA to solve business, not technical problems, are overriding criteria when buying, and traditional hands-on VARs might not even be called - cut out by online marketing and inbound sales teams. In hardware, it is more about scale economies, quality engineering and brand management - software is all about market share and developing accelerating returns and an ecosystem of fellow travelers.

Cloud Orchestration
The second key area of cooperation is in what is being called Cloud Orchestration, where the objective is to manage the traditional data center functions of computing, network, storage, security, and management, delivered across physical, virtual and cloud environments using Unified Computing, Unified Management and Unified Fabric. This is clearly Cisco’s home territory and they bring expertise and technology including Unified Computing System (UCS), Open Network Environment (ONE) and the Nexus Series of switch technologies to bear on these challenges. Citrix contributes the newest CloudPlatform, a new open source CloudStack and the XenServer to this effort. Using Cloud Orchestration, the alliance aims to deploy Public, Private and Hybrid Cloud environments with unified management that reduces complexity and improves agility, something SMB customers will be happy to see. Embracing Open Source is also a good move for Citrix to increase the footprint.

Cloud Networking
The third leg of the alliance is centered on the Citrix NetScaler Cloud Networking Platform. Here the objective is to adopt NetScaler as the go-to technology and jointly develop the next generation through the alliance. This will be accomplished by offering NetScaler as a strategic component within the Cisco Cloud Network Services Architecture, with seamless integration at the product level in areas including Security and WAN optimization. The order of implementation is that Cisco will adopt, sell and market the NetScaler, it will be manufactured according to a certified Cisco Design specification followed by a joint road-map for product interoperability, development and go-to-market strategy over the long term.

Through these announcements, Citrix has taken several steps to advance Cloud-based services and fill gaps in the market; they have introduced a new channel for Windows and Office365, brought to market their own collaborative suite, and a VDI-embedded client to further the VDI and BYO trends in the SMB space. Other technology announcements were also significant but for reasons of brevity we have not covered them in detail. One thing is for sure - no one can accuse Citrix of being timid. Of course, when snuggling up with the big guys the way they are, Citrix themselves said it best in the announcement: "POs are better than PR". It all falls on execution at this point.

Where is the market for client devices going – and what does it mean to corporate strategy? These are questions that Techaisle and its clients – and the industry as a whole – has been wrestling with ever since the decline of the traditional PC opened the door for alternative client technologies.

In many cases, users now combine mobile and fixed devices, and with this multi-device approach, consistency and security become even more important than they were in the laptop era. Many organizations are responding to a need to securely manage and distribute user data and applications by investigating virtual desktop (VDI) technologies enabling delivering of “desktop as a service,” or DaaS. With VDI/DaaS, businesses deploy client virtualization technologies from suppliers like Citrix and VMware to ensure that users have anywhere/any time/any device access to current information, their applications and their desktops. These technologies allow for better data security and auditability, and often offer the additional benefits of reduced CAPEX and OPEX.

The allure of VDI and DaaS is clear – but the technology itself and the path to realizing its benefits can still seem somewhat mysterious to many small and mid-sized businesses. To understand implementation challenges and lessons learned, Techaisle conducted depth interviews with small and mid-market businesses (from 50 employees to 999 employees) that are currently using VDI and/or DaaS solutions. Based on a random sampling these businesses belonged to financial services, professional services, manufacturing, construction, utilities, retail and private education segments. These early adopter SMBs have rolled out VDI and/or DaaS solutions within their organizations. The number of users using VDI and/or DaaS within the businesses interviewed ranged from a low of 30 employees for a small business to a high of 600 employees within a mid-market business.

Techaisle’s quantitative VDI/DaaS research shows that the key user objectives in adopting either on-premise or hosted VDI/DaaS solutions revolved around mobility, application availability from anywhere and on any device, disaster recovery, centralized management and administration of end-point devices at the same time reducing costs. Based on users’ real-world experiences and feedback, Techaisle has compiled a list of seven key lessons for success for small and mid-market businesses planning to adopt VDI/DaaS solutions.

1.       Prepare a roadmap of the solution and a blueprint of implementation process

Before starting the implementation process and before even considering a pilot, current VDI/DaaS users advise potential users to create a roadmap of the solution and a blueprint of implementation process. The roadmap and blueprints should include solution and brand selection criteria, a list of solution components and their objectives, changes required (if any) to the core infrastructure to support the solution, costs involved and budgets for cost overruns, security vulnerabilities, phase-in of users and their training process and timeframe for enhancements post implementation.

2.       Hire external consultants - people who have experience

It is almost impossible to develop a roadmap and blueprint without the guidance and close involvement of experts.  All SMBs that we interviewed had contracted with external consultants varying in size from a group of 4-5 to a maximum of 40-50 people. In each case, consultants were preferred over resellers and service providers due to their focused deep expertise and track record. However, each of the current users of VDI/DaaS had decided on either Citrix or VMware solution prior to engaging with consultants with corresponding expertise.

“We approached our known consultant which is a small company formed by 6 to 7 people and have expertise in VMware solution. They are highly technical professionals providing free infrastructure and free connectivity support and covering infrastructure maintenance and end user connectivity”.

