How Well Do You Know The Very Small Businesses That You Want to Sell To?

Technology vendors are increasingly targeting very small businesses (VSBs, with 1 to 19 employees) with their solutions, lured by the sheer size of the market and the relatively low penetration of many technology solutions in this sector.

However, the very diverse, fragmented and volatile VSB market is not for the faint of heart. And all too often, technology vendors operate on assumptions that are truer of the 1% of venture-backed startups than the average VSB. While all sorts of nuances must be considered, understanding the fundamentals is a must to have a good shot of being successful in the VSB market. Take the quiz and find out if you know the basics about what makes the 99% tick!

  1. What do VSBs rate as their top business challenge? (Check one)
    1. Obtaining financing
    2. Attracting new customers
    3. Growing revenue
    4. Improving employee productivity

Slide1VSBs are consumed with growing their businesses and staying afloat. Their challenges center on attracting new customers, growing revenues, improving cash flow and maintaining profitability. Other challenges, such as improving customer retention and satisfaction, and attracting and retaining quality employees are important but pale in comparison to money in, money out issues. If you don’t speak directly to how your solutions can help solve these key challenges, it will be very difficult to get on VSB radar. Score 1 point if you checked b or c; zero for a or d.

  1. What do VSBs rate as their top technology challenge? (Check one)
    1. Transitioning from on-premise to cloud/SaaS solutions
    2. Containing technology costs
    3. Figuring out which solutions can best help my business
    4. Securing company information

Slide2VSBs are confused by all of the technology options out there! They often find it tough to figure out which technology solutions can really help their businesses. Other key tech challenges include: securing company information, containing technology costs and keeping systems up and running. Help VSBs cut through this confusion with clear information about how your solution can help them improve business outcomes–securely, affordably and reliably. Give yourself 2 points if you chose c; 1 point for b or d; and zero for a.

  1. What is the median for VSB annual spending on technology products and services? (Check one)
    1. Between $1,000 and $9,999
    2. Between $10,000 and $24,999
    3. Between $25,000 and $49,999
    4. Between $50,000 and $99,999

Slide3VSB budgets are very tight. Median technology spending for businesses with 1-19 employees is between $1,000 and $9,999 annually. Be realistic about pricing for this market: remember that after paying for essentials (devices, connectivity, etc.) there’s not a lot left over. Score 2 points if you selected a; 1 for b and 0 for c or d.

  1. Who is primarily responsible for IT support in VSBs? (Check one)
    1. No one
    2. Part-time employee(s)
    3. Full-time employee(s)
    4. External/third party contractors

Slide4In 41% of VSBs, no one is tasked with looking after IT! 34% are lucky enough to have an external contractor filling this role, with just 25% having someone on staff to do the job. Solutions must be easy to deploy and very intuitive to use to gain traction in the VSB market. Add 2 points for a; 1 for d, and 0 for b or c.

  1. What do VSBs rate as the most important information source to learn about technology solutions? (Check one)
    1. Social media sites (Facebook, LinkedIn, Twitter, etc.)
    2. Webinars/podcasts
    3. Professional advisors/consultants
    4. Web search (via search engines)

Slide5Time to tune up your search engine optimization engine! 49% of VSBs put web search as one of their top 3 information sources. 40% say professional advisors/consultants are one of their top 3 sources. After that, VSB indicate their preferences for technology information varies greatly. Creating a strong presence with the top two information sources is critical, but broad coverage in the others is also key to reach this diverse audience. Give yourself 2 points if you chose d; 1 point for c; and zero for a or b.

  1. What is the top reason a solution gets on a VSB’s short list? (Check one)
    1. Easier to use
    2. Local service and support
    3. Better pricing
    4. Free trial

Slide6Better pricing trumps all, but ease of use is almost as important. 41% of VSBs rate better pricing as one of the top three reasons they put a solution on their short list. If a VSB decision-maker gets even a whiff of sticker shock, they’re likely to eliminate a solution from consideration.

