I was intrigued by two opposing views coming out of TechCrunch Disrupt this week - one saying that start-ups have an “unfair advantage” in the enterprise market and the other that "tech start-ups needed to find new opportunities away from traditional technology".
"Don’t try to disrupt the redwoods", he told an audience at TechCrunch Disrupt in San Francisco.
On the other hand Box co-founder Aaron Levie said in his view, the enterprise market isn’t just getting "sexy" today, but it's actually now a very attractive market for start-ups.
The traditional enterprise vendors, after all, are accustomed to slow innovation cycles that’s just not sustainable now that so many consumer trends have infiltrated the enterprise.
Levie outlined his reasoning:
start-ups don't have to go through the usual channels, especially with the SaaS model;
it's easy to trial new products with the web-native freemium model
for incumbent enterprise companies, the transition to these new business models is very cost intensive.
I'm on the side of Levie. The transformational effects of cloud, mobile and social are huge, and we generally talk about the impact of that on enterprises and how they function. But it will have an equal impact on enterprise software vendors and their ecosystems.
In this world, at the convergence of these massive forces, I think that the traditional enterprise vendors are particularly vulnerable, in the same way that enterprises which don't transform using cloud, mobile, social are also vulnerable.
The cloud is more than real, but there is still a lot of cloud hype and usually about the irrelevant. I think what is missed is that the cloud isn't something we do things ON, it's something we do things IN. Most of the attention goes to infrastructure which is the doing ON stuff. That's important, and Amazon, Google, Microsoft, Oracle, IBM etc are sorting that out. Once the big things starting happening IN, and we get enterprise Mashups that's when the world starts changing.
It's not just "cost intensive" for the incumbents to move to new models, it's intensive and costly with respect to all their legacy attributes including culture, sales models, remuneration, product line cannibalisation, margins, cash flow, support structures etc. All the usual legacy issues which turn successful companies into potential failed companies.
I think all that is well known, I was just intrigued about the opposing opinions from two smart people. Probably there is something more to David Sack's view that did not come across in the interview.
STOP PRESS: This just published Sept 13, 2012 "It's 'Shocking' That Startups Are Ignoring A $500 Billion Market" by Sequoia Capital partner Jim Goetz.
Enterprise remains an "enormous opportunity" because companies are spending about $500 billion a year with legacy enterprise companies and those budgets are ripe for the plucking. "We believe most will be disrupted in the next decade," he says.
@tiffanywinman wrote a good post at the IBM Software Blog to celebrate Social Media Day. It's full of impressive statistics which show how far IBM has come as a social business and the impressive number of employees who are part of this transformation. All the more need for Partners to get up to speed and to leverage and take advantage of that massive IBM investment. I see Partners being the ones dragging the chain.
I had a minor twitch when I read that IBM has been using social software for 15 years. I think that a lot of firms have been using traditional collaborative tools, but they have not transformed into social businesses - so in that sense IBM is devaluing it's own achievements in social business by claiming to have been doing it for so long.
That's a pity because they are one of the most social media savvy organisations on the planet, at the same level of social business development as Microsoft, and the very astute EMC, and the highly invested Cisco. Even though Microsoft has topped IBM in a couple of polls of social business (Microsoft tops social media savvy companies - survey), these businesses are all clustered up in the high achievers.
Social business is about reinventing customer relationships, and this also means with Partners and the channel. I consistently see that the channel is the tortoise in this race to social business, and that they fail to really and fundamentally pick up on the assets which the vendors are providing them through the social business transformation. Microsoft is focusing on partner enablement through social business as a competitive edge, and also to help move their channel partners to better understand the customer buying process.
IBM is also directing many initiatves towards Partners, to help them grow their social media skills, social media marketing skills, and social business transformation. The IBM post outlines many of these, and there's been great work done by @sandy_carter - see IBM's social media skills initiative for partners.
To do that, to transform, they need a good strategy. And to develop a good social business strategy Partners need time (and resources). But luckily they have great examples in their vendors, and the smart partners will work that for everything that it is worth - and the vendors will pleased to help, it's their future at stake as well!
What's the partner maturity level in social business that you see? - please comment below.
We used to talk about the dot-com boom, now Dell's doing a dot-cloud Boomi. The purchase of Boomi is smart, and puts Dell in a strong position in the cloud integration space, and in particular the cloud data integration space which I think is key to the business benefits of cloud. In fact I said just yesterday that the real business innovation with cloud will come from the information and data management - see Cloud Review Board - 5 governance responsibilities. But amongst all the analysis I don't see mention of 2 hidden gems which will emerge from this acquisition - one from Boomi and one from Dell.
