SMB Group Top 10 SMB Technology Trends for 2015

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(Originally published on the SMB Group website and available here in .pdf format).

Here are SMB Group’s Top 10 SMB Technology Trends for 2015! A more detailed description of each follows below.

(Note: SMB Group is the source for all research data quoted unless otherwise indicated.)

  1. Cloud is the new IT infrastructure for SMBs.
  2. SMB IT staff and channel partners evolve into cloud managers.
  3. SMBs recalibrate IT strategy and spending for a mobile world.
  4. The Internet of Things (IoT) comes into focus.
  5. SMBs reinvent marketing for the new buyer journey.
  6. KPIs trump ROI and TCO as the new “show me” metric.
  7. Analytics gets SMB-friendly with “bring your own data” and freemium offerings.
  8. It’s time to reimagine work.
  9. SMBs place a premium on protection.
  10. SMBs opt for an incremental, integrated solutions approach.

Detailed SMB Group Top 10 SMB Technology Trends for 2015

  1. Cloud is the new IT infrastructure for SMBs. SMBs increasingly view technology as a key business enabler. According to SMB Group research, 67% of small businesses (1–99 employees) and 81% of medium businesses (100–999 employees) say that technology solutions help them improve business outcomes or run the business better. However, most SMBs don’t have the resources necessary to keep pace with technology on their own. Just 19% of small businesses employ full-time dedicated IT staff. And while 86% of medium businesses have internal IT staff, they are typically IT generalists who lack expertise in newer technology areas such as mobile and analytics. As SMB requirements for fast, easy access to new social and mobile analytics solutions, more compute power and storage, and other services have been increasing, cloud adoption has boomed—with 92% of SMBs are now using at least one cloud business solution and 87% using at least one cloud infrastructure solution. In 2015, cloud solutions are poised for hockey stick growth as more SMB decision-makers turn to a cloud-first approach that not only supports existing business models, but also enables them to develop innovative new products, services and business models. Public cloud adoption will continue to significantly outpace that of private cloud, but more medium businesses in particular will consider a hybrid cloud approach, particularly in industries and applications where security and privacy are top concerns.
  2. SMB IT staff and channel partners evolve into cloud managers. As the cloud becomes mainstream, both internal SMB IT staff and external channel partner roles will evolve from implementation and break/fix support to become more proactive and strategic. SMBs will look for staff and channel partners that can work with line-of-business decision-makers to better align technology investments with business goals, select best-fit solutions and manage cloud service providers. Internal IT staff and channel partners will also need stronger integration expertise to help SMBs get more value from their technology investments. Channel partners will need to cultivate consultative selling and adjust staffing skill sets accordingly. SMB decision-makers will seek help to better understand and articulate new skill-set requirements, and to hire and/or contract for these needs. They will be hungry for thought leadership from SMB vendors, analysts and other influencers.
  3. SMBs recalibrate IT strategy and spending for a mobile world. A growing majority of SMBs now regard mobile solutions as essential business enablers, with 60% saying that mobile solutions are critical to their business. 86% of SMBs agree or strongly agree that mobile apps are a complement to traditional business applications, and 71% believe that mobile apps will replace some traditional solutions entirely. Mobile solutions also account for a growing share of SMBs’ technology budgets. SMB median spending on mobile technology and solutions as a percentage of total technology spending rose from roughly 12% in 2013 to 16% in 2014. Mobile service and device costs still account for the bulk of SMB mobile budgets, but SMB spending in other areas is rising as a percentage of mobile spend. On average, in 2014, SMBs spent 11% of their mobile dollars on apps, 9% on security, 11% on mobile management and 8% on consulting. Planned increased investment in mobile apps and more diverse mobile devices will necessitate a spike in mobile management adoption as well.
  4. The Internet of Things (IoT) comes into focus. IT vendors and prognosticators have been forecasting explosive growth for more intelligent and connected devices of all types. However, many IoT scenarios have been cast in a consumer light, such as smart watches and Tile (a locator for items such as keys and glasses), and the IoT vision has been fuzzy for many SMBs. In 2015, however, early but compelling use-case scenarios and solutions will emerge, leading more SMBs to the “aha” moments required to spark adoption. For instance, radio-frequency identification (RFID) has been used in logistics to track pallets and crates for some time, but mostly in closed-loop systems for high-value goods. IoT will help reduce RFID costs, making it more practical and appealing to retailers to use in order to help improve inventory accuracy, automate customer checkout and reduce theft. Beacons, which are indoor positioning systems that communicate directly with smart phones via Bluetooth, provide another compelling SMB use case. For example, a network of in-store beacons can identify the location of customers in a store and send them push notifications. Or, a trucking company could install beacons to monitor the state of its trucks, provide more timely maintenance, reduce vehicle downtime and decrease costs. Once SMBs understand use cases more clearly, IoT will hold great appeal because it is mostly invisible to end users, which negates adoption issues, and it provides real-time data for better decision-making and better business outcomes.
  5. SMBs reinvent marketing for the new buyer journey. The buyer journey is evolving rapidly and includes many more touch points than ever before. SMBs must transform their marketing approach to connect with more prospects and customers, and to provide them with the right information at the right time in the buying journey. Although many small and even medium businesses rely on point solutions, more will turn to an integrated marketing approach. In 2014, 20% of small businesses and 25% of medium businesses had purchased/upgraded to a marketing automation solution in the past 24 months. Meanwhile, 22% of small businesses and 26% of medium businesses plan to purchase/upgrade a marketing automation solution in the next 12 months. More SMBs will realize that choosing the right marketing automation solution is one of the most important technology decisions they will make, particularly as cloud, mobile, social, analytics and other technologies continue to transform the buying process.
  6. KPIs trump ROI and TCO as the new “show me” metric. Historically, vendors have tended to focus on proving solution value through return on investment (ROI) and total cost of ownership (TCO) analysis and metrics. But these assessments and metrics, while often beneficial, are frequently too vague and/or too dependent on nuanced measurements to be compelling for SMBs. In comparison, key performance indicators (KPIs) can provide SMBs with specific, actionable insights on business performance and what areas need improvement. With so many vendors fighting for SMB dollars, SMBs will increasingly seek out those that help them understand what KPIs are most relevant for their business and industry, and those that provide credible, specific metrics about how their solutions affect these KPIs.
  7. Analytics gets SMB-friendly with “bring your own data” and freemium offerings. Most SMBs don’t have data analysts on staff. These businesses often are intimidated by analytics solutions, which have traditionally been expensive, complex and difficult to use. But cloud computing, better user interfaces, visualization tools, improved algorithms and natural language capabilities as well as a growing number of freemium offerings designed for business decision-makers—not data scientists—are poised to change this. For instance, IBM’s Watson freemium offering allows users to bring in data from many sources, and it has capabilities that reduce data preparation and loading time, including a “fix it” button to repair data quality issues. Once data is plugged into Watson, users can query in natural language to analyze information. As more solutions designed for people with little or no data preparation and analytics skills emerge, analytics will become more consumable for SMBs.
  8. It’s time to reimagine work. Whether you prefer the hashtag #futureofwork, #newwaytowork, #reimaginework or something else, it’s clear that change is on the horizon. Processes, tools, attitudes and behaviors are shifting as mobile, social, cloud, analytics, IoT and other technology advances take hold in SMBs. Likewise, demographic shifts are reshaping the makeup of SMB workers as well as their expectations of what technology should do and how it should do it. For instance, millennials and digital natives are rising through the workforce ranks, while baby boomers are starting to retire or move to part-time work. Meanwhile, the ranks of temporary and contract workers continue to grow. The National Employment Law Project found that temporary help agencies, staffing agencies, professional employer organizations and employment placement agencies fill 2.5% of all jobs, up from 1.4% in 1990. In addition, easy-to-use consumer apps and devices have raised the bar for user experience in the business-to-business (B2B) world. This changing mix of resources, behavior, attitudes and requirements will lead more SMBs to seek better, easier and more affordable ways to access, evaluate, buy and get productive with technology solutions. Vendors that understand and plan for this evolution, provide clear solution value and make SMB customers feel that they are part of a strong ecosystem will have a decisive edge as this trend unfolds. Providing easy access and free trials, clear messaging, a delightful user experience, superior support and vibrant user communities will be key to tapping into this trend.
  9. SMBs place a premium on protection. SMBs are already using basic security and backup tools. However, our research shows that most use point solutions that only tackle part of the problem. The use of more comprehensive solutions to protect and manage data is still far from the norm. But greater reliance on technology, an increasing number of “moving parts” (traditional apps and infrastructure, cloud, social, mobile, etc.) and the need to manage data no matter where it resides necessitate better security, control and management capabilities. SMBs need only turn on the news to understand the financial, brand and legal ramifications of data breaches at large companies such as Sony Pictures, Home Depot and eBay. As awareness rises, SMBs will place a premium on more comprehensive solutions from vendors that offer proactive guidance, deeper expertise, stronger service-level agreements (SLAs) and 24/7 support for an always-on world.
  10. SMBs opt for an incremental, integrated solutions approach. New cloud, mobile and social solutions have made it easier for SMBs to access and use new applications, but they have offered little help with integration. Although 63% of SMBs have partially integrated some applications, 79% still rely on manual Excel file uploads or custom code for integration, which underscores the severity of the problem. SMBs typically lack the expertise and resources to manage the entire integration process, and they need solutions that both encompass and better integrate cloud, mobile, social, analytics, security and other technologies. However, SMBs don’t want—and can’t digest—monolithic solutions. Vendors need to accommodate SMB integration requirements with a LEGO-like approach that enables SMBs to acquire only what they need at a given point in time, and then to add on new capabilities (their own or those of partners) with as little friction as possible when new needs arise. Although integration remains one of the toughest technology nuts to crack, we see new hope. Open ecosystems, embedded integration capabilities and stronger APIs should help pave the way, as should toolsets designed to help non-technical users to configure integrations without coding if they understand business integration workflows and requirements. Built-in collaboration and social communities to help users crowdsource information, find experts and share and/or sell integrations will also be key to making SMB integration a reality.