Ease of use comes in at number 2, with 36% of VSBs rating this as one of their top three considerations. From there, other criteria ranking drop into the 20% or below range. Score 2 for c; 1 for a; 0 for b or d.

How Did You Score?

9-11 points: VSB Expert. Congratulations, you are part of the elite group of technology vendors that truly understand VSB realties. You know how to engage VSBs on their terms, and your pricing isn’t likely to give them sticker shock. If we Google “small business” and your solution area, your company probably comes up in the top 3. With continued research, social media engagement, great content to educate customers, a strong stable of partners and influencers, and constant striving to make your solution easy to use, you have the right stuff to compete successfully in this very tough market.

5-8 points: VSB Intermediate: Your knowledge of and comfort level with VSBs is growing. You’re likely to already have a plan, but you need to up your game to rise above the noise and carve out a sustainable, scalable volume play in the VSB market. Team up with influencers and partners who are already strong in the space; join relevant groups on social media; tune your understanding of VSBs with research and 1-1 time onsite with VSBs; sharpen content so that it really resonates with VSBs.

4 points or less: VSB Novice: Congratulations for having the courage to start thinking about whether or not the tricky VSB market is a good fit for your product and/or service. Build your understanding of VSB customers with research, 1-1 conversations at events, joining relevant social media conversations, groups and to get a better feel for VSB behavior, concerns and goals. Study best practices of companies that have been successful in this market, as well as those who have failed. By listening and learning before you launch into the VSB market, you can avoid many of the traps that a novice might ordinarily fall into.

Sage’s Everest: Building Mind and Market Share With A New Generation of SMBs

everestAt last week’s Sage Summit, one of the featured speakers was renowned British explorer, entrepreneur and adventurer Justin Packshaw. Among other achievements, Packshaw spoke about the challenges he and his team of 10 climbers faced to successfully reach—and then descend—the peak of Mount Everest, the highest mountain on the planet.

Watching Sage’s new (as of November 2014) CEO Steven Kelly interview Packshaw, I couldn’t help but think about the uphill battle that Sage has faced in attracting net-new customers to its accounting and ERP software solutions over the past several years. While many rivals were quick to bring innovative cloud, mobile and social capabilities into their solutions, Sage has taken a slower, more conservative approach. As a result, although Sage has done a fairly good job of retaining existing customers, it has struggled to gain mind and market share with new generation of cloud and mobile savvy SMB customers that it needs to fuel substantive growth.

Making the Case for the New Sage

Steven KellyKicking off the event, CEO  Kelly made his case for a newly energized and more engaged Sage. At the 50,000 foot level, Kelly:

  • Pledged Sage’s commitment to “being the best technology company for small businesses,” by providing small businesses with help to run their businesses, give them more control, and help them make the right choices.
  • Positioned Sage at the forefront of the “golden triangle” of accounting, payroll and payments solutions to make small businesses “100% compliant, 100% of the time.”
  • Reiterated that Sage “loves on premises, hybrid and cloud solutions” and will support all of these models to give businesses choice.
  • Vowed that “end of life” is not part of the Sage vocabulary. Sage won’t force existing customers to go to the cloud before they are ready; instead, it will provide pathways and tools that enable customers to control the pace of their migration.
  • Asserted that the term ERP (enterprise resource planning) really means “expense, regret and pain,” and that Sage will also banish this term from its vocabulary (which by the way, got a pretty big round of applause).

All of the above should be welcome news for existing Sage customers, who have stayed the course through numerous changes in Sage strategy, management and products over the past few years. But, it doesn’t offer much in the way of helping Sage attract net-new customers So how will Sage ascent its Everest? 