First I'll review the general proposition, and why it's an important move for Dell, and then the gems.
You've got Dell Dude!
Those dudes who were buying Dell when Dell was the innovator in the PC market are the same dudes who are buying SaaS and "shadow IT" today. It's the outlyers, the edges of the business, the people who need to get things done faster than the IT processes can effectively support. What David Linthicum calls sneaking around IT to get to the cloud.
After these credit-card apps get going - and they usually do get going quite fast and effectively - they begin to come up against two challenges, and they are both to do with data:
Challenge #1 - how do we get data from/into our other systems (be they other SaaS or corporate on-premise); and,
Challenge #2 - gosh, how do we get our data? Meaning get it back, recover it, migrate it, disaster-proof it - treat it like a corporate asset and not another spreadsheet lost in the wilderness?
In fact, if these various "edge" credit-card apps initiatives are successful then there will come, over time, a compelling reason to want to have their data integrated and synchronized into a corporate view. Now that's going to be difficult if the corporate IT folk have been left out of the conversation, or ignored, to this point! A key to Boomi's success is in keeping it simple, and Dell will have to maintain that nimbleness and simplicity, plus call the nimble of those in the channel (see below) to satisfy the "you've got SaaS sister" market at the corporate edge.
That's where Boomi steps in. In simple terms Boomi is a SaaS version of Cast Iron, recently purchased by IBM. What seems to have attracted IBM to Cast Iron is that one version of their software sat on an appliance, which aligns perfectly with IBM's "private cloud" sales strategy, while Boomi sits all the cloud itself (Cast Iron did offer their Cloud2 as a SaaS offering, not sure if IBM continues to do so). As Dell says, pointedly, Boomi:
"...takes the cost and complexity out of integrating applications by allowing easy transfer of data between cloud-based and on-premise applications with no appliances, no software and no coding required."
Forrester analyst Stefan Ried recently described Boomi as a "robust third-party PaaS connector," which means, basically, that it's software that helps software play nice with other software. Specifically, it's a data glue that sticks together "on-premise" software from companies like Oracle and SAP and "off-premise" software like financial software hosted by NetSuite or contact management hosted by Salesforce.com.
Jeff Kaplan ponders that Boomi may have sold because it was growing so successfully and needed a big investment to reach the next step. They had to take a decision - find the money or find a buyer. He also points out that Dell's previous SaaS acquisitions - Everdream, SilverBack Technologies and MessageOne - haven't excelled under their new owner. Presumably Dell's learnt from that.
I think Dell's move on Boomi is a very smart one. It will certainly have companies like Informatica and Pervasive looking over their shoulder, as two of the few well established players in the cloud data integration market left (other smaller players include Hubspan, SnapLogic and a babe in the woods Cazoomi).
The purchase by Dell does surprise me, not that they weren't on the lookout. But I would have thought that it would be much more strategic for a cloud provider like Amazon, or Google, or Rackspace, or even Microsoft or even a CSC to have jumped in first. Those companies have to rise to the challenge of managing and integrating cloud-based applications with existing applications and databases, particularly the first three.
Boomi's hidden pot of gold - the channel
One of the strong assets, and perhaps an undervalued one, is its channel partners. There's endless controversy in the SaaS world as to whether SaaS providers actually need channel partners. After all if the purchase is simply and done directly from the vendor's website what role or value-add can channel partners offer?
Boomi has a strong channel program, and relies on channel partners to add new services and applications to its core offer. In fact it is a platform upon which channel partners can not only build their own software apps, to offer to clients globally, but of course they also offer implementation and project expertise to Boomi clients. Partners like WDCi in Australia have established strong businesses as a Boomi partner, for instance. To be sure, this channel strategy is the exception not the rule in the SaaS world and a definite asset for Boomi/Dell.
Dell's Perot Systems will also be able to take advantage of Boomi in the same way the channel partners do - by building on apps, and providing services and implementation.
Dell offers the Boomi channel - social media
Let's hope that Dell can continue to grow and motivate this particular specialist channel. Although it started life as a non-channel business, it now has a successful channel and even more of note it has strong social media credentials and activities in support of the channel. Here again, this is probably an under-rated or even overlooked part of this transaction.
