Techaisle Analyst Insights

Announcement

Cisco has announced a new Cloud and Managed Services Program (CMSP) that integrates its currently existing Cloud Provider, Cloud Services and Managed Services Channel Programs (MSCP) into one. Besides streamlining incentives, discounts and payments for its partners, the program also aims to simplify pricing for Cisco-based cloud and managed services offerings. The program will also enable collaboration and sharing of complementary opportunities between partners through a microsite via Cisco’s partner portal. All partners are expected to transition to the CMSP by August 2013.

Techaisle Take

We believe that with one master move Cisco is strategically addressing the US$94 billion global SMB opportunity by 2016.

Techaisle’s global channel surveys have shown that Cloud, Mobility, and Managed Services Solutions together are changing the SMB channel landscape as these solutions are revolutionizing IT utilization by SMBs. The new paradigm would be the "3-in-1" Channels offering Mobility, Cloud, and Managed Services as a single offering. We first wrote about the 3-in-1 channel here. And now Virtualization is quickly becoming a potent arsenal in the SMB channel partners offerings.

Techaisle’s corresponding SMB research has consistently shown that SMBs want mostly integrated solutions to limit complexity and therefore seek partners that are capable of such deliverables but very few partners currently do so as they are all camped in either one or two solution corners and few seem to embrace a holistic solution view - and this is making SMBs unsure of overall benefits and desire to spend.

With its current announcement Cisco is removing some of the barriers by bringing channel partners serving managed services and cloud needs of SMBs under a common cluster. Since many SMBs want to obtain all services from a single provider, it is important for broad product/solution vendors to evaluate all their partners, seek and cluster partners based on where they are with regards to capabilities of delivering complete solutions and introduce programs to support development. As the dividing line between cloud and managed services is becoming thin, Cisco has just done it, that is, created a single program that should:

• Enable channels to build more dynamic and serious partner-to-partner collaboration to collectively address complementary opportunities


• Enable Cisco partners to add capabilities, such as, managed services to an existing cloud services


• Attract newer partners to join Cisco program


• Help current channel partners qualify and move up Cisco’s channel partner pyramid

The data on the right from Techaisle’s channel study (N=2851) shows that channels that serve the SMB segment are keen to offer multiple services that straddle cloud and managed services. Cisco’s new program should open up opportunity for its channel partners to offer both cloud and managed services using Cisco platforms.

If we look at the survey data at micro-level, we find that is a higher percentage of Channel Partners that are offering some type of Managed Services Solutions than they are offering Mobility Solutions or even Cloud Computing. The channels falling in the green columns will benefit immediately, those in the blue columns will find the program attractive but those within the red columns in the chart would be of immense importance.

It is clear that Managed Services has been the most important offering for Channel Partners, as they evolved from a typical value added channel to offering break-fix services and remote managed services.



The path being chosen by Channels to move from one offering to the next is strongly dependent upon their current offering. Those that are in the mobility space are moving to cloud, while those in the cloud are moving to managed services.

Understanding the channel dynamics and current offerings gives clues in the direction they will move. For those that are offering only one of the services there is a clear path to adding services. In fact Techaisle survey shows that the channels have chosen their path of selection.

Channels are also interested in offering mobility solutions, however, it is also clear that mobility has become possible due to cloud and managed services allowing employees to work from anywhere, anytime and from any device.

 

The responsibility now lies with both the channel partners and Cisco to make the program a success. However, there some other steps that Cisco needs to take as well.

• Extend the reach of its Smart Care to cover cloud based services


• Develop capabilities that not only work with Cisco's networking devices but also with client devices. Although it must be said that Cisco is addressing some of those needs through its partnerships with other vendors


• Further the agenda on not only BYOD but also just BYO


• Market the program aggressively. Channel partners are being courted and trained by many other vendors


• Use the program to establish a strong presence in the datacenter space

With the latest move, Cisco may have begun to shift the tide in its favor more decisively.

Anurag Agrawal
Techaisle

VARs, ISVs and Service Providers (SPs) are going full throttle in providing cloud computing and mobility solutions to SMBs. Techaisle’s detailed Channel and corresponding SMB Research shows that there are some demand supply gaps between Cloud & Mobility offerings from channel partners and what the SMB customer needs. This gap between channel supply and SMB demand is illustrated below:



Red bars indicate a gap shown by a higher percentage of SMBs asking for solutions than Channels offering them, which creates shortage and channel opportunity, while the green bars indicate a higher percentage of Channels offering solutions than SMBs demanding; creating surplus capacity and increasing price pressure.

Higher demand-supply gap for Mobility Solutions

The demand-supply gap is higher for mobility solutions than cloud computing. SMBs are demanding mobility solutions; however, both the Channel Partners and their vendors have not yet developed sufficient expertise and solutions to supply them. Cloud computing technology has had longer to develop and mature while mobility has taken center stage (and resources) only in the last two years, resulting in a focus on access to application data rather than development of new applications. Techaisle research suggests that SMBs are particularly interested in mobile applications in the areas of Productivity Suites, Time and Billing Management, Social Media Marketing, Logistics and Field Service applications.