About SMB Group

SMB Group focuses exclusively on researching and analyzing the highly fragmented “SMB market”—which is composed of many smaller, more discrete markets. Within the SMB market, SMB Group’s areas of focus include: Emerging Technologies, Cloud Computing, Managed Services, Business and Marketing Applications, Collaboration and Social Media Solutions, IT Infrastructure Management and Services, and Green IT.

A New Cloud Formation: Dell Cloud Marketplace

This is part one of a two-part blog series discussing Dell’s strategy to help SMBs better capitalize on technology. This first post provides perspectives from Dell World 2014. The second post, Dell’s Strategy to Provide Game Changing Technologies to SMBs, provides a detailed glimpse into Dell’s approach in the SMB market.

dell worldHow has Dell changed since Michael Dell took Dell private a year ago? A couple of weeks ago, I had the opportunity to attend Dell World 2014 in Austin and find out. As I’ve written in past posts about prior Dell Worlds, the transformation has been underway for several years, since Michael Dell embarked on his strategy to transition Dell from a hardware-centric company to an end-to-end solutions provider.

As a private company, Dell is no longer obliged to disclose financial metrics. But, unleashed from Wall Street’s quarterly pressures, Dell appears to be making excellent progress on its goals. For instance, Dell has broadened its software and service portfolios, and claims significant growth in both areas. According to IDC, Dell is also increasing hardware market share no doubt aided in part by competitors HP and IBM. With IBM exiting the x86 server market, and HP’s recent decision to split itself into two companies (one focused on PCs and printers, the other on servers, software and services) Dell is the only vendor left that supplies an end-to-end desktop to data center portfolio. Meanwhile, Dell has evolved to become a significant force in the channel, with 40% of its sales now going through channel partners.