Dell's expertise in social media will leverage Boomi's activities many times over, and will add a of value to the transaction. This will include in support activities, in partner education and training, in collaboration and problem solving, in innovation and idea generation (IdeaStorm), and last but not least in customer engagement and sales generation. All areas where Dell can deploy it's social media skills to Boomi.
Dell has a lot of cred in social media, more so than HP. IBM probably has a bigger investment in social media, but it's not so visible or at this stage potentially added as much business value as Dell's. Boomi's principals are active bloggers with valuable content, and Dell will be able to repurpose that many times over through different social media channels.
Dell as a cloud player?
All up, it's part of a new path which Dell is mapping out for itself. I must admit I have trouble getting my head to accept Dell as a serious cloud player, with even some of the press still calling it a "PC box maker" when publishing this acquisition announcement. But that's something I'm going to have to overcome.
Well done to the Boomi boys!
What do you think of Dell's cloud ambitions?
How would you best leverage Boomi if you were Dell?
Folk etymology has it that the Chinese character for crisis 危机 is a combination of "danger" plus "opportunity". Linguists point out that this is incorrect, but its popularity lives on in speakers' repertoires because it's a convenient and perhaps exotic segue.
Now, perhaps the combination of Partners plus Office365 represents "opportunity", or, might it turn out to represent an equally factious interpretation. Certainly in some partner circles and parts of the blogsphere it is seen as a danger.
So let's simplify things, and rearrange the equation into something which is at least more than a truism in that it's not so entirely self-evident as to not be worth mentioning. As far as Partners are concerned, Office365 is a danger and an opportunity. In any case I'm hoping that the "opportunity" component is not self-evident as if it were then I am wasting your time!
Office365 = Danger + Opportunity
Danger
As a Partner I mean a current hosting partner of Microsoft offering hosted Exchange, SharePoint and Office Communications to their clients.
From the "danger" perspective things are clear. Office365 offers the clients of these partners a compelling suite of business IT services at very attractive prices and with a 99.9% service level. In fact if you have 25 seats or less you pay only US$6 per seat. This gives you access to Office Web Apps plus hosted Exchange, Sharepoint, and Office Communications (including Live Meeting, all rebranded as Lync). You can chop this up various ways, and in every way it represents a very competitive offer, serviced direct from Microsoft to client subscribers.
For clients with more than 25 seats, the cost per seat ranges up to US$27 (or for the "E3" plan $24 per user per month without the voice capabilities for Lync - formerly Office Communicator - Online). And this also includes a license for Office Professional Plus 2010 on their desktop, and Active Directory. It also includes telephone support. Office Professional Plus 2010 is a comprehensive suite which is integrated and synchronized with the whole Office365 online service.
Is this Office in the cloud? No, but it is Office "Plus" on your desktop synchronized with the current state of Office Web Apps and supporting remote and mobile access. The fact that it's not yet full Office in the cloud is hardly significant in the value equation given the cost and benefits this enterprise Office365 offers.
It's a Google Apps killer for sure. I use lots of Google stuff, and appreciate their innovation, but let's get real, this is a king hit from Microsoft as far as enterprise and small business apps are concerned. Beyond the intrinsic advantages of Office365, there is the huge partner network (not just the hosters but the developers).
What is the danger that clients will compare prices with their current hosting partner offers and then request Office365 services from their service provider as an agent of Microsoft, or worse still sign up directly with Microsoft?
The danger is clear and present - so how can it be mitigated by the opportunities?
Opportunity
Departing from the Hosting Partner theme for a minute, the opportunity for software developers and systems integrators (ISVs/SIs) is significant - there is now more opportunity than ever to build apps to integrate into the Microsoft Online services (think Sharepoint, Exchange, CRM, Lync) and for SIs a wave of migration opportunities and custom development. Microsoft has a showcase of these which is worth reading, and it's more than self-promotion it is a really good opportunity space for partner solutions.
In fact throw Windows Azure into the mix and solution developers have the opportunity of a lifetime - to develop in the cloud and and integrate into Office365 and offer complete line of business cloud solutions which, marketing-wise, will piggyback on the cloud wave and marketing of Office365.
We'll also see the development of an "Apps Store" for Azure/Office365 using what's called the Sandboxed Solutions feature of Sharepoint Online. This will join the ranks of Google, Salesforce, Zoho, Intuit, Netsuite in having apps stores, but will start with a massive developer base familiar with the Azure environments.
