Techaisle Analyst Insights

SMB and Midmarket businesses are adopting Converged Infrastructure solutions for reduced cost and imrpoved IT efficiency. For slightly more than 1/3rd of small businesses and slightly less than 2/3rd of midmarket businesses, converged infrastructure solutions are among the top 10 IT priorities for 2018. Granted that by the end of year the actual penetration would be less but the very fact that CI/HCI has percolated to the top 10 is an interesting point to note. Cloud is everywhere, but Techaisle believes that efficiency is a reflection of the compute platform, not simply whether it is housed on-premise or at a remote facility and converged infrastructure contributes to the compute platform. SMBs are adopting converged infrastructure for one or more of five primary reasons:

1. To benefit from integrated design and efficiency
2. To tap into its ability to enable centralization/management of resources
3. To capitalize on performance/time-to-benefit advantages
4. To improve IT agility and its ability to meet business needs
5. To respond to core requirements for cost savings and improved security.

In fact, 39% of midmarket firms said that converged infrastructure helps lower total cost of infrastructure ownership.

Midmarket firms that adopt a holistic organization-wide digital transformation strategy are growing at 2.2X vs. Siloed digital transformation strategy. They are also experiencing 2.1X business process cost reduction, 1.9X better customer intimacy and 1.4X improved employee productivity vs. Siloed adopters. Techaisle’s US midmarket digital transformation trends study shows that it pays to have an organization-wide, holistic digital transformation strategy. Survey of 876 US midmarket firms reveals that Holistic adopters are experiencing better business outcomes than Siloed adopters of digital transformation.

We are all responsible for the pace of change – and to ensuring that it benefits rather than threatens our success. Nowhere is this clearer than with digital transformation – the adoption of digital infrastructure as the foundation for digital business processes, which enhance operational efficiency, employee empowerment, product innovation, customer intimacy, competitiveness and profitability throughout the organization. Businesses that embrace digitalization are more agile, more adept at using technology to accelerate cycle time and expand reach, better able to respond to market opportunities and requirements – while those that are left behind face an uncertain future in which one wrong step can lead to diminished business viability.

Holistic, Inclusive, Siloed and In-the-Shadows are the four midmarket segments by digital transformation strategy as revealed in Techaisle’s US midmarket digital transformation trends survey & segmentation data. The segmentation reveals that overall, 41% of the US midmarket firms (100-999 employee size) are firm believers in digital transformation. They are leading digital transformation initiatives. These firms belong to the “Holistic” segment of the four different digital transformation segments. They believe that digital technologies impact every aspect of the business and are a core part of organizational strategy. Interestingly though, within the firms belonging to the holistic segment, digitization of process automation is far from complete. They still have a huge runway in front of them.

For 59% of the midmarket firms, digital transformation initiatives are sporadic and ad hoc or not critical across the entire business. These are the firms that belong to the Inclusive, Siloed and In-the-Shadows segments. They are the laggards in digital transformation journey.

Clearly there is vast untapped potential for firms offering digital transformation services to the midmarket businesses.

Techaisle forecasts worldwide SMB (1-999 employee segment) IT spend will reach US$735 billion in 2021 and cross US$1 trillion in 2028, growing at 2X the global GDP rate and 3X the enterprise segment. With slightly over 72 million SMBs (excluding home-based businesses), the market segment presents itself as lucrative and yet incredibly difficult to penetrate. Within each employee-size category there exists segments by IT sophistication, cloud maturity, digital transformation strategy, SaaS adoption, cloud first to cloud selective segments. As per Techaisle survey digital transformation is on the minds of most SMBs who are expected to spend US$275 billion on DX in 2018. And 42% of SMBs have become more dependent on technology over the last 12 months for better business outcomes.