Techaisle Analyst Insights

Solutions. Cloud. Mobility. Datacenter. Solutions again. Dell is a new company. It was evident at the recent Dell World 2011 held in Austin. There was a distinct zip in Michael Dell’s walk and what was most exciting about the event was witnessing the roadmap and the transformation of Dell as a company. The IT industry in general has begun one of the most exciting times yet. More than the overall IT industry, SMBs are going through a major transformation moving from enablement to empowerment. And Dell seems to be moving with that transformation lock, stock and barrel.

Cloud and Solutions have become front and center - solutions that are designed and imagined to directly address business issues such as productivity, automation, enhancing sales and marketing, reducing operational cost and many others.

Some may begin to call Dell the new IBM. However, unlike IBM, Dell is addressing entire sets of market segments – small businesses, mid-market businesses, enterprises, government, healthcare, consumers. Dell’s recent different acquisitions are playing a big part in its transformation. Most notable among them have been Boomi, SecureWorks, KACE, Compellent, InsightOne and Perot Systems. Dell may have fewer big case studies as of now compared to IBM but it will get there.

PCs, servers and general computing hardware are still relevant to Dell’s business and integral to its growing arsenal of solutions. PC is still relevant to businesses and consumers alike. Those who predict the PC is dead are not seeing the picture correctly. They are probably getting carried away by the current “wave” of tablet adoption. However, the nature and use of the PC as the foundational block has changed. An SMB today can start work immediately with a server that resides in the Cloud, use a smart phone that provides access to corporate information anytime and anywhere, a CRM application that resides off-premises, a communications infrastructure that is cost-effective, and a line of business application that is plug-and-play. At Dell World 2011, Dell demonstrated solutions in each area such as device management, unified communications, cloud business apps, collaboration, storage, datacenters, expense management and many others.

Traditionally, the IT industry gets caught up in terminology such as Cloud, Mobility, Managed Services, Big Data and so on. We had written that vendors have a real opportunity now more than ever to tweak their messaging to take on a series of statements that explain what the new IT can do for SMBs and enterprises in terms of functionality, operational cost, fixed cost, profitability, and how it benefits their business plan. Or even in more simple terms, messaging such as: how can a business use a PC to connect to
line of business applications faster, more securely, and from anywhere to help
them run their business better. We have begun to see this messaging from Dell.

Anurag Agrawal
Techaisle

Techaisle SMB surveys in multiple countries are showing that SMB cloud computing non-users will increasingly get comfortable with the idea of Cloud based services once there are enough proof points in the market. The question remains though whether there are actions that vendors can take that would not only overcome the barriers for cloud adoption but compel SMBs to switch to or adopt Cloud services? Of those SMBs that are currently not using Cloud services, 43% state they will never consider Cloud services under any circumstance. For the remainder, 24X7 customer support (34%) is the key requirement that would compel them to adopt  and if the cloud services were provided by a trusted vendor (26%). And if the trusted vendor is a single vendor that has a broad catalog of services and takes responsibility for service then it is even better.

Techaisle conducted a quantitative survey with over 8300 SMBs and spoke with ITDMs in US, UK, Germany, Australia, Brazil, Singapore, Malaysia and India to understand small
and medium business Cloud Computing market opportunity along with issues,
concerns, problems and challenges.

One of the questions that we asked to current non-users was: What vendor actions would compel you to use Cloud services?

Top reasons ranked in order of % of respondents for the US is given below.



There are obvious differences between SBs (1-99 employees) and MBs (100-999 employees).



There exists a strong correlation across all the points raised by SMBs. While most cloud computing vendors may like to pick up one or two issues and address them in their marketing messages but it may not have the most impact.  Vendors like Dell that have embarked on the journey to help SMBs adopt cloud solutions have the most to gain by addressing all of the above issues.

Other large IT vendors may soon follow, but at least if Dell executes on its plan it may take the lead. The last time we spoke with Dell, they had already implemented most of the points and had developed a roadmap to roll out the remaining.

Needless to say, vendors should take specific actions to overcome SMB Cloud Computing adoption barriers.