Sage Live: Poster Child for the New Sage

sageliveKelly’s roadmap for new growth focuses on rapid, global new solution development for next-generation business decision-makers who are already sold on a cloud and mobile first world. Sage One, Sage’s offering for sole proprietors and very small businesses from pen and paper and spreadsheets, is part of this, but Sage Live  (formerly Sage Life) is really the poster child for Sage’s new approach tailored to the “office of the future.” Notably, Sage Live was designed and developed in six months from when Kelly gave the team its marching orders.

Built as a multi-tenant cloud-based accounting solution. Sage Live is aimed  squarely at growing small businesses who need more power than entry-level accounting solutions offer, and want cloud, mobile and collaborative capabilities out-of-the-box. Pricing starts at $30/user/month for full users (such as finance and accounting users) and $15 per user/month pricing for more casual business users. Slated for U.S. release now, and for UK availability at the end of the summer, Sage Live is designed to be a global solution.

The Salesforce1 Shortcut

Sage choose to build Sage Live on Salesforce1, the largest cloud development platform in the world, to gain development and go-to-market efficiencies, including:

  • A rapid development environment and tools to design, build and bring the solution to market.
  • The ability to embed Salesforce1 mobile and collaborative functionality, such as Chatter, directly into the Sage Live solution.
  • An enormous partner ecosystem to add features and functions for specific markets. For example, Kimble PSA announced its integration with Sage Live at the event. With a partner-centric approach from the get-go, Sage Live doesn’t need to become a clunky, monolithic solution.
  • The same look and feel as Salesforce, giving Sage a natural entrée into Salesforce’s 95,000 SMB installed base customers. 

Customer-Centric Design

Salesforce1’s platform also made it easy for Sage to pull in its best small business accounting experts from around the world to collaborate on Sage Live. Sage also involved customers in its early adopter program from the beginning, seeking out non-Sage customers–both owners and those in financial roles—for input.

What Sage heard is that they are spending too much time juggling too many spreadsheets. As their businesses grow, they need better tools to budget and forecast, the ability to look at their business through different lenses, and more collaborative capabilities. They want a “one-office approach” with easy cloud and mobile access to real-time information for all users.

In response, Sage Live’s multi-dimensional accounting engine allows users tag records with geographical, product or other information. Users can then easily pull up different views and reports based on the tags. The solution can also be configured for different role-based views or “scoreboards” giving users just the information most relevant to them.

iwatchEmbedded Salesforce1 real-time social and mobile capabilities make it easy for users to collaborate and share information, ala the “business in the moment” example of Sage Live notifications on Apple iWatch.

Perspective

New and fast-growth SMBs are increasingly gravitating to the cloud for accounting and ERP. SMB Group’s 2015 SMB Routes to Market Study reveals that 29% of SMBs planning to purchase new accounting/ERP solutions are leaning toward cloud deployments. Sage Live provides Sage with a much-needed solution to tap into this market, and meet it’s elusive (to date) challenge of attracting net-new business. 

While some have questioned the wisdom of building on Salesforce1, I believe that this was a good choice for Sage. Salesforce1 has enabled Sage to skip the plumbing work and to build Sage Live much more quickly than it could have from scratch. Furthermore, Sage gains exposure to Salesforce’s large SMB customer base, and an entrée to Salesforce’s extensive developer ecosystem.

In addition, while Salesforce customers have many choices when it comes to accounting solutions, Sage Live is the only small business accounting solution native to the Salesforce1 platform (FinancialForce is native as well, but aimed more at the midmarket).

Finally, armed with a true “net-native” cloud solution, Sage can apply its extensive expertise as a volume SMB marketer to the cloud and mobile first SMB segment. Sage is even opening a new Customer Business Center, exclusively dedicated to digital marketing and sales for the Sage Live solution.