Dell’s New Cloud Marketplace

One of the most interesting announcements at the event was the beta launch of the Dell Cloud Marketplace, which distinguishes itself from many other cloud vendors by offering customers choice. In Dell’s brokerage model, the vendor provides customers with a one-stop shop from which they can select and manage cloud services from multiple vendors, including Amazon, Google, Joyent and Microsoft. The marketplace is built on technologies from Dell’s Cloud Manager, which Dell acquired from Enstratius in 2013. Key technology partners include Delphix, which supplies data migration services; Pertino, for cloud networking; and Docker, for container and portability services. Dell is also partnering with Foglight to provide developers with tools to improve cloud-based application performance.

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Dell Cloud Marketplace is tuned to the different needs of IT managers and developers. IT managers get a single console from which they can provision, manage and integrate private, public and hybrid could services. Meanwhile, developers can get instant, self-service access to cloud services. The concept appealed to conference attendees, with over 400 signing up for the beta the day Dell announced it.

 

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Dell’s vision for its Cloud Marketplace is similar to that of Priceline or Kayak in the travel business. Dell will aggregate, simplify and streamline shopping, selection, purchase and management across many cloud service options. Cloud offerings will initially be sold through Dell.com, Dell’s established, high volume direct sales channel. Over time, Dell is likely to implement reseller programs and possibly even white-label programs for channel partners.

Perspective

Perception is the hardest thing to change. With deep, successful roots in the hardware business, they company has been primarily regarded as a hardware vendor, even though its journey to become an end-to-end solutions provider has been underway for quite a while.

Dell’s move to become a broker of cloud services, highlight the acquisitions, research, development and determination that Dell has been investing in this quest. And, with cloud adoption now mainstream (Figure 1), Dell’s timing for the marketplace is on target as well. The cloud makes it easy for people to buy new services, and more difficult for IT to manage the wide variety of different services that are in play. Providing a solution that gives IT managers more visibility and governance capabilities, while at the same time offering users more choice, promises to help address this challenge.

Figure 1: SMB Cloud Adoption

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Source: SMB Group

However, due in part to the uniqueness of the model, Dell will need to invest in market education to articulate the capabilities and benefits of this new brokerage approach more clearly.

In addition, Dell must create a clear roadmap for what and when it will add to the marketplace to properly set market expectations. For instance, one of the customers I spoke to at the beta would like to use the marketplace to help him manage the wide range of file sharing and collaboration solutions that his users are buying.

Finally with Dell partners accounting for an increasing percentage of Dell sales, Dell will need to come up with an attractive approach to lure partners to resell Dell Cloud Marketplace services.

Disclosure: Dell paid for most of my travel expenses to attend Dell World. 

 

 

Sneak Peak at Dell World’s SMB Focus


mark horanRecently, I had a chance to talk to Mark Horan, Vice President/General Manager at Dell to learn about what Dell World has to offer for SMBs. Here’s a recap of our conversation. 

Laurie: Hi Mark, and thanks for taking time to provide some color commentary on Dell World. As usual, my focus is on small and medium businesses, so can you preview for me what Dell will be doing at Dell World this year that is geared toward SMB customers?

Mark: Just like we purpose-design solutions for SMB customers, Dell World features speakers, sessions, solution showcases, and networking opportunities for SMBs. Two of my favorite things for SMBs are the User Forum, where customers can deepen their technical knowledge around Dell solutions, and keynote speaker Alexis Ohanian, a New York based entrepreneur who founded Reddit.

Laurie: Why would SMB customers and prospects attend Dell World?

Mark: It’s a world-class event and opportunity to network with and learn from not only other SMB customers but other types of organizations from around the world. The diverse perspectives are invaluable. For customers who rely on technology to grow their business, whether they’re Dell customers already or not, it’s a great way to learn about where Dell is going and how that helps customers achieve their goals.

Dell also recently commissioned an extensive research study that explores how respondents adopt, consume, use and influence technology in four key areas – mobility, security, cloud and big data. The research focuses on mid-sized organizations (100 to 5,000 employees) across the globe), and we’ll be sharing and reacting to the results in numerous sessions at Dell World.

Laurie: How many SMB customers do you expect to attend? Do you have any SMB customers being showcased at the event (Executive Track, Partner Summit, Main Track and/or Ancillary events)?

Mark: We expect over 600 SMB customers joining us for Dell World 2014. SMB customers will participate in all of the Dell World tracks: Executive Summit, Partner Summit, User Forum, and more.

Laurie: What particular SMB solutions is Dell showcasing at the event? Addressing which SMB customer problem areas?

Mark: We’ll be showcasing many of our solutions; ones that I think are of particular interest for SMBs include our SonicWALL network security appliances and management consoles that provide industry leading software-designed protection for facilities of all sizes from small branches to massive data centers; our 13G servers and new SC4020 storage array will also be prominent. Systems like these help customers increase performance, reduce their IT footprint, and maximize the value IT can drive for their business.

Laurie: Are there any ‘birds of a feather’ or interactive sessions specifically for SMB customers at the event?

Mark: Absolutely. My team and I will be hosting a reception on Wednesday evening at Cedar Street Courtyard in Austin for SMB customers, channel partners, and Dell leaders in the space. Any SMB customer registering for Dell World should ask their account team for an invite to the reception.