So how about Hosting Partners? How will they fare when Microsoft does all the hosting? The truism is that they have to "add more value". We want to move beyond the pregnant pause which usually follows that statement and examine what that value could be, within the context of the capabilities of hosters.
Marco Limena, vice president of business channels for the Worldwide Communications Sector at Microsoft, recently discussed the Office 365 announcement and opportunities for hosting provider partners. He highlighted these areas:
BREADTH - Growth of the userbase in SMBs, noting that hosted email was extremely fragmented and "with Microsoft Hosted Exchange accounting for only a small percentage of the space", so hosters would go for a volume play to recruit new clients to Office365.
DEPTH - Offering "value-added services" that "extend beyond the features offered in Office 365 Small Business such as customized services IT tools, phone support, the ability to grow beyond 50 users, sync with Active Directory, advanced IT management, enterprise-class e-mail, Web content management, business intelligence, additional storage, security features, archiving and the full Microsoft Office suite".
Now I must admit that not all that made sense to me. For example it seems that he is only addressing one variant of Office365, for Small Business, although he says "Office 365 for small businesses is targeted at customers with up to 50 users" and yet all other announcements say 25 users? And then his "value added" services seem to me to actually be all the services a client gains by signing up to Office365 for Enterprise - and therefore not bringing any direct hosting revenue.
Three opportunity strategies
So that makes my head hurt a little, but not to worry let's assume that I'm missing something and where to from here? The fundamental points I see are these:
Hosters are not going to be able to compete with Microsoft's hosting capabilities, pricing, and financial guarantees against a 99.9% SLA on Office365 or any Microsoft Online products. On the other hand, clients aren't going to shift overnight, and a certain amount of FUD and conservatism will provide adequate time for hosters to plan their way forward.
The most basic strategy is to build a marketing capacity to reach a large number of new clients and sign them up to Office365. This is easier said than done, in primeval terms it means turning into a GoDaddy marketing machine - which hosters can do this, and have the cashflow and talent and can they design and execute the digital engagement strategies?
Another is to build a more complex multi-sourced Go To Market model, whereby hosters aggregate and integrate apps and cloud services and add those into the Office365 offer. The core to this is that hosters have to have or bring on board integration skills, know how to use integration products like IBM's Cast Iron and Cloudburst, and also have migration skills to be sold on a project by project basis to clients to transition them to the cloud. For example as part of that migration it's possible now for a hoster to add Office Web Apps to their hosted Sharepoint and to take that to customers ahead of Office365's full release. Here's the trick - you have to be able to select and build a competitive portfolio of apps and cloud services, and be able to do the commercial deals to ensure both viability and servicability (support and end-to-end SLAs). One key to the portfolio is the non-Microsoft linkages which suit the target segment - Blackberry related, iPhone related, field service apps, remote monitoring etc. (Not forgetting Microsoft build-outs like Windows Intune.) Also the management of a mobile fleet can be a good value-added service. Another of the opportunities, over time, is as clients migrate to the Microsoft cloud and off the hoster's domain that there is a chance to optimize investment and capital in own-facilities to support new hosted offers as part of the portfolio. This will see hosters using a hybrid cloud model.
Finally, hosters can use the cloud transition, what we call the Cloud Shift, as a means and vehicle to engage more closely with their client base. It's an opportunity to talk business, enabled by the technology. Customers will have concerns about moving to cloud, and once beyond the basics these will centre on "how do we make best use of cloud/Office365". Hosters who can help clients extract the most business value from the transition will have the opportunity to claim a fair share of that value for themselves.
Churn ain't churn - it's hoster churn not apps churn
In the general SaaS world, it's crucial to manage customer churn and to optimize renewal rates. With Office365 this has a slightly different flavor. Sure some clients will migrate to Google or Zoho, but in fact Office 365 is the competitive offer to retain them or to bring them back. The real game for hosters is to ensure that their clients renew with them and not a competitive Office365 hoster - that's all about relationships and that's the big story in the future of hosting for SMBs (unless you follow the GoDaddy model).
Conclusion
In conclusion there is both danger and opportunity to Hosting Partners in Office365. To minimize the danger and to optimize the opportunity it is the time right now to start agreeing the business goals and objectives for the next 12 months and 3 years. Once that is settled, which is not necessarily easy, then a path from the current assets and capabilities needs to mapped into the future value equation. It's probably fair to say that there are more dangers than ever, but at the same time more opportunities than ever for those Hosting Partners which get it right.