However, this is not enough to ensure success. I see a few areas in which Sage will need to double down, including:

  • Creating a clear, constant drumbeat to articulate why Sage Live is different from other Sage and its competitors’ offerings. Getting on SMB radar is hard in a market where so many vendors are vying for customers that have outgrown QuickBooks and other entry-level accounting solutions. And, since SMBs rank “Figuring out how different technology solutions can help my business” as one of their top three technology challenges in SMB Group’s SMB Routes to Market surveys. Sage will also need to provide in-depth education to make it to SMB short lists.
  • Persuade Salesforce to more actively promote Sage Live. From what I gathered at Sage Summit, Salesforce sales reps will refer customers to Sage Live if they want to integrate accounting and CRM. This is a start, but fairly passive. Sage Live needs Salesforce to play a more active role to kick-start consideration and adoption. Sage will be a Platinum sponsor at Dreamforce, and it will be interesting to see how Salesforce reciprocates.
  • Prove that it can expand traction with developer partners. To further validate its cloud direction and ambitions, and to fill in key gaps for critical customer segments, Sage must quickly recruit high-profile Salesforce developers to the Sage Live fold.

Prior to Kelly’s appointment, Sage had been investing in new technologies to modernize its existing accounting payroll and payments solutions for quite some time. But progress seemed to be slow, and it was clear that simply moving existing solutions would not be enough to fuel significant  growth. With Sage Live, Steven Kelly is already operating at a bolder, faster and more aggressive pace than his predecessors to pursue this growth. Now, having proved it can get on the fast track with product development, Sage’s next—and bigger challenge—is to get on the fast track with marketing and sales.

SAP’s 5 + 1 Strategy to Build SMB Consideration and Adoption of Business One

SAP logoWhen it comes to business management and  enterprise resource planning (ERP) solutions, SAP often isn’t on the radar for small and medium businesses (SMBs). But, while the ERP giant is best known for its large enterprise solutions, SAP Business One is aimed squarely at providing small businesses with a unified business management solution.

In this three-part series, I interview Luis Murguia, who was recently appointed Senior VP and general manager for SAP Business One to discuss how the solution fits into SAP’s strategy, and what makes it a good fit for SMBs.

In this third and final post, Luis talks about SAP’s plans to accelerate consideration and adoption of Business One.

Laurie: Luis, you’re still relatively new to your Business One role. But looking out over the next year or so, what are your goals, and how will you measure success?

pillarsLuis: When I joined the team, we put a plan in place called five-plus-one priorities. Why five-plus-one, why not six? Because this one is very special, so we have five pillars, and one overall priority that is common across all five pillars. The five pillars include:

  1. Continuing to optimize Business One for the cloud is number one. Right now we offer a multi-tenant environment, we want to be able to scale that to serve tens if not hundreds of thousands of customers.
  2. Number two is speeding adoption of the HANA database among Business One customers. HANA provides an incredible source of innovation, helping customers to run much faster in real time.
  3. The third pillar is to accelerate two-tier ERP adoption. Business One is used not only by small businesses, but also in larger companies who use SAP Business Suite at corporate, and use Business One for operations in divisions and subsidiaries.
  4. Fourth is simplification. We are aggressively pursuing simplification if all of our processes. In July we are on target to reduce the number of products on our price list by 70%, to make it easier for our partners and customers to select and configure Business One
  5. The fifth pillar is to raise the dial in terms of volume and building mindshare among small businesses. Our Business One customers are small and maybe not well known, but they are on social media promoting their success so other small businesses can see the value of it.

So those are the five pillars. The plus one is very dear to my heart; I call it people, talent and diversity. Business One will be as good as the people we have working on it. We’re investing a lot of effort in terms of training, developing career paths, and helping employees continually find more challenging more interesting areas to work in to help them grow as individuals and as professionals. So that’s the core pillar that will make Business One stronger. As I said, Business One will be as strong as the people that are a part of the business.

Laurie: That’s very key, but is often not given enough airtime. If your employees are engaged and motivated and able to keep up with new skills, you’re much more likely to get good results! I think you’re right that it’s the glue.

Luis thank you so much, for painting a picture of Business One for us, where it is today, and where you want to take it.

This is the final post in a three-part series examining SAP’s Business One strategy and directions.

Are You Keeping Pace With Your SMB Customers?