Laurie: I understand that  the Solutions Expo is a bit different this year and geared more around starting with a customer’s problem, then taking that customer down a specific path to a solution. What kind of path would an SMB customer take for the following problem areas at the show:

Mark: It is a bit different this year. It will help customers self-select the most relevant content for them including:

  • Mobility/mobile workforce Connect Journey to Evolving Workforce
  • Security Protect Journey to Security Deep Dive
  • Cloud Transform Journey to Cloud Deep Dive
  • Big data Inform Journey to Big Data Deep Dive

Other Deep Dive areas include: Services, Software, Internet of Things and Data Center.

Laurie: What makes Dell a good choice for SMBs?

Mark: Dell’s ability to provide industry leading and cost-effective solutions from the endpoint to the data center to the cloud that address key needs for productivity, security, data protection, and analytics is world-class. We architect and deploy these systems for SMBs through a dedicated model for sales and support from both our direct sales teams and our channel partners.

Laurie: Mark, thanks so much for the sneak preview, and see you at Dell World.

Disclosure: This post was sponsored by Dell.

California Dreaming? Salesforce’s Dreamforce SMB Story  

This is part one of a two-part blog series discussing Salesforce.com’s strategy to help SMBs better capitalize on technology. This first post provides perspectives from several Salesforce SMB customers on how they are rethinking their business models and using technology to get ahead. The second post, Salesforce’s Strategy to Bring Game Changing Technologies to SMBs, provides a detailed glimpse into Salesforce.com’s approach in the SMB market.


dreamforce2014
Each year, the festivities at Dreamforce, Salesforce.com’s annual user event, intensify. At Dreamforce 2014, the entertainment ranged from musicians as diverse as Bruno Mars and the Beach Boys; politicians as similar as Hillary Clinton and Al Gore; Hawaiian blessings and hula dancers; and Salesforce’s erstwhile mascots, Chatty and SaaSy. Beanbag chairs, giant chessboards, free pedicabs, and lots of liquor-fueled parties added to the carnival-like atmosphere.

But there were also many Salesforce-related keynotes, led by CEO Marc Benioff, and hundreds of Salesforce sessions. Of course, I was most interested in the SMB keynote, led by

The Technology Trifecta

Salesforce sees SMBs as being uniquely suited to use cloud, mobile and social technologies to create new business models and to win customers over from larger, but often slower-moving businesses.

As discussed in SMB Group’s Guiding Stars: Vendor Strategies to Bring Game-Changing Technology Trends to SMBs report, Salesforce is in violent agreement with other technology vendors. The nine major vendors we interviewed for the report (including Salesforce) all view cloud, mobile and social as providing SMBs enormous opportunities to gain business advantages. With customers and prospects racing into the digital future at breakneck speed, SMBs that use technology to stay ahead of their customers will thrive, while those that don’t face extinction.

Though many technology vendors offer SMBs solutions to capitalize on these trends, Salesforce’s SVP of SMB, Tony Rodoni, and Desk.com VP, Layla Sekla of course touted Salesforce as best positioned to help SMBs harness technology to:

  • Scale their businesses with one integrated system
  • Gain better visibility into data
  • Engage customers in new ways

The Salesforce worldview (and that of the customers that joined to tell their stories) skew heavily toward what they described as a “typical silicon valley startup.” These are companies that want to conquer a large market using disruptive technology–ones that will launch and soon face a “tidal wave of demand.”

In reality, this segment represents only a tiny fraction of the SMB universe. But, from my perspective, they zeroed in on how businesses of all kinds can think about and apply technology to improve business outcomes.

Differentiate With Great Customer Service

The heat is on for all companies to provide a great customer experience for obvious reasons. Unhappy customers are likely to stop buying and share their dissatisfaction, costing your business money. Happy ones are likely to come back for more and recommend your business to friends and family. Social media of course, amplifies the influence of customer experience.

muncheryWith this in mind, Munchery is bringing new meaning to meals on wheels. Munchery provides meal delivery of “wholesome prepared dinners, handmade by top local chefs using only the best ingredients, for same-day delivery to your home or office.” In 6 months, its revenues have grown by 400%. Munchery credits its success to using providing customer support “that’s as good as the meals.” The company uses Desk.com to:

  • See what social networks their customers are using, and what they’re saying. Are there trends in what foods people want, such as kale or quinoa (they are in San Francisco!)? Once Munchery spots these trends it integrates them into marketing and meals.
  • Intake cases from Munchery’ mobile app to adjust orders on the fly and respond to them. Munchery can provide great service, and happy customers can also add an extra tip if they’d like. This responsiveness is helping Munchery turn customer problems into opportunities, and create evangelists.
  • Streamline internal communications. The company’s 100 drivers use Desk.com to communicate back to headquarters to help optimize routes and deliveries.

Outsmart The Competition By Re-thinking the Problem 

Accessing, analyzing and acting on data can give SMBs a big advantage over the competition. But building and managing infrastructure to do this takes a lot of time, money and expertise–all scarce resources for SMBs.

zenpayrollAccording to ZenPayroll’s CEO, one-third of SMBs get fined for inaccurate payroll. The three-year old start-up the entered the payroll market, which is dominated by big players such as ADP and Paychex, with a strategy to differentiate by giving users “delightful modern payroll” that works right on day one. While competitors position payroll as a chore, Zen thinks of payroll as employees getting paid and employers showing appreciation. It provides SMBs with a paperless, cloud-based, mobile-first solution in 97% of the U.S. Its 60 employees use Desk.com to solve support issues once, and then take proactive measures to ensure they aren’t repeated. Zen also uses Pardot to automate marketing, sales and nurturing and grow its business, which now processes more than $1 billion in payroll annually. Reeves’ advice to other business owners is to rethink the problem you’re tackling.