Do you think that Office365 represents more of a danger or opportunity to Hosting Partners?
Where do you see as the best future model for hosters in a Microsoft Online/cloud world?
What timeframes do you think are crucial in making this transition?
They made the point that the Cloud plus on-premise vendors are best placed to take advantage of this shift, and in fact to help accelerate the shift.
"SMBs have their doubts, particularly around the security of a 3rd party hosting confidential numbers. But companies like Microsoft and IBM who provide a convergence of on-premise and SaaS are clearing these concerns for interested SMBs who are trying to maximize the combination of cloud and on-premise issues," said AMI Senior Associate Yedda Chew.
AMI believes that SMBs are easing into the concept of local plus cloud-based computing rather than leapfrogging into a pure-play platform, allowing companies like Microsoft, who not only provide hosted solutions like exchange online in its BPOS bundle, but also its ubiquitous "exchange on premise", to live in co-existence.
This on-premise plus Cloud flexibility provides visibility of the Cloud opportunity to SMBs while assuaging their security concerns. And then, in time, as the realization of the TCO of on-premise becomes more visible in comparison to Cloud, SMBs then have the potential to easily migrate from their on-premise Windows and .NET-based applications to the cloud.
Although AMI mentions both IBM and Microsoft to be well placed in having Cloud plus on-premise, I'm struggling to think how IBM fits here execpt for Lotus Live, which has little market penetration at the moment. In a comparison between the two Microsoft would have to be not only a country mile ahead but also an organisational generation ahead in transforming to this business model.
In another related cloud study AMI confirmed that CRM, payroll, accounting/financials and web-conferencing tend to be the leading applications currently used in the Cloud. Adoption intentions remain strong for CRM, Business Intelligence (BI) and web/video conferencing for the next 12 months.
So if we again compare the IBM and Microsoft cloud portfolios then IBM is barely on the map in all those cloud applications whereas Microsoft has a strong position in several. Of course IBM does have the on-premise applications, a monstrous suite of them, but not Cloud, not cheap and not simplified. And it's those last two points which accelerate Cloud adoption in the SMB space.
How should resellers and channel partners respond to this shift?
The first necessity is to go with the flow - the Cloud shift is not going to go away, and even if you deny it (because it threatens to cannibalize your current business) your customers will not.
So first step is to make sure that their current solutions are working well, and are as cost-effective as possible (I'm thinking on-premise here), and that you are familiar as you can afford to be with which features they are using, and which they don't need.
Second step is to work with them to understand which Cloud applications they are using and how they sourced them and how they feel about them, and how they link or do not link to their on-premise suite. Also note their wish-list for their potential integration of these services - between Cloud or between Cloud and on-premise.
Third step, and this might seem counter-intuitive, is to work with them over time to help them understand the proper TCO of their on-premise. This can be easier said than done because of all the hidden costs - a rough rule of thumb - take what they say are the costs and double them.
Fourth step, be pro-active in migrating them to an online suite, like Microsoft's BPOS, which cuts their costs and builds your goodwill. This may also seem counter-intuitive since it will also cut your revenue, but that's not necessarily true. It will be done over time, and if you initiate it you will guide that timeframe and can plan for it. You will also have the opportunity to now know where to add other higher value on-premise and Cloud applications which will add value and grow your income e.g. Remote Managed IT Services.
Fifth step, having worked with your customer you'll be able to find additional applications which will suit their business needs and are Cloud and where you can provide services. Notably, there is growing interest in using cloud-based productivity suites, along with bundling additional value-added components such as security, storage and wireless broadband access.
Following these steps will bring you closer to the customer's issues and place you in a position to close the knowledge gap on Cloud and SaaS, and help them migrate to SaaS applications where you can add value.
As a channel partner how would you help your customers move into Cloud?
How do you think Microsoft and IBM compare in their Cloud plus on-premise offerings?
IBM is often ranked in the top 50 of US companies in terms of social media savviness, but like most companies which sell indirect that savviness does not necessarily translate down through the channel.
This means that channel partners are actually missing the opportunity to leverage the investment that IBM is making in social media to help grow their business. In fact IBM found in their 2010 IBM Business Partner Social Media Survey that 75% of their partners were unsure of how to apply social media as an effective sales tool.