The good news for tech vendors: SMBs are bullish on their own growth, and on using technology to help achieve that growth. The bad news: tech vendors may not be doing a good enough job helping SMBs understand, evaluate and buy the tech solutions that will best help their businesses.

SMB Group recently completed our 2015 SMB Routes to Market Study, which provides an in-depth look at U.S. SMB (small businesses: 1-99 employees, medium business: 100-999 employees) technology adoption, the decision-making process, and the buying cycle. Among the findings, we learned that “figuring out how different technology solutions can help my business” is the number one technology challenge for small businesses, and the number three challenge for medium businesses.

Figure 1: Top Three Technology Challenges for SMBs

Slide2

SMBs need tech vendors to provide them with a more informative, consistent purchasing experience to help them punch through the confusions knothole. Though the priority rankings differ a bit between small and medium businesses, the top two asks for both small and medium businesses are for vendors to provide a consistent experience across online, mobile, offline and other channels and to more clearly articulate how the solution helps improve specific business goals. Number three for small businesses is the desire fro better real-time online chat/phone support to answer questions, while for medium businesses, its help in connecting with reference customers with similar needs.

Figure 2: Top Ways Tech Vendors Can Improve the SMB Purchasing Experience

Slide3

The “SMB market” has always been a tough nut to crack as it actually comprises many different diverse markets. In addition to standard employee size and industry segmentation, SMBs vary widely in terms of business maturity, attitudes about technology, and a host of other variables. Furthermore, it’s a very volatile market: about 50% of new businesses fail within the first five years.

Today, these age-old challenges are compounded by the fact that the digital, social and mobile revolution raising SMB buyers’ expectations of tech vendors’ across solutions, marketing, sales add service.

As competition for SMB mindshare and market share continues to rise, tech vendors will need to work smarter to earn SMB dollars. Vendors need to do a better job of understanding the intricacies of the SMB market so that they can personalize content to nurture buyers along the their journey, providing them with an informative, helpful and consistent purchasing and service experience across channels.

Please contact Lisa Lincoln at (508) 734-5658 or lisa.lincoln70@smb-gr.com for more information about the 2015 SMB Routes to Market Study (including a Table of Contents), or to order.

 

Taking the Plunge: Triggers for Small Businesses to Move to SAP Business One

SAP logoWhen it comes to business management and  enterprise resource planning (ERP) solutions, SAP often isn’t on the radar for small and medium businesses (SMBs). But, while the ERP giant is best known for its large enterprise solutions, SAP Business One is aimed squarely at providing small businesses with a unified business management solution.

In this three-part series, I interview Luis Murguia, who was recently appointed Senior VP and general manager for SAP Business One to discuss how the solution fits into SAP’s strategy, what makes it a good fit for SMBs, and how the vendor plans to move Business One from being one of SAP’s best kept secret onto SMB short lists for ERP solutions.

In this second post, we talk about the triggers that motivate small businesses to move from entry-level accounting to SAP Business One, and how SAP and its partners help them take the leap.

Laurie: So, SAP Business One provides small businesses with more of their industry-specific needs already configured right out of the gate, and getting it in a cloud model means they don’t have to worry about installing hardware and software. But just the thought of moving from an entry-level or lower end accounting to a more robust ERP system can be very intimidating for smaller companies. So what triggers do you see motivating them to finally take the plunge and move up?


bandaidLuis:
I think a lot of us in most aspects of life; we tend to keep putting Band-Aids on pain. But finally someone says I can’t keep putting on the Band-Aids on this, I need something more comprehensive to manage my business with? I remember the story of the largest manufacturer of white boxes, white label PCs in Brazil. They were very successful in selling to schools, and any place that needed a large number of PCs because they were very price competitive. What triggered ERP adoption for them was the day they delivered the wrong PC configuration to a big customer. They lost a fortune scrambling to produce another batch, and they also realized that they almost lost one of their most important customers because of contractual requirements and remedial penalties.