Personally Engage Customers

Getting the right message at the right time to customers at the right time is essential in today’s multi-channel world. In addition, the more personal the message, the less likely it is to end up in the spam filter. Salesforce introduced both a B2B and B2C customer to illustrate the importance of personalized engagement.

firstmileFirst Mile told the B2B story. When it launched 2 years ago, U.K-based First Mile saw the recycling market as overcharged and underserved. Its mission is to displace entrenched, inefficient competitors by making recycling easy and responsive. First Mile sees customer engagement as its key to its strategy, and uses innovative business practices and technology to power it. For instance, established competitors require long contracts, so First Mile requires no contracts. While competitors never call their customer except when its renewal time, First Mile makes 100 calls a day to get feedback. The company uses the Salesforce platform and apps to get and analyze recycling stats and help minimize attrition. First Mile’s field sales people also recently began using iPads and Salesforce to directly enter leads into Salesforce, “quadrupling the return on investment from field sales,” over the former double-entry paper and pen to Salesforce method. First Mile’s advice to other SMBs? There are lots of free or low-cost cloud solutions out there. Try the ones you think will help you to find out which ones will give you the return you need.
georgestreetOn the B2C side, George Street is putting a new twist on wedding photos and videos by connecting photographers to brides in 50 cities across North America. George Street handles everything but taking the photos or videos. For brides, George Street creates a personalized experience to ensure they have a great wedding photography experience. The company uses several Salesforce and AppExchange solutions, including Pardot, Salesforce and Chatter lead generation, sales and contracts, photographer and shot selection, notifications and sharing photos. George Street has also created a community for brides to talk about everything from cakes to dresses. It helps facilitated last-minute requests, such as a new shot request, with Chatter. Before they used Salesforce, they did a lot of this manually, but by developing a Salesforce app to automate the process, they’ve sped up the process and can provide a better experience. For instance, it used to take 7 days from a bride’s initial appointment with George Street to close a contract, now the average close time is 24 hours. Automation has helped them scale, increasing the number of weddings they handle by 250%. And, they’ve reduced case incidents by 200%. George Street’s guidance for other SMBs is to focus on delivering an exceptional experience. Automate back-end so your people can spend more time with clients, make them happy and generate boost referrals. Finally, if you’re using Salesforce, find a good developer to help you make the most of it.

Perspective

The writing is on the wall for any business: With customers and prospects racing into the digital, mobile, and social future at breakneck speed, SMBs must proactively deploy technology to improve both business processes and the customer experience. SMBs that figure out how to use technology to stay ahead of their customers’ demands will thrive, while those that don’t will face extinction.

But there are lots of vendors and solutions out there ready to help you on your journey. Is Salesforce right for you? Read Part 2 of this blog series, Salesforce’s Strategy to Bring Game Changing Technologies to SMBs, to help you decide.

Disclosure: Salesforce paid for most of my travel expenses to attend Dreamforce.

Salesforce’s Strategy to Bring Game Changing Technologies to SMBs

This is part two of a two-part blog series discussing Salesforce.com’s strategy to help SMBs better capitalize on technology. Part One, California Dreaming? Salesforce’s Dreamforce SMB Story, provides perspectives from several Salesforce SMB customers. This second post, which is excerpted from SMB Group’s April 2014 Guiding Stars: Vendor Strategies to Bring Game-Changing Technology Trends to SMBs report, provides a more detailed glimpse into Salesforce.com’s approach.

The writing is on the wall for any business: With customers and prospects racing into the digital, mobile, and social future at breakneck speed, SMBs must proactively deploy technology to improve both business processes and the customer experience. SMBs that figure out how to use technology to stay ahead of their customers’ demands will thrive, while those that don’t will face extinction.

But there are lots of vendors and solutions out there ready to help you on your journey, and one-size-fit all doesn’t apply in SMB. Is Salesforce right for you? Read on for information and insights to help you decide.

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Top Technology Game Changers for SMB

Fifteen years ago, Marc Benioff founded Salesforce with the belief that multi-tenant, cloud computing applications democratize information by delivering immediate benefits while reducing risks and costs.

So it’s not surprising that while the cloud isn’t new, it continues its reign as Salesforce’s top game-changing trend. Salesforce sees cloud as removing the technology and cost barriers so that SMBs can:

  • Bring best practices and automation into their businesses so they grow, do more with less and do it better.
  • Gain real-time visibility into their businesses to improve decision-making.
  • Centralize information, making it easy for everyone to collaborate, no matter where they are, and providing a built-in way to retain knowledge as employees come and go.
  • Take advantage of enterprise class security and reliability trusted by thousands of enterprises at an affordable cost that scales with their business.

Salesforce views the cloud as the foundation and springboard for SMBs to benefit from other game-changing trends, namely mobile and social solutions. Salesforce believes that mobile is becoming the “new normal” user experience. People are already running their personal lives on mobile devices, and increasingly want to click into apps, dashboards and info on mobile devices for work. To that end, the vendor’s Salesforce1 initiative puts mobile first by making 100% of Salesforce functionality and information available to users in a relevant interface on any device.

Social collaboration is also key, not only in terms of marketing, but to help SMBs deliver more responsive service that customers increasingly expect. Social tools and analytics let SMBs increase context about customer and prospect interactions so they personalize how they engage and support them. For instance, Salesforce Chatter can run across everything in Salesforce and some of its partners’ apps, allowing everyone—from the CEO to the receptionist—to get on the same page whether to more readily spot new opportunities or to head off potential problems.

Together, these trends make things more transparent. It’s easier for people to collaborate to get the job done, instead of operating in silos. Salesforce introduced its Communities solution, which its customers can use to manage external relationships with customers and partners in a protected or non-protected way, furthering extending social collaboration capabilities from within Salesforce.