"They sense it could be an effective sales tool, but they don't know how to get started," said Sandy Carter, vice president, IBM software business partners and social media evangelist, in an interview (follow her @sandy_carter).
The online survey of 1,000 channel partners, the results of which IBM also unveiled last Thursday, found that 45% are experimenting with social media to drive new revenue streams. But 74% said they need more education and direction, Carter said. They were overwhelmed by the number of social media outlets and asked for training on specific tools like RSS, wikis, Facebook and Twitter. They also weren't sure how to measure the effectiveness of such efforts.
So IBM has just launched a "skills initiative" to bridge this knowledge gap. Some of the offerings, including online training sessions and a social media guide, are available immediately through IBM PartnerWorld Communities. Others will follow shortly, including a live session called "Leveraging Social Media for your Business" at the IBM Information On Demand Conference in Las Vegas in late October.
The initiative will also include online training sessions, podcasts, and Web events. Sandy Carter gives some immediate tips here on her YouTube update.
IBM is also offering partners a free one-year Lotus Live license to help set up communities with their customers. It is hoping partners will emulate its own PartnerWorld Communities, launched in June 2009, which has grown to a collection of social networking community spaces specifically designed to help its partners more easily connect and collaborate online.
The community, with members in 30 countries, extends beyond PartnerWorld with 10,000 partners tapping into 250 LinkedIn groups, 400 Facebook groups, and over 500 blogs on industry-specific topics ranging from SOA implementations and green IT to virtualization and cloud computing (and including the IBM Business Partner blog).
The 250 LinkedIn groups, 400 Facebook groups, and over 500 blogs are impressive statistics, an impressive social web footprint backing up IBM's ranking as a social media savvy corporation. In fact the Partner survey also showed that 97% of respondents described IBM's social computing capabilities as moderately to much better than other competing large IT vendors. Partners cited the expertise of IBM employees, support and responsiveness, and "ease of use" as reasons IBM is ahead of other technology and services companies.
This is all a good news story, for partners in particular. I'm still left wondering if the roadblock is the "how" and in the most simple way. Partners typically focus short-term and on sales, and they don't want to dig through a lot of material, as they indicated in their survey responses. The general education is all fine, but how do you get into it quickly, indepth, and in relation to sales. I know how we do it, because we use the XeeSM tool, but it is this aspect which might make or break the early success of this IBM effort with their partners.
What do you think of the IBM initiative?
Are you an IBM partner and agree with the survey findings?
What's the thing you most need from IBM social media as a partner?
The Cloud is the biggest disruptive force to hit the IT industry for the last 20 years; and by the way that's why it's not "the same" as using AMS as an online service bureau 20 years ago although for some bizarre reason people feel compelled to say that the Cloud is "nothing new".
There are a whole lot of astounding things about the technology which is making Cloud such a force, but the reasons people are buying, and will do so in increasing numbers, can be boiled down to two basics:
reduced cost;
reduced complexity.
Of course those same two forces are the cause of fear and denial in the traditional channels of supply of IT services to business. Complexity is the friend of the service company, and simplicity and reduced price the enemy, or so it might seem. In any case that's a story for another day.
AMI Partners has undertaken a number of Cloud surveys recently, and the momentum of the two forces shows out in those results. (I don't know AMI I just found them during a Google search.)
Their studies confirm CRM, payroll, accounting/financials and web-conferencing tend to be the leading applications currently used in the Cloud. Adoption intentions remain strong for CRM, Business Intelligence (BI) and web/video conferencing for the next 12 months. Their research showed that
Remote Managed IT services (RMITS);
SaaS; and,
web/video conferencing;
are the highest-growth components within the Cloud, with a 20%+ CAGR, each. On the other hand total Cloud-related spending will grow at a CAGR of 13% to exceed $95 billion by 2014, about 11% of total WW SMB ICT spending.
Cloud a replacement mechanism for current higher priced services
In the case of fairly simple bread-and-butter solutions and processes, including a variety of managed IT services, the Cloud essentially acts as a replacement mechanismdriving costs lower, says Deepinder Sahni, AMI’s Senior VP for Global Sizing and Segmentation. In fact in the US in particular where these smaller businesses are still under financial pressure the move to Cloud and SaaS is seen to have greater momentum, for these cost-saving reasons, then elsewhere in the world.
Small business wants to migrate, but needs education
AMI report that the biggest impediment to even faster Cloud growth in small businesses (SBs - up to 99 employees) is not the willingness but the how-to.