Laurie: Ouch.

Luis: They were trying to do all this with manual processes and Excel files. But when you are using a lot of Excel files that need to be aligned and synchronized. In this case, they only needed one disconnect to get massive mistakes with the customer’s configuration. So they realized they had to bite the bullet and get their house in order to be much more operationally efficient.

Laurie: Okay, so how do SAP and its partners help small businesses avoid pitfalls when they’re ready to take this leap and implement Business One?

Luis: Well, some of our most successful US partners insist new customers pass a week of product training before they implement Business Because when end-users feel comfortable with the application, this helps guide the implementation and ensures users get value from it right away. So attention to end-user training is really making the difference when it comes to successful implementation.

This post is the second of a three-part series. In the third, we’ll explore SAP’s Business One strategy and goals for the future. 

Yes, Virginia, SAP Does Have a Real Small Business ERP Solution

SAP logoWhen it comes to business management and  enterprise resource planning (ERP) solutions, SAP often isn’t on the radar for small and medium businesses (SMBs). But, while the ERP giant is best known for its large enterprise solutions, SAP Business One is aimed squarely at providing small businesses with a unified business management solution.

In this three-part series, I interview Luis Murguia, who was recently appointed Senior VP and general manager for SAP Business One to discuss how the solution fits into SAP’s strategy, what makes it a good fit for SMBs, and how the vendor plans to move Business One from being one of SAP’s best kept secret onto SMB short lists for ERP solutions.

In this first post, we discuss Luis’ background, Business One history, and some of the key differentiators it has in the SMB ERP market.

Laurie:  Hi this is Laurie McCabe from SMB Group and today I’m talking to Luis Murguia, Senior VP and general manager for SAP Business One. Business One is SAP’s flagship ERP solution for small and medium businesses. So Luis you’re relatively new in this role, can you tell us a little bit about where you come from, and why you decided to become part of the Business One team at SAP.

luisLuis: Thank you Laurie, and great to catch up. I’ve been with SAP for 9 years, in the enterprise division as well as the partner organization. For the past 6 years, I ran SAP’s European partner organization. Throughout my career I have been involved with the ERP market. I started my career in providing ERP solutions for small wholesale food distributors, working with solutions like Peachtree, QuickBooks. Then I moved into selling HP3000 servers pre-loaded with business management software. So I’ve been involved in helping small business find new ways better ways to run the business and be more successful throughout my career.

Laurie: It sounds like you have a well-rounded history and in terms of small business solutions, which brings me to my next question. Many people think of SAP primarily as a big company a big company that sells sophisticated, high-end business solutions to other big companies. So what’s SAP’s role in small business?

Luis: Great question. Ben Horowitz, a venture capitalist that I admire a lot, was also a CEO of a start-up that became very successful in the dot-com crisis. He describes innovation as a really good idea that initially looks like a bad idea. This because any good idea that looks good off the bat is probably not innovative, as it s likely that many people are already doing it. For example manufacturing a car is a good idea because people need cars, but everybody knows it.

Laurie: So unless you’re like Tesla it’s not necessarily a new idea.

Luis:  Exactly. 10 years ago people thought the idea of making a high performance car that runs 100% on electricity was such bad idea was no one was doing it. But then Tesla did it. Likewise, Business One, which is designed for small businesses, doesn’t appear to be a fit for SAP. But actually, we can leverage many SAP strengths, including industry knowledge and best practices, such as order to cash, and package it for small business. That’s what makes Business One such a novel and successful product. We instill and capture expertise from SAP’s big business ERP to help our smaller business customers be more competitive.

Laurie: Ok, explain a bit of the Business One history for us.

Luis: Business One has about 50,000 customers. The solution has been available for the last 15 years, and we are accelerating growth, adding close to 1500 new customers every quarter. Every day, about 15 new companies in the world choose Business One to manage the business.