This is giving rise to many smaller, flexible and niche players that are providing point mobility solutions to SMBs, but their main weakness is channel reach. Conversely, large IT vendors with vast number of channel partners such as Cisco, Dell, HP, and IBM are still working on viable mobility solutions offerings and corresponding messaging. Many solutions available today from these vendors are targeted towards secure device management, BYOD enablement, and virtualized access to applications across multiple devices. Techaisle analysis shows that SMBs, although excited about these offerings, prefer to have them embedded in overall mobility solutions to reduce complexity in managing and administering multiple layers of IT.

Vertical Cloud Solutions

In the area of cloud computing, SMBs are requesting vertical industry solutions. In order to accomplish this, channels need to go beyond technology knowledge and really understand the dynamics of industries in which their customers operate and become industry subject matter experts. Channel partners would do well to focus on cloud solutions that help SMBs with their industry verticals, disaster recovery, accounting, and new forms of communication such as video conferencing, web conferencing and hosted VOIP. These combinations of cloud services make it easier for SMB customers to handle vendor relationships without having to manage separate account reps, billing and agreements across Infrastructure, Business Productivity, Communication and Industry Vertical Solution categories.

CRM is one of the most adopted cloud business application by SMBs and is also extensively offered by channels. Initiated by Salesforce.com and followed by SugarCRM, Zoho, Microsoft and many others, cloud CRM has already permeated the SMB landscape. IT Vendors like Dell are taking CRM to the next level by providing packaged solutions such as Salesforce.com CRM along with marketing automation from Pardot and Dell Boomi integration platform to increase the functionality, productivity and customization.

However, Techaisle research suggests that channel partners need to focus on delivering solutions that have higher relevancy to SMBs.

The above data is taken from Techaisle’s report titled “US Channel View – Challenges and Trends in Offering SMB Cloud, Mobility and Managed Services Solutions”. The US report is based on 604 channel interviews, and similar detailed surveys and analysis have been done for the Germany, UK, China, Brazil and India Markets.

Tavishi Agrawal
Techaisle

End-to-End Solutions Company
Convincing conference, unified messaging from all executives, substantial customer success stories including SMBs, considerable partner alliance conversations, convergence showcase, expanding geographic footprint, emerging technologies, mid-market design point, and end-to-end solutions story. What can I say?

At the recently held Dell Annual Analyst Conference, in Austin, the centerpiece of messaging was Dell’s relentless pursuit to be an end-to-end IT solutions provider and a trusted partner. Michael Dell in his conversation with the analysts proved that Dell has changed the conversation from product to services.

“Many new change vectors are going on - Data centers are becoming server centric/compute centric, networking is being combined with computing and storage and security are becoming one – Dell has the ability to understand where the puck is going”, said Michael Dell. To that extent Dell is busy building products and solutions from which customers can capture value.

Dell has made 20 acquisitions since 2008 to build a solutions delivery capability. Its R&D, which is increasingly being focused on storage, server, security and networking convergence went up by 40 percent in the last year alone.  A key aspect of the strategy is to develop converged solutions that include storage, security, servers and wrapping it all together with services and deliver end user solutions that help customers compute in environments with pervasive data access.



 

 

 

 

 

 

 

 

Since his return as CEO, Michael Dell has steadily moved Dell into new areas for higher growth and profitability. Although Dell’s revenue has remained within a narrow margin, growing by only 1.5% from 2008 to 2012, its net income after taxes has grown by 18.5% within the same time period. Dell today has greater diversity in its solution offerings and broader geographic footprint. Both storage and security are higher margin products and with the acquisition of EqualLogic, Compellent and recently SonicWall, Dell’s margin story continues to improve.

Dell’s end-to-end solutions story is also beginning to look complete with portfolio having evolved from PCs and servers to services. Dell’s software portfolio is not where it should be but Dell is building out its capabilities for on premise software, cloud applications and software embedded in hardware. Consistent with the overall theme it wants to offer software solutions that are easier to buy, easier to use and easier to extract value.



 

 

Even the channels organization is perfectly aligned and focused on continuing to grow its PartnerDirect program that was started five years ago and is now approximately US$14 billion business for Dell. The channel’s organization headed by Greg Davis is continuing to make its rules of engagement very partner friendly and empowering and training its channels to provide value to their customers. Greg is ensuring that there is consistent
channel engagement across both mature and emerging markets with deal registration, compensation neutrality and executive priority. With over 135,000 training modules delivered in the last year alone it aims to provide simplicity, enablement and a strategy to win datacenters together. To take advantage of new social media networking platforms, Dell has also launched a new social media training program for its channel partners. The training program, developed based on Dell’s own experiences, provides its channel partners access to a number of useful social media tools and tips, including links to all of PartnerDirect’s social media platforms, a Q&A forum, registrations for both a live virtual training session and on-demand refresher courses.

