Techaisle Analyst Insights

Over the past six months, the need for advanced solutions and professionals supporting strategy, implementation, integration, and optimization has become much more acute. Business patterns changed by COVID-19 require businesses to accelerate digital transformation within their operations. Purchasing authority has shifted from IT to business management, requiring solution providers to position their offerings and services in terms that emphasize business metrics, such as time to market and measurable revenue and cost impact, rather than technical specifications and targets. This focus on business outcomes ripples through partner marketing and technical operations: marketing needs to emphasize time-to-benefit, the ability of individual solutions to contribute to overall business agility, and the direct application of IT features to pressing business needs; on the technology side, partners need to focus as much as possible on services centered around pre-built vertical solutions that can be deployed and integrated rapidly, with replicable processes and predictable outcomes, so that delivery matches the vision set by marketing and the requirements of the customer executives.

In a unique survey, Techaisle posed several and the same questions to both BDMs (business decision-makers) and ITDMs (IT decision-makers) and probed to identify what each expected from the other. Techaisle data shows that although BDMs have higher expectations of ITDMs, they align reasonably well in some areas, and there is a broad expectation gap in others.

• 53% of midmarket BDMs say that it is very critical for business success that ITDMs can identify and associate IT solutions with business efficiency, productivity & profitability. On the flip side, only 30% of IT executives in these midmarket businesses say that business executives should be able to associate IT solutions with business efficiency, productivity, and profitability. Responsibility for delivery rests with IT, and BDMs have very high expectations from ITDMs.

• Data also shows that BDMs have high expectations for support in using technology to build customer experience. Over 40% of BDMs believe that IT must understand solutions that enable beneficial customer & supplier interactions. In contrast, less than 25% of ITDMs say that BDMs should understand such solutions.

• Employee productivity is an essential aspect of a business, and in most cases, business management expects IT to understand and deploy core technology solutions to make employees more productive.

• Business process automation is an area where there is better alignment between IT and business. Nearly 40% of BDMs say that it is critical for business success that IT can identify requirements for automation and associate IT solutions with these needs.

• Cross-organizational integration is vital for both BDMs and ITDMs, and over 50% of both groups agree that the other should associate and adopt technology solutions with changing business demands.

Business decision-makers (BDMs) are an intrinsic force in most midmarket organizations. They are the primary decision-makers in some high-growth technology areas, including collaboration and analytics – meaning that increasingly, BDMs are 'the boss of IT.' These BDMs view IT as a component of business processes rather than as a stand-alone silo. Techaisle SMB & Midmarket Decision Authority data shows that twice as many BDMs as ITDMs (IT decision-makers) in midmarket businesses say that IT must understand how technology contributes to overall organizational success. These BDMs have specific objectives for technology usage, clear perspectives on adoption drivers and impediments, and tend to be influenced by information sources that are different from the inputs used by ITDMs.

This pressure from business managers leaves IT leaders scrambling to stretch limited budgets to meet seemingly limitless requirements, striving to deliver predictable, secure systems that respond to their business users' increasingly varied needs and competitive environments. The divide increases because business perspectives on technology are shaped by information channels that are not part of the IT professional dialogue. The different information channels create an environment where businesses are struggling to develop the cohesion needed to promote or embrace new IT capabilities to achieve business objectives within existing IT and business process structures.

ITDM and BDM divergence will continue, and although there is cross-pollination, they may continue to operate from different pods. Although it may be tempting to try to bring the various parties together, IT suppliers cannot successfully act as intra-corporate matchmakers: they have to grasp the reality of selling to two different constituencies with different expectations.

HPE is not the only game in town. Dell had announced its entry into the aaS arena in 2017 with PCaaS on the client-side. Dell Technologies, the only IT supplier with an end-to-end portfolio, announced its latest foray into the "as-a-service" (aaS) arena with Project Apex, which it hopes will take Dell Technologies' aaS capabilities to the next level. Its objective is to unify Dell's as-a-service and cloud strategies to provide a consistent experience wherever a workload runs - on-premise, at the edge, or in the public cloud. Project Apex aims to simplify customers' and Dell Technologies partners' access to Dell's as-a-service portfolio. The first product, Dell Technologies Storage as a Service (ST-as-a-service), delivers a pay-per-use model and elastic capacity and is deployed on-prem but fully managed by Dell at the initial launch. The key enabler of Project Apex is the Dell Technologies Cloud Console. This single web interface enables customers to manage their cloud workloads and services, available to a few select early customers with a wider roll-out in 2021. Dell has a long road ahead with "everything-as-a-service" as a final destination. After STaaS, Dell is expected to roll out compute-as-a-service (COMPUTEaaS), PCaaS, Data-protection-as-a-Service (DPaaS) and vertical solutions (SAPaaS). PC-as-a-Service (PCaaS) is already available. Apex will enable it to move from a bundled, "leased" offer tying software and services to each device in an annual price per seat to modern, flexible aaS capabilities providing customers with tailored offers of hardware, software and services delivered over the air and accessed/ managed through a single portal enabling customers to seamlessly scale up and down specific to their unique needs and renew effortlessly, with one simple price per month.