Laurie: Why do you think growth is accelerating now?

diversityLuis: I’ve been with Business One for just about four months, and I see two great takeaways to date. Number one is that Business One can be run in the customer’s own facilities, as well as in the cloud. Businesses like having this choice. The second reason, and perhaps more important, it is that more customers are choosing Business One because of the in-depth industry functionality that has been developed by our partner ecosystem.

Laurie: So is the focus for Business One to differentiate with industry specific versions or customizations?

Luis: That is 100% correct. And let’s talk a little bit about customer size segmentation too. We divide the Business One market into three distinct segments: companies with less than 50 employees, those with between 50-200 employees, and ones with 200 to 1,000 employees. The first, businesses with less than 50 employees will usually be running QuickBooks, as a standard off the shelf solution. In the 50 to 200 employee category, companies are probably using Microsoft Dynamics, Sage or another solution that they’ve customized to some extent, but they don’t have the critical mass to afford systems integrators to meet all of their requirements. Business One really fits the bill here, because we have over 600 micro-vertical customizations.

Laurie: So Business One has become a software development platform?

Luis: Yes, standard accounting, standard invoicing, management, sales, taxes, and other functionality is in there, and the ISV can build specific micro-vertical functionality on top of it–say for photo copier dealers or microbreweries, which have very different requirements. And in that 50-200 employee segment, that’s exactly what they need, a full solution to manage unique requirements, off the shelf. They can derive more value from a complete micro-vertical solution with Business One as the foundation.

Laurie: And having it available in the cloud probably helps a lot too.

Luis: Yes, in the US, over 85% of all new Business One customers are choosing cloud deployments. Many sign a contract a perpetual license from SAP for financial reasons, because most will stick with an ERP solution for a long time. It is much better, just like its better to own the house than renting the house–the math says you should buy not rent. But they are having partners run and manage Business One for them in the cloud. Say you are a microbrewery in Chicago. You don’t worry about servers, disasters or backups; you eliminate the traditional headaches associated with IT infrastructure. So even though many buy a perpetual license, all the infrastructure and management is in the cloud.

This post is the first of a three-part series. In the second, we’ll examine key triggers and requirements that drive small businesses to move from entry-level accounting solutions to SAP Business One. In the third, we’ll explore SAP’s Business One strategy and goals for the future. 

As The Cloud Turns: Dell’s 1-5-10 Cloud Roundtable

The roots of cloud computing date back to the late 1990s, but the “cloud” continues to evolve—as does the conversation about its impact on technology and business. So I welcomed the opportunity to moderate a discussion of cloud past, present and future at Dell’s recent 1-5-10 Cloud roundtable in Washington DC. Dell’s 1-5-10 series is designed to engage Dell customers, executives and influencers in discussions exploring the implications of major tech trends over the one, five and ten years