According to Michael McDonald, a Senior Associate with AMI, "small businesses have been laggards in adopting new technologies that fall outside their comfort zone, often looking to larger firms as test cases".
"The larger issue is the lack of knowledge regarding Cloud," according to McDonald. "Even though some budget has been allocated for SaaS products, we see a gap between planned and actual spending. Small businesses have the capital available to make significant advances in the Cloud; however, they are still uncertain as to how a Cloud solution will benefit firms of their size."
Cloud service providers targeting SBs should understand that educating the decision-makers of these companies on the ease and simplicity of migrating to SaaS applications is essential.
Further, channel partners should be armed with simple case studies demonstrating these benefits, according to AMI. This is a pointer to how vendors should be responding, and also engaging with both partners and SBs through social media, for example. Why social media? Well, it's the most cost-effective for reaching out to this market segment, and to leveraging word of mouth between these business owners.
Despite the pressure on current channels and service providers, there is an upside. It's related to the opportunities that arise from the same factors they fear most - simplicity and lower cost. I'll talk about those in my next post.
Right now Cloud is here, it is not going away, and it will disrupt the IT industry as we know it. Now is the time to get ahead of the wave, because Cloud also presents great opportunities for the industry.
...doesn’t it stand to reason that solution providers will be more effective selling the technology, building custom applications around it and helping customers with the supporting business process if they themselves understand the power of collaboration and social networking?
It sure does, we're with you Beth!
Beth goes on the say that in their 2009 study focused on Partner Collaboration and the Role of Social Media, nearly 50% of solution providers indicated they are only "opportunistically" collaborative with peers, and "In fact, nearly 30% said they don't use social media in their normal course of business at all." And most of the others use social media "mostly to find new customers and do outbound marketing of their services and solutions - not to collaborate with their vendors or their [current] customers".
Partners are missing a real opportunity, because many of their vendors are extremely social media savvy, I wrote previously about EMC, and Microsoft.
This means the vendors have a large investment in social media assets and connectivity which can be re-purposed by Partners to grow their business. And after all "same shopper sales" are the easiest to get, as compared to new customers.
End-users are already using social media to get information about products. Depending on which study you read, 60-90 % of customers begin their purchase process online by gathering information and looking for current customer comments. Increasingly aware of this pre-sales activity, channel managers want to make sure their products are well-represented.
Communication between vendors, resellers and customers is noticeably improved using social media. Messages, attachments, and links are sent and received more quickly (usually getting through all those pesky corporate firewalls) from smart phones, netbooks, and other devices. And using social media drives down the cost of communications, sometimes by as much as 80%. It’s just cheaper to post a video on YouTube and send out a link than to maintain/expand a usable partner portal or distribute (and redistribute) a bunch of PDFs.
Social Media is extremely effective at building and maintaining more intimate relationships. A reseller can maintain weekly contact with 50 customers in just a few hours by connecting with them at their online spaces. This replaces the 50 phone calls and scores of emails flying off into the ether. Most important, social media is personal in a way that good salespeople and their customers appreciate.
That's why channel managers are keen, and it mirrors why partners/resellers themselves should be keen. And that is why we're a partner of the Social Media Academy and a big fan of the High Tech Partners Social Media training course because the potential for partners is so high.
If you think about distribution channels in software and IT in 2010 then we're on the cusp of major disruption. Think about the "cloud", and SaaS, and vendor cloud infrastructure undercutting independent vendors and partners - it's big.
In fact, a long time ago Peter Drucker famously said every enterprise should regularly ask itself "If we were to go into this now, knowing what we now know, would we go into it the way we are doing it now?" AND, perhaps far less famously - that:
this applies with particular force to an area that many enterprises tend to neglect...distributors and distribution channels. In a time of rapid change distributors and distribution channels tend to change faster than anything else. It is also on distributors and distribution channels that the "information revolution" is likely to have th greatest impact.
Drucker was again so right, and from here on for the next 18 months or so the channels of the IT industry are about to be ripped apart and re-formed.
That's potentially a big reason behind Microsoft just a week ago switching out one of their most respected world-wide partner executives for a tough new guy to shake it out.
The channels in for change, and it will happen whether "the channel" agrees or not, so best to try to help the leaders get ahead of the curve, and social media enablement has to be part of that plan. Not for it's own sake, but for the sake of more meaningful customer engagement.
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