Changes in SMB Technology Expectations and Behavior

As SMBs get more familiar with cloud, social and mobile solutions, Salesforce sees several key shifts underway:

  • Rising expectations for centralized, single sign-on access to apps and data, with everything needed to get work done pulled together from different apps for a complete view.
  • Demand for solutions with built-in collaboration capabilities. Business owners see that collaboration helps the business to deliver better customer and employee experiences, because information flows both ways and provides better visibility to make decisions.
  • Customer service as the “new wave of marketing.” Better visibility and engagement with customers has raised awareness about the importance of servicing and engaging with customers throughout the whole life cycle to drive business, leading service people to take more ownership of the brand.
  • “Try before you buy” is the new normal. SMBs now expect to try—without having talk to rep—solutions before buying them. Salesforce cited one customer who wanted to get Desk.com, Salesforce’s small business help desk service, up and running by himself while watching the Super Bowl.
  • Friction-free technology. SMBs increasingly look for a frictionless technology experience. They have less patience for solutions that can potentially take too much time or cost too much money. They want vendors to demonstrate ease of use upfront, and provide transparent pay as you go pricing.

Although the cloud isn’t new in the industry, Salesforce believes that the concept of being able to gain advantages from enterprise-class software without having to worry about infrastructure is still something many SMBs are just starting to understand. Salesforce’s view is that while the cloud is more common today, some things aren’t “true Cloud” and SMBs are still learning about the nuances of the cloud value proposition. To that end, Salesforce is expanding its educational commitment to SMBs around business best practices. The vendor:

  • Doubled the amount of SMB content at its annual Dreamforce event last year over the prior year, with over 150 SMB breakout sessions, a dedicated networking and expert interaction area, ask the ask experts panels, a dedicated keynote as well as inclusion in other keynotes with SMBs alongside big companies.
  • Will move from one SMB message to differentiated messaging for different types of SMBs and decision-makers, to make it more relevant for different segments and roles.
  • Has recently introduced new SMB resources, including small business blogs, a customer success community.

Perspective: Salesforce as SMB Technology Catalyst

salesforcelogoAs one of the first true cloud computing pioneers, Salesforce seized on the fact that cloud computing removes the barriers for small businesses to gain the same business benefits from technology solutions as larger companies.

Salesforce—via its vision and strong customer proof points—has painted a vivid picture of how SMBs can use cloud, mobile and social solutions offerings for a more user-friendly, streamlined way to run their businesses.

At the low end of the market, many Salesforce customers move directly from Excel or from pencil and paper to Salesforce, underscoring both ease of use and the resulting business value of having real-time information access, anywhere from any device. And, even as it’s grown its star-studded Fortune 500 customer roster, Salesforce has kept SMBs in the spotlight, investing to educate the broader market about how they can use and benefit from these technologies.

Over the years, of course, Salesforce has also broadened its vision and developed and assembled many more components to enable this vision. For instance, there are now 4 editions of Sales Cloud, 3 of Service Cloud and 4 of Marketing Cloud.

At the upper end of SMB, companies may have enough staff, expertise and time to sort through Salesforce’s expanded portfolio, and figure out what’s right for them. But, Salesforce’s story may be getting confusing for smaller SMBs. While entry-level pricing is low, how many small businesses can jump from Group Edition ($25/user/month) to Professional ($65/user/month). While Professional Edition offers a lot more functionality (including pipeline forecast, campaign management, contract storage and quote delivery, custom reporting and dashboards, and a complete view of the customer across sales and service, the price differential is tough for many SMBs to absorb. Alternatively Salesforce does offer desk.com at $29/user/month to customers that have customer service requirements. Again, however, it can be challenging for SMBs to figure out which approach will work best and be most cost-effective.

However, Salesforce plans to increase investments to engage SMBs both locally and online. Not only will this help Salesforce educate more SMBs about the power of technology in business, but also it should give Salesforce a wider lens through which it can get a better pulse on SMB requirements. In turn, this should help Salesforce simplify and streamline solution packaging and positioning. All of which bodes well for its potential to help more SMBs understand and use technology as a game-changer.

Want to know more about how Salesforce’s SMB customers use Salesforce? Read Part 1 of this blog series, California Dreaming? Salesforce’s Dreamforce SMB Story, for perspectives from several Salesforce SMB customers on how they are rethinking their business models and using technology in their businesses.

Disclosure: Salesforce paid for most of my travel expenses to attend Dreamforce.

 

Five Things SAP Needs To Do To Make “Simple” Real

SAPPHIRE_NOW_Orlando_2014_004_t-e-JPG@900x598There’s probably nothing harder for a business to accomplish than these two things: 1) make the complex simple; and 2) change market perceptions. But, at SAP’s recent SAPPHIRE NOW 2014 user event, SAP CEO Bill McDermott and other SAP executives ambitiously outlined SAP’s strategy accomplish both of these challenging goals simultaneously.

On the first count, SAP discussed how it will make its notoriously complex software easier to use so that customers can reap more value and streamline their own operations. On the second count, SAP is striving to shift the market’s view of SAP from that of a behemoth that is tough to business with to a kinder, gentler SAP that is much easier for customers and partners to work with.

At the event, SAP outlined many of the investments it is making to help it meet these goals. These ranged from Fiori, SAP’s new (and now free) roles-based user experience for SAP solutions, to its cloud first, mobile first development mandate. SAP founder Hasso Plattner discussed how SAP must redesign what it does with data, independent of what it has done in past 50 years. Plattner emphasized that SAP is moving from delivering monolithic business applications to a “minimalist,” modular approach, with HANA as an underlying and unifying platform. Bill McDermott also discussed the steps SAP is taking and plans to take to reduce internal complexity and management layers at SAP, and get closer to customers and prospects.

In all, SAP made 70+ announcements at Sapphire to back up its newfound direction for “simple.” I’m not going to cover them here, because many of my analyst and press colleagues have already done so in ample detail and with great acumen. However, I will share my suggestions on higher-level approaches SAP needs to incorporate to succeed in its goal of making simple real.