Top Takeaways

  • IMG_2915The cloud means different things to different people–but “game changer” is the common thread. We kicked off the roundtable by asking participants to describe cloud in three words or less. Customers chose descriptors such as cost-effective, flexible, reliable and mobile. For instance, Edima Elingewinga, Executive Director, Information Technology at the United Nations Foundation, used mobile as a key descriptor, noting that “Cloud facilitates communication all around the world. That is critical, and that is what drove us to the cloud.” Meanwhile, Dell execs used terms such as digital services enablement, future-ready, and scalable to describe the cloud. However the group was in consensus that the cloud is a game-changer for businesses, government and non-profits.
  • us government sealFederal government adoption of cloud has slowed since the Cloud First policy was established. Cloud First is an initiative launched in 2011 by then US CIO Vivek Kundra. The policy mandated that government agencies had to evaluate a cloud computing option first, and had to have a strong rationale on why they could not use cloud before they could purchase traditional on-premises solutions. As Dell Director of Product, Cloud Management Systems James Urquhart noted, “If you look at this from 2010-2013, you’d have to argue that the federal government as a whole was ahead of the enterprise” with a top-down approach and mandate. But, despite early advocacy and some marquee cloud deals, federal adoption has been more sluggish than many had anticipated, as noted in a 2014 report from the US Government Accountability Office (GAO), CLOUD COMPUTING : Additional Opportunities and Savings Need to Be Pursued. David Lancaster, Dell Federal marketing executive, believes that this is due in part to different agencies having different requirements for different types of clouds—which makes the sourcing process complex and time-consuming. “The federal government is more concerned about private cloud because of security,” added Dr. Lon D. Gowen, chief technologist and special advisor to the CIO at USAID. According the GAO report, legacy migration concerns, cultural barriers and skills deficits also put a drag on adoption.
  • The silver lining in Cloud First is that it sparked adoption in the private sector. Government endorsement of Cloud First paved the way for the private sector to become more bullish on cloud adoption. As Edina Elinewinga, commented, “If the government can trust the cloud, we can trust the cloud.” As a result, private sector adoption is now outpacing that of the federal government.
  • cloud question markCloud computing decisions are becoming more strategic and complex. Whether in business or government, cloud conversations are evolving into discussions of how cloud computing can provide strategic business benefits. As Executive Director and General Manager of Dell Cloud Services Jeremy Ford commented, “The cloud is an enabler, not the point of the discussion. The more organizations view it as an enabler, the more successful they’ll be.” Dell Vice President and General Manager for Engineered Solutions and Cloud Jim Ganthier observed that the conversation is shifting away from “either/or” private or public cloud to one of an “and” conversation in an increasingly hybrid cloud computing world. As Dr. Phil Yang, director of the NSF Spatiotemporal Innovation Center stated, “Choosing the right cloud is like match making, you need to think of it like uber legos.” Participants agreed that most organizations will choose to utilize both public and private clouds, depending on a requirements, constraints and other considerations.
  • Cloud is changing the role of IT. As the cloud conversation shifts to business enablement, IT is increasingly expected to serve as a strategic advisor to the business. Edina Elinewinga said that she has become more of a technology broker in her role now. In addition, IT must assume responsibility for developing a coherent strategy to guide organizations in how to use and integrate different types of cloud deployment models and providers.
  • Cloud will become the fabric of our lives. Big Data and the Internet of Things (IoT) will drive cloud growth over the next 10 years, affecting every aspect of cloud decision-making—from infrastructure and management to strategy requirements. “Big data and IoT are examples of usage models that wouldn’t have been practical or enabled without the cloud,” observed Jeremy Ford. “In about 10 years, everything will be part of the cloud, and we won’t use the word cloud to describe what we are using,” according to Dr. Phil Yang. And Jim Ganthier predicts that “We won’t be talking about “the cloud” in the future. It will be all about the data generated and how we use it.”
  • digital securityPrivacy and security concerns will continue to be top of mind cloud concerns–and power issues will enter the discussion. Privacy and security issues will intensify as more devices, more data comes into play. Edina Elinewinga noted that she is focused on how to keep the work environment and data secure as more and more UN Foundation employees bring different technologies and applications into work. As cloud computing becomes more ubiquitous, power issues will also arise. Dr. Lon D. Gowen predicted, that we’ll need “power over the airwaves to enable future generations of cloud computing.

Summary and Perspective

The cloud conversation is increasingly centered on business problem solving, enablement and innovation. And, big data and IoT are likely to fuel exponential growth in cloud adoption and use cases beyond what most of us can even imagine today.

However, as cloud computing becomes a ubiquitous solution for more problems, cloud alternatives and issues are also becoming more numerous, nuanced. Cloud choices will also become more inter-dependent and related. As complexity and choice expands, brokerage services will become essential in helping most organizations navigate the cloud landscape.

As business reliance on the cloud grows, IT and business decision-makers must align to meet business requirements and optimize long-term security, agility and flexibility with cloud solutions. Both groups will also need guidance and education to build a common foundation from which they can engage to optimize their cloud investments.

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