Anurag Agrawal
Techaisle

 

Announcement
Dell just announced its full intention to assist SMBs with their Cloud Computing adoption by launching Dell Cloud Business Applications, a family of integrated SaaS applications with cross-application cloud analytics supported by end-to-end Dell services specifically for SMBs.

Key benefits include easy and affordable integration with existing software; integrated best-of-breed cloud applications selected, tested and backed by Dell; and real-time online analytics and reporting across multiple business functions. Dell Cloud Business applications can solve the top pain points cited by SMB customers contemplating a move to the cloud:
- Integrating applications is expensive
- Out of the box reports are insufficient
- Moving to cloud is harder than it seems.

The total solution announced by Dell includes:

• Access to Leading SaaS Applications (initially starting with Salesforce.com)


• Integration with Existing Software (through  Dell Boomi)


• Real-time Business Visibility and Analytics


• Comprehensive Services

In addition, Dell’s Cloud Business Applications will be delivered through a Dell-branded cloud service complete with business grade single sign-on and security.

First such SaaS application being made available by Dell is Salesforce.com. By re-selling Salesforce's CRM offerings to its existing base of SMB customers, Dell would increase its revenues while Salesforce.com could potentially expand its available market at a lower cost
than it would on its own.

Significance of the Announcement
The announcement is significant in more than one respect. Besides taking the guesswork out for SMBs on what applications to use in the cloud, the ability to integrate across applications both in-house and SaaS as well as real-time business analytics across the
entire business is really important.

Cloud Computing has become an all pervasive terminology promising the holy grail of quick start up and low costs allowing small businesses to focus on their core competencies. We have to pause and think about the reality and outcome in five years. As SMBs increasingly adopt cloud computing and reach a new level of complexity, the very technology that had a low start-up cost for them may become too complex and expensive.
While there are many different reasons for such complexity but the two that stand out are the Complexities in Application Usage and Intricacies in
Data Integration.

Dell’s Cloud Business Applications addresses Complexity Issue Head-on
A recent Techaisle survey showed that while the average number of fee-based applications/services being used has largely remained the same over the last three years, the maximum number of applications being used has shown steady growth.

For example, for US SMBs, that number now stands at 11 applications. This increases the complexity of usage of applications in terms of: different vendors, different billing, different sign-ons and above all inability to exchange data easily.



Dell aims to provide best of breed applications to the SMBs, largely helping them to make decisions on their behalf. Cloud Business Solutions directly speaks to typical SMB questions:

• What can I move to the cloud?


• What solutions are best for my business?


• How will I transfer my data to the cloud?


• Who will train my employees?


• What will be my cost?


• If I move from a Capex to an expense situation as far as my IT investments are concerned, what will be the impact on my financial health?


• How does it affect my cash flow, profitability, etc.?

Dell offerings also provide complete transparency to its SMB customers with regards to all associated costs and monthly single billing.

Dell Boomi – SMB SaaS Data Integration Made easy
As Cloud computing adoption among SMBs grows, the real issue of data integration will come into play. As we see it, there are clearly four stacks of Cloud offerings and it will become imperative for each stack to communicate with the other stack. And with increasing usage of number of SaaS applications following questions become relevant with no easy answers:

• How do I move my data and information across applications?


• How do I have a single sign-on?


• How do I change vendors?


• Will I be able to change vendors?


• How do I migrate my data?


• I like applications from two different providers and I want to run them both but will they interact?

Dell Boomi addresses above questions at an affordable price point for SMBs.

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.



One of the last things that SMBs need is a high-cost of application data integration, a cost that may become higher than the applications they are using. SMBs do not have the time or the budget for such integrations. It is a given that SMBs will continue to work in a hybrid environment with both desktop software and cloud based applications in simultaneous use.

In order to achieve data integration, ensure security and compliance and guarantee multiple device access, Dell’s integration and analytics capabilities built into its Cloud Business Application solutions will provide multiple specializations to an SMB. These very well thought out specializations and roles are:

- Consultants/Business Process analysts, advising on which cloud computing solutions to use
- Developers and Integrators, helping businesses achieve data integration
- Cloud Governance marshals, advising and auditing security and governance issues
- Data Aggregators, specializing in aggregating both internal and external data and making it actionable to businesses through the use of business intelligence applications

A good day for Dell and a good announcement for SMBs. Dell has to get the word out and not only make it a success in the US but also begin its gradual roll-out across geographies. And it cannot leave its channel partners behind. Dell cannot underestimate the usefulness of channels, more so in the emerging markets than the mature markets.