  1. Make SAP events more interactive and engaging.

    After business hours concerts, buffets and have become table stakes at tech industry events. The new bar is to make the entire event more interactive and engaging. Innovative vendors are engaging attendees with interactive, visceral experiences during working hours to help drive home key messages and insights. For instance, SAP could have given attendees a Fitbit or similar device, and set up stations where we could track, visualize, display, query the data collected using HANA and other SAP tools? Providing engaging, hands-on evidence that lets people experience the change would drive home the simplicity message much more convincingly.

  2. SAPPHIRE_NOW_Orlando_2014_011_t-e-JPG@900x600Mix up the executive ranks to get a broader range of perspectives.

    Panelists on stage at the SAP press conference with the Global Managing board consisted of 8 white males and 1 white female, many of who were German. For all I know, these may be the most competent people on the planet! But too much homogeneity can sometimes blind you to opportunities and issues. If SAP wants to become more relevant to a wider range of business decision-makers, I think it will need to foster more diversity within its own senior management and executive ranks. Not only in terms of gender and ethnicity, but also in terms of adding people from more diverse industries, company sizes and types of businesses into the inner circle.

  3. Use social media more effectively.

    SAP has expanded its social media presence over the last few years, but to me, it seems like it spends more time using social to trumpet the SAP message, and not enough time interacting with relevant constituents in meaningful 2-way conversations. For instance, a couple of SAP product groups just started to follow me on Twitter at SAPPHIRE. Not a big deal—except that I’ve been tracking and writing about their stuff for years. If SAP really wants to get closer to customers and engage with more prospects, executives and employees should use social media to prove that it is a company that is accessible and easy to do business with. Why not put HANA horsepower to the test to track, engage, assimilate and evolve based on ongoing conversations across the social media universe?

  4. cloudStop saying SAP is “the” cloud company.

    Unfortunately, this is a statement SAP executives made numerous times at the event, which, as I tweeted, probably caused heads to explode at the likes of Salesforce and NetSuite! While SAP is aggressively moving to the cloud, it is getting there much later than these pure-play, born on the cloud companies. In addition, what’s the upside of even trying to stake this claim this late in the game? Though the puck is certainly moving to the cloud, survey after survey suggests that a hybrid IT environment will be the norm for most companies for a good long while. Positioning its ability to give customers choice is a much more believable and viable path for SAP.

  5. Invest more in small and medium businesses (SMBs). 

Newer solutions such HANA are key to SAP growing wallet share in its flagship large enterprise accounts. But to really boost growth, SAP must become more relevant to more SMBs. While SAP claims that 207,000 small and medium enterprises (SMEs) use SAP solutions, let’s put that in context. First, SAP defines SME as companies with up to $1 billion in revenues—a much higher upper end than most tech vendor’s use. Second, SMB Group defines the broader SMB market to include companies with 1 to 999 employees. Given this definition, we estimate there are roughly 278 million SMBs worldwide. Although SAP Business One has done an admirable job of growing its SMB base and relevance, as a corporation, SAP has a long way to go to make real headway with SMBs—who use price and ease of use (aka simplicity) as key benchmarks when it comes to selecting IT solutions. In other words, SMBs are the litmus test SAP should use to determine if it is making progress with its goal of being simple to use and work with.

I have no doubt SAP is sincere in its quest to simplify its solutions and become an easier vendor for customers to work with. After all, it must achieve these goals to thrive, because simplicity increasingly beats complexity. However, SAP is only at the starting gate. How well it runs the race depends on how quickly it can move beyond using simple as a marketing slogan to truly instill simple into its solutions and its corporate culture.

Nine Signs Michael Dell Will Be the Comeback Kid

14111426889_67f83375a7_zA couple of weeks ago, I had the opportunity to go to Dell’s annual analyst conference (DAAC), an event I’ve attended for many years. The big difference this year, of course, is that this is the first DAAC since Michael Dell took his now 30-year old company private several months ago.

As a longtime Dell watcher, I’ve been tracking Dell’s journey from hardware vendor to become an end-to-end IT solutions and services provider (see my 2011, 2012 and 2013 perspectives). The event persuaded me that Dell is well on its way to accomplishing its mission to reinvent itself and offer customers a differentiated, more cost-effective and easier-to-use IT experience.

Why? Because Michael Dell has not only unchained his company from Wall Street’s myopic quarterly demands, but because he is also building a powerful value proposition for customers that puts Dell on a solid comeback trail. Key evidence for Dell being on the right track include:

1. Customers increasingly view Dell as a key partner. Dell’s mission to engage in deeper conversations with customers of all sizes is paying off. At DAAC, customers used superlatives to describe how Dell is delivering more complete solutions, higher value, lower costs, and a better customer experience. For instance, Ted Colbert, Boeing CIO, discussed how the Dell relationship has expanded from day-to-day operations to some of the most strategic initiatives. He also described working with Dell as “purposeful,” in contrast to a more scatter shot approach of “just throwing hardware at us like some other vendors.” Exasol CEO Aaron Auld talked about how Dell “provided them with the support they needed to win new business and grow,” and Jenkon Director of Information Systems, Steve Shinsel described Dell’s end-to-end solutions support as “phenomenal.” Yes, I know vendors handpick customers to attend these events, but in addition to the unprecedented level of enthusiasm I heard from these customers, Dell’s aggregate NPS (Net Promoter Score) of 52 and 90% customer retention are best in class.

2. Business is growing. Since going private, Dell says it has added 18,000 new customers to its ranks and is seeing steady growth in it’s software and services businesses, among others. In fact, the company’s PC business has enjoyed five consecutive quarters of market share growth. I think customers were naturally anxious as they waited to see how things would play out, but are now giving Dell a vote of confidence with their wallets. Furthermore, the company appears to be headed toward profitable growth, according to CFO Tom Sweet, who told us the company paid down $1 billion of debt in the first quarter of this year. Dell’s goal is to get back to “investment grade” status within the next four years.