HPE may have the lead, but nobody can claim a victory lap as yet. It is too early to declare a winner. Dell is a compelling challenger. It matters to SMBs, Midmarket firms, Enterprise customers and Partners.

Cloud, private cloud, and conventional infrastructure are three parts of a whole. Dell Technologies is currently betting on it by providing simplicity, consistency, and flexibility. However, the current branding of solution offerings of Dell Technologies Cloud Platform and Dell Technologies On Demand will need to merge quickly to avoid digressing and having complex customer conversations on the merits of each. And then, there is the VMware Cloud, which adds to the choice complexity.

Let us discuss why the as-a-service challanger status matters to SMBs, Midmarket firms and Dell Technologies' Partners.

Why the announcement matters to SMBs and Midmarket firms

Precision is impossible but agility and resilience are realizable. In every crisis, there is opportunity. If history is any indication then the SMBs are well-placed to narrow the banks of uncertainty. With integrative thinking SMBs will be adept at maneuvering around the edges of flames that have been fanned by COVID-19. 

Over 12 years of Techaisle tracking data paints a fascinating picture in which SMB business goals established by unexpected challenges drove new IT priorities. Klaus Schwab, Founder, World Economic Forum observed that, "In the new world, it is not the big fish which eat the small fish, it's the fast fish which eat the slow fish." SMBs are the fast fish as compared to enterprise segment.

After every downturn, SMB IT spend has rebounded higher and faster than overall (consumer + SMB + enterprise + government + education) IT spends. Techaisle had published its forecast scenarios here.

But the questions remain. Is today the same as the past? Will the future be different? We know that to be uncertain is to be uncomfortable, but to be certain is to be ridiculous. There are already many discussions and surveys conducted by various firms on today’s devastating impact on SMBs. At Techaisle we agree that SMBs are currently desperately operating between the raindrops but our objective is to square the circle, to simplify the path forward for IT vendors and channel partners and see past the blind corner.

To understand the impact of COVID-19 on future of IT we conducted a survey of N=2427 SMBs in several countries. Regardless of the uncertainty, over 50% of SMB business leaders in Asia/Pacific and some countries in Europe are optimistic and are confident about a V-shaped recovery as compared to US and UK SMBs who believe in more of a U-shaped recovery.

Download free Techaisle Take document to understand:

• Why agility and adaptability will accelerate recovery for SMBs Worldwide? Global SMB IT spend vs Overall IT spend vs GDP growth rates
• Why SMB technology and business alignment will result in resiliency, agility and adaptability?
• What will be post COVID-19 impact on business and IT operations? Uncertainty and status quo.
• What will be the impact on tech investments? Increase, decrease, delay, no change
• Will digital transformation be the agility enabler for SMBs?
• What is the current non-technology related work-from-home challenge for SMBs?

The Covid-19 threat to the global economy and to the IT industry is potentially as bad as, or worse than, the health impact. A global workforce that cannot collaborate effectively cannot deliver products that rely on timely supply of components from far-flung suppliers, and cannot create and implement complex solutions. The necessary isolation used to contain Covid-19 has a devastating effect on economic activity. Manufacturing does not work when people don’t. Chinese exports fell by 17.2% in January/February of this year. The impact on solutions is harder to quantify, but may well be even greater. However, with the slowing number of new cases in China, 80% of manufacturing plants have restarted with about 60% capacity which may restore supply-chain balance by addressing supply-side constraints. The freight (including trucking) and air-cargo routes between China and Asia is returning to normal but China-Europe and China-US routes may be impacted until the middle-to-end of Q2. 

Globally SMBs IT spend in 2019 was $662B with a projected spend of US$700B in 2020, a growth rate of 5.6%. It is natural, in the current economic situation to pare down these spends and slice expectations (perhaps deeply) based on beginning-of-the-year projections. As compared to the original SMB IT spend growth rate, the projected growth rates may drop from a low of 29% to a high of 84% depending upon Techaisle’s optimistic to gloomy scenarios, resulting in revised growth rate ranges from 4.0% to 0.9%. 

SMBs are a good indicator to measure the pulse of economy in any country as they constitute over 90 percent of global businesses. They are intricately linked to large businesses, government departments and educational institutions as both suppliers and customers. A large percentage of consumers rely on SMBs for products and services that they consume within their households. Technology plays an important part in daily operations of SMBs across all departmental functions including sales, marketing, operations, finance and customer support. SMBs form the essential thread of the economic fabric of any country and to a great extent their fortunes and investment capabilities are dependent on the economic situations and policies of the countries where they operate. In a downturn and uncertainty the investment capacity of SMBs is deeply affected. Techaisle conducted a global survey of SMBs to assess their investment intent which combined with Techaisle global SMB IT spend data presents four scenarios - Ideal, Optimistic, Pessimistic, Gloomy. 

Download to read full analysis and projected small business and midmarket IT spend growth rate scenarios.