Anurag Agrawal
Techaisle

The World is Flat (© Thomas L. Friedman) and so has become IT, especially for SMBs. With a Flat world, rises an opportunity for SMBs to employ workers who are globally distributed, travel and telecommute. With a Flat world comes Flat IT. And the IT vendors are missing the dialogue with their SMB customers- some vendors more than others. They are also missing a new understanding of SMB IT adoption cycle.

But we are getting ahead of ourselves. Let us first understand the world of Flat IT.

Waves have Evaporated to Form Clouds

Analyst firms typically use words such as IT waves or eras in describing SMB IT adoption - client/server wave, networking wave, Internet wave, etc. There is nothing wrong with this wave theory except now that there are no more waves left, all water is evaporating to form clouds. But some analysts still continue with that philosophy and call the coming wave as mobility wave. These do not do any good to either a vendor or the end-customer. Mobility started with notebooks & Wi-Fi. An SMB does not buy IT considering the wave, it does not even think whether the wave is waxing or waning. A typical SMB buys IT because it needs IT and the SMB with the help of channel partners becomes smart enough to understand what IT to buy to make itself more efficient, productive and profitable.

Waves were relevant more than a decade ago when technology products were evolving in piecemeal basis. Today all technologies are available at the same time and its adoption among SMBs is dependent upon the business plan.

Building Block IT

Enter the building blocks. SMBs started off their journey into IT by unknowingly using simple building block concepts. Their first purchase was always a PC which served as the foundational block. When they added employees and file sharing became important, they built a network and added a server – the next block stacked up on the foundational block. When they reached a certain size they added more servers, the third and subsequent blocks became applications such as CRM, ERP and Line of business. All of these blocks could not be added without the existence of the previous block. Very soon when an SMB reached a mid-market level of operation, the blocks were neatly stacked one on top of another. And when the blocks became vertically unstable, they brought in external experts such as consulting organizations to help manage these blocks and possibly break them into small chunks that could be easily maintained. SMBs looked for Enablement.

IT vendors thrived. Dell concentrated on the foundational block, Cisco connected the blocks, HP played with all block layers while IBM refocused to the top layers. Vendors like Microsoft, SAP and Oracle provided the layers that enabled the blocks.

The process of an SMB growth and its relative steps to absorb IT were steady and predictable. Some SMBs stacked the blocks faster than others but steps to get to the top of the block were always same. It was also dependent upon the financial capacity of an SMB to the extent that those with large dollars available for investment built the blocks faster not necessarily having the same end-results as SMBs with limited investment capabilities and which moved slower. Call it cutting edge versus laggards, but such nomenclature also never proved that the cutting edge SMBs were more efficient or profitable than the laggards. IT vendors and channels made money as they exploited the IT imbalance among various SMBs creating a race to reach the top of building blocks as fast as possible.

Flat IT

Enter Flat IT. Cloud, mobility, virtualization, and managed services have effectively toppled the blocks down in one fell sweep and have laid everything flat on the table. SMBs are now automatically empowered but they do not know it yet, because nobody has told them so directly. The concept of cutting edge and laggard has been torn apart because
it carries little meaning as SMBs now have a rich menu of solutions available that can be plugged into in a very short time. Now it is not a race to the top, but how can an SMB reach its full potential in the shortest period of time.

In a Flat world, with Flat IT, similar technology is now available across all countries and gap between developing and developed worlds is narrowing. In some of the emerging markets, IT is not only Flat but leapfrogging technologies as building blocks are not fully present. Where converged infrastructure is becoming a possibility, Cloud services will
be delivered via wireless.

Next week we will discuss how SMB IT has become Time & Size Agnostic and how the SMBs of today are transforming themselves.

Anurag Agrawal
Techaisle