“We preferred going with Consultants as they had solution specific expertise. They gave optimal options taking into consideration both cost and technology sound solution. They even offered technical assistance even after post implementation and maintenance for one year. They are a small company with VMware expertise formed by a core group of people”.

“We approached consultants, a small group of people, with deep Citrix expertise, because they had relevant qualifications and certification”.

3.       Ensure that the solution supports legacy software

Not all SMBs are using all modern applications; many mid-market businesses have core legacy applications and/or applications that are essential to a specific department and workgroup. Current SMB users of VDI/DaaS advise that the blueprint prepared should include a list of applications currently being used within the organization and to systematically test to ensure that they will continue to be supported in the new DaaS environment.

The VDI/DaaS SMB users also advise that businesses should also revisit the current licensing arrangement they have for some of their applications and ensure that in a virtualized environment those licenses are valid and applicable.

“We learned during the implementation phase that not every application is supported by VDI or DaaS solution. It is difficult to understand and analyze the amount of storage used by different departments”.

“The main concern was with software licensing concerns. Few of our application’ licenses restricted the use of software on systems accessed by terminal servers. There were issues coming up initially that affected our end users as these applications were not accessible on multiple virtual desktops”.

“The main concerns were the length of the project, the cost of the project and back end integration. Backend integration was a major concern as we have legacy application running on the system”.

4.       Get the business users ready

Business users do not like changes that affect their interfaces – it takes time to build new usage habits, and this can (and generally does) have a short-term impact on productivity. Although a VDI/DaaS roll-out is often used to deliver better mobile systems to business users – generally, a well-received benefit – it is essential to prepare the business users with new interfaces, log-ins, support mechanism, and training on the use of thin clients. This will require IT to manage a number of VDI/DaaS-specific issues, including application downloads to user devices, management of persistent or non-persistent desktop experiences, and tactics to address latency if/where it impacts performance.

“A challenge we faced post implementation was to manage new rounds of user trainings. The new solution meant introduction of a different system to the users and one where users had to undergo a series of trainings to become comfortable with it”.

“The main challenge that we faced was user training and that was a really big concern for us”. 

“We had to give training to users in about two weeks which was taken out of their operational hours and once the service was put in place the learning was steep, the users were not very productive during that time”.

“Most of the issues were to do with the users who were unable to come to terms with the changes and the content that could access easily”.

5.       Conduct a pilot

Conducting a pilot helps in fine tuning the roadmap and blueprint for implementation.

“During the pilot test, we observed a need to modify our terminal server as they were not responding to the end users request. Then we decided and made changes in terminal server by making a cluster of terminal servers so that similar end users request would be sent to desired terminal server, to cut down network traffic congestion”.

“At the initial stage we started facing issues which were basically related with bandwidth or poor network response. We decided to increase our bandwidth for offering end-users customizable experience similar to that of a physical desktop”.

“In the pilot stage some issues popped out. First of all, the expected cost for the pilot stage rose considerably. Also we got a mixed reaction from the team using it as some said they were able to fully utilize the resources, whereas when we tested it over other networks like WLAN, the data was not accessible”.

6.       Create a detailed budget, be prepared for cost overruns

The current users of VDI/DaaS suggest that potential adopters should budget 25 percent for software, 20 percent for services, 20 percent for networking and one-third for hardware. The percentages vary for small businesses where the budget allocation for hardware varies between 10-15 percent and the proportional cost of software rises to 30-35 percent. Current users advise businesses that have legacy applications to allocate higher budgets for hardware and services, as high as 45 percent and 35 percent respectively.

As many as 40 percent of SMBs indicate that cost overruns of 10-20 percent is a given.

“There was additional expenditure required. The testing phase was difficult as we had to change our server and switches”.

“In testing phase we found out that the users had to get software assurance which delayed the project, delayed purchase of licenses and forced additional expenditure”.

7.       Upgrade server and network infrastructure

The most common and almost universal changes to the IT infrastructure to prepare for VDI/DaaS usage are installation or upgrades of blade servers, upgrading cabling to fiber optics cable thus enabling substantially higher data bandwidth, replacement of switches for routing higher throughputs, installation of thin clients and in some cases increasing storage.

Current users generally opted for specific server and thin client brands based on either recommendation from their consultants or because of existing relationships. Brands most often used were IBM, HP and Dell. Most SMBs preferred to use Blade Servers.

“We upgraded cabling by using fiber optics cable which boosted our bandwidth and smooth flow of data from the data center to the end users. We used fiber optics as it was a cost effective solution for us rather than going on with existing metal cabling which had an impact on bandwidth”.

“Networking and replacement of cabling was one issue as it did not work with the solution initially, the cabling between the server switches and office switches and for this we looked for fiber cabling”.

Concluding observations

The need for VDI/DaaS as a mobility enabling technology is clear, and its corresponding benefits for user experience and data management are compelling. However, the path to VDI/DaaS can be tricky to navigate. By capitalizing on the advice provided by current users, SMBs interested in adopting VDI/DaaS can set realistic objectives and expectations, and can manage confidently towards effective deployment.