Executing on its vision
Dell’s vision is being driven by five key market dynamics:

1. Emerging markets growth


2. Consumerization of IT


3. Explosion of data


4. Alternative computing platforms


5. Corporate IT complexity

Dell has not only been able to integrate the businesses it has acquired but also has successfully scaled them. Dell Boomi, a middleware for cloud, originally acquired for its ability to bring cloud integration to SMBs, is equally at home in large enterprises. A  recent example is OneWorld Alliance which has implemented a new information technology (IT) hub based on Dell Boomi AtomSphere cloud integration, designed to substantially reduce complexity, cost and time involved in linking new member airlines into the alliance.

SMBs' "CIO in a box"
Whenever an IT vendor presents customer stories I look for sincerity in the customer’s dialog and contribution of the IT vendor to customer’s success. Current Motor, an Ann Arbor, Michigan based SMB stole the show and my heart. With only 12 employees it uses full end-to-end solutions from Dell in the most interesting yet fundamental ways. Remember that it is only a small business; nevertheless Dell put a team together to bring to fruition integration with salesforce.com and digital dashboard enablement of Electric Scooters six months sooner than expected. Solutions used – mobility, cloud, hardware, software, services. As Laura Flanagan, Executive Chairman, Current Motor put it, “Dell is her CIO in a box.” And it all started with Laura approaching Dell with a business pain point. The result -- sincerity in dialog and value-add by Dell.

As Dave Johnson, SVP, Corporate Strategy said in his presentation, the “heart of the customer is the CIO.” No worries, SMBs, if you do not have a CIO, Dell can play that role for you.

Next Steps for Dell

• The entire Dell team has to work harder to get its messaging and capabilities heard by its current and potential customers because I feel Dell’s end-to-end
  solutions story has not yet reached the crescendo it deserves


• By focusing on mid-market design point Dell should not forget that small businesses have different needs and the last thing they want is a scaled-down version of product meant for mid-market businesses. Other IT vendors have tried in the past with zero to limited success


• Dell should formulate and articulate its mobile strategy beyond its planned introduction of tablets and smartphones, especially for the SMB segment that are adopting mobility solutions faster than enterprises


• Technology pain points have now overtaken business pain points for SMBs. Dell can be that unique IT Vendor that helps SMBs sort out and identify relevant technology options (cloud, mobility, infrastructure, managed services, virtualization, social media, business intelligence, marketing automation) by becoming a trusted advisor and business consultant

Anurag Agrawal
Techaisle

On March 29^th, 2012, Dell announced a new Cloud Services and Solutions Certification program for its channel partners that want to transition to cloud-based business model. This program specifies additional sales and technical training required for the new certification and is initially directed at channel partners who already have a certain level of infrastructure-related skills and sell Dell’s enterprise products.

Dell’s Cloud Services & Solutions Certification is comprised of three primary pillars in providing cloud services and solutions:

• Cloud Builder – for channel partners that can provide services to design and develop a cloud infrastructure for their customers. This is typically suitable for VARs.


• Cloud Provider – for channels that have the capabilities or want to acquire skill-sets to operate a cloud networking operating center (NOC) enabled with Dell technology to provide cloud services. These include:  Infrastructure as a Service (IaaS), Platform as a Service (PaaS) or Software as a Service (SaaS).  This is typically suitable for SaaS ISVs, Service providers.


• Cloud Service Enabler – for those channel partners that want to act as aggregators or brokers identifying, securing and integrating the appropriate set of cloud technologies and services from multiple sources and operating the resulting cloud for their customers through a set of managed services. This is typically suitable for MSPs & Systems Integrators.

Techaisle believes that Dell’s new channel program is a step in the right direction. Techaisle’s research has shown that businesses are looking for advice and guidance from their channel partners on the use of cloud services & solutions. In addition, Techaisle’s channel research has also shown that many channel partners who want to offer cloud-based offerings to their business clients, themselves need help and support from their vendors. The new training requirements will ensure that channel partners have the required cloud-related skills to be the best in business. Dell is also making it easy
for partners to demonstrate their infrastructure-related skills by accepting their membership in channel programs of recognized vendors in technology areas of security, networking and virtualization. In addition to getting preferred pricing, Dell’s Cloud Partners will also have access to financing from Dell as well as support engagement from Dell Direct Sales and Services.

A key feature of Dell’s program is the recognition that channel partners vary greatly in their size, skills and resources. The program allows partners to transition to the cloud computing model in a manner they feel is best suited for them – be it as a cloud builder, cloud provider or as an cloud service enabler (aggregator). The program also allows partners to supplement Dell’s technology with their own technology services, giving them significant flexibility to offer Dell-based cloud offerings without having to write-off up their investment in their existing services.

Dell has steadily evolved its channel strategy over the last five years and this new certification represents an important step in that evolution. Given this steady evolution, Dell’s channel partners can expect Dell to further fine-tune channel’s role in the cloud, develop additional support programs and also expand its cloud-based offerings for the channel.

Anurag Agrawal
Techaisle