 Screen Shot 2014-06-09 at 4.54.52 PM3. Entrepreneurial DNA runs deep and can now fully surface. Check out Michael Dell’s twitter handle! He knows what it takes to build a company from scratch, and being self-employed suits him. Freed up from Wall Street constraints, Dell can again operate in both a more strategic and agile fashion, and infuse employees with the entrepreneurial spirit as well. Dell’s high-level strategy remains the same to bring complete IT solutions to customers, be accessible and listen to what customer want. But the company can now more easily place some new bets to fulfill this mission. For example, Dell is investing to become a value-added cloud broker, positioning itself as an advisor to customers, rather than an OEM. In a very cloudy world, Dell’s Switzerland approach should be attractive to many customers. Furthermore, Dell has upped itsR&D spending from 1.6% of revenue to 2.1%. Last but not least, its hard to think of a more socially savvy tech CEOlistening ears are on!


14296498661_36be143384_z4. Execs and employees are all in.
 Other than customers, employees are any company’s best advocates. But, when there’s a lot of uncertainty in corporations, employees usually look for the nearest exit. But Dell is an exception. Despite a long, drawn out, uncertain and contentious (aka Carl Icahn) privatization process, Dell retained many of its top execs, such as Karen Quintos Senior VP and CMO; Jeff Clark Vice Chairman, Operations and President, Client Solutions; and Tom Sweet, Senior VP and CFO. Dell also attracted the fresh talent required for its transformation, including Andi Karaboutis, CIO; John Swainson, President, Software; Suresh C. Vaswani, President, Services. Renewed energy, excitement and loyalty were palpable in my conversations with employees too: when I asked how and why they stayed the course, they said they believed in Michael Dell’s vision—and several told me they bleed “Dell blue.”

5. Investment in a collaborative partnering model. Dell’s direct connection to customers provides Dell with many advantages, and will continue to be a key route to market for the company. But, Dell is investing in the channel to ensure it can sell to and service customers in today’s increasingly omni-channel world.  Dell has bridged what has sometimes been a gap in trust between it and the channel with a more collaborative partnering model. Dell is integrating regional channel and direct sales structures, paying Dell sales more for sales via the channel, and linking up regionally and locally with partners to pursue joint opportunities. Dell’s expanded portfolio also provides more partners with more headroom to grow with Dell. The results? Channel sales grew faster than direct sales in last quarter, and attach rates for channel sales are now within 3 to 4 points of the attach rates with Dell direct sales.

dell legacy of good6. Ethics, sustainability and diversity. In May, Dell was recognized as a 2014 World’s Most Ethical Company by the Ethisphere Institute, an independent center of research promoting best practices in corporate ethics and governance. Quoting the Institute, the EI award is given to companies “that continue to raise the bar on ethical leadership and corporate behavior.” Dell has also been recognized as a leader in environmental sustainability for many years, and recently upped its commitment when it announced its 2020 Legacy of Good Plan. Among the 21 corporate responsibility goals outlined in the plan, Dell has set 12 goals specific to environmental sustainability. Building on existing initiatives, these 12 environmental goals focus on three areas: reducing the environmental impact of company operations, driving social and environmental responsibility in the industry and supply chain, and promoting technology’s role in addressing environmental challenges. Finally, Dell’s executive team and workforce are diverse. Dell has also stepped up to help women entrepreneurs via Dell Women’s Entrepreneur Network (DWEN). Recent research from The Intelligence Group’s Cassandra Report indicates that among millennials, 59% say that a company’s ethics and practices are important factors in deciding what brands to buy. Pretty powerful stuff—and very tough to fake.

14113197698_5fef929bdb_z7. Stringing pearls instead of looking for one big rock. Dell has been investing strategically to acquire the IP and expertise it needs to package software and services in a more digestible way. While the theme at last year’s DAAC centered on the 12 acquisition Dell made, this year, the vendor spent more time discussing progress to integrate them and bring more complete solution value to customers. For instance, John Swainson discussed how, in the mobile management area, Dell combined Wsye, KACE and other assets for a single enterprise mobile management (EMM) solution to manage PCs, Macs and mobile devices. The vendor is looking to doing something similar in the cloud, giving customers a way to manage public, private, multi-cloud environments with open, scalable solutions. More recently, Dell acquired StatSoft, and intends to leverage this to reduce entry costs and barriers for customers in the analytics area. Just as important, Swainson emphasized that Dell will follow “the 80/20 rule,” to keep its software solutions as simple as possible to acquire and use.

14113201388_6075815e58_z8. The PC isn’t dead! There’s no question that the traditional PC market is declining, but Jeff Clarke took the stage to the tune of “we are not dead yet” from Monty Python’s movie Spamalot to deliver his “Top 10 reasons the PC is (not) dead” message. Good news for Dell, as PCs are the entry point for 70% of new customers. Of course, Dell also offers a growing array of other client devices—from Wyse thin clients to Chromebooks to tablets and laptops.

9. SMB growth and focus. Good segue from #8, as Dell’s fastest growing client business is the SMB market, which grew 28% in the last quarter. In my opinion, the “personal” in PC translates into Dell’s capability to expand SMB business into other solution areas. Furthermore, in an age of technology consumerization, consumer, prosumer and small business are inextricably linked. PCs provide Dell with a launch pad to expand SMB business into other areas. Dell’s direct model, which enables Dell to reach deep into SMBs, its continued focus on listening to customers, its new, collaborative partnering model and vision to sell more value at lower cost, should help keep Dell on this SMB growth trajectory.

In a nutshell, this isn’t your father’s Dell—or Wall Street’s Dell. It is Michael Dell’s Dell now, and it’s starting to benefit not only from being a private company, but also from the fact that as a private entity, it can more fully capitalize on the equally advantageous qualities summarized above.

 

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