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.

 

Six Inspirations for Small Businesses From ICON14

WordItOut-word-cloud-394443Entrepreneurs have always been a rare breed. And, as the U.S. employment rate has improved, the overall rate of business creation has fallen from 0.30 percent in 2012 to 0.28 percent in 2013, according to the annual Kaufman Index of Entrepreneurial Activity. All age and ethnic groups experienced declines, except for the 45 – 54 year-old group. Furthermore, according to the U.S. Small Business Administration, over half of all new businesses fail within five years.

So is it any wonder that many small business owners feel like they are isolated, misunderstood and lacking in the guidance and support they need?

Infusionsoft, which develops marketing automation solutions for small businesses with 25 or fewer employees, can relate to this dilemma—and is committed to helping. The vendor not only provides small businesses with effective, affordable solutions to help “attract, sell and wow customers,” but also offers up an abundance of business guidance and support—key ingredients for lasting business success. To quote Clate Mask (@ClateMask), Infusionsoft’s founder and CEO, “I don’t care about big business! We are totally committed to the true small business market—and changing the definition of success for small business owners.”

ICON14ICON14, held in Phoenix last week, represents Infusionsoft’s flagship commitment to help small businesses. In addition to offering attendees the prerequisite tips and tricks to get the best results from its solutions, Infusionsoft provided its 3,000-plus attendees with insights and expertise needed to create thriving, sustainable businesses and achieve work-life balance.

ICON14 featured both entrepreneurial leaders, including Simon Sinek, Seth Godin, JJ Ramberg, Jay Baer and Peter Shankman, as well as its all-star small business customers, to help guide entrepreneurs to beat the odds and create successful enterprises.

These speakers and Infusionsoft executives imparted many pearls of wisdom during the conference (check out the Twitter hashtag #ICON14 for more). But here are a few that really made an impression on me and that I wanted to share.

  1. Develop a positive corporate culture. Most businesses view happy customers as key to success. Yet what are the odds of creating happy customers if you have miserable or just unmotivated employees? As Simon Sinek (@simonsinek) noted in his talk,“Leaders need to set a circle of safety within their organization so their teams can do wonderful things.” Employees who feel appreciated, included and recognized are your best business advocates. See my interview with Infusionsoft’s VP of People, Anita Grantham (@anitakgran) for great ideas on how to build this type of culture.
  1. Establish a system to grow. Entrepreneurs should take advantage of cloud computing’s “no infrastructure investment required” model to help kick-start and organize their businesses for sustainable growth. Small businesses can use technology to enhance relationships by taking the friction out of process and freeing up more time to focus on customers. Systems also enable small companies to scale more easily and maintain better work-life balance. When the owners of Cleancorp (@CleancorpAU), an Australian commercial cleaning service and the ICON14 winner, did everything manually, they had no time for vacation. Since they began using Infusionsoft to automate sales and marketing, they’ve grown the business 575 percent, and the two co-owners took 9 and 13 weeks of vacation last year.
  1. Once you have a system in place, let go of process and let employees do their jobs. As Clate Mask says, business owners need to spend more time working on the business and less time in it. Or as Christian Isquiedero, CEO of Left Foot Coaching and ICON finalist put it, business owners should ask themselves, are they buying you or your process and mission? “You aren’t scalable, but your process and mission is. So build a system to “Verify, Clarify, Document, Teach and Automate.” Let go of the block and tackle, let employees do their jobs and manage what’s going on via a dashboard.
  1. Remember the sale starts with “No.” Small businesses that succeed follow-up regularly with prospects to stay top of mind for the next opportunity. Keep connecting with people every day, not only to sell, but to be there when the timing is right, according to Peter Shankman (@petershankman). Personalize communications with emails, offers and campaigns tailored to different prospects’ histories and behaviors. And don’t forget to integrate offline communication—phone calls, events, on site meetings, etc. with online activities to help humanize the business.
  1. Be relevant, brief and write well! Also from Shankman: With so many ways for people to get content these days, you need to find out what your audience wants and how they want it. Make sure you communicate relevant information, or people will tune you out. Remember that attention spans are shrinking; you have just 2.3 to 2.7 seconds to capture someone’s attention, so keep it short and sweet. Finally, learn to write or hire someone who can. Poor writing is a turn off.
  1. Make your sales process a customer service process. Heather Lemere (@salonbusiness), owner of Salon Success Strategies, a marketing agency for salons and spas and ICON finalist, uses strategic lead qualification to reduce high sales costs by eliminating bad leads to focus only on the best prospects. With a smaller but better qualified prospect pool, you free up time and resources to turn the sales process into an educational customer service process, which in turn helps close more business.

The wisdom, camaraderie and energy at Infusionsoft was truly amazing. Not only did it help educate and inspire those of us that are already pursuing our passions as entrepreneurs, but it should also help motivate those who have been tentative about making the leap! Remember, YOU create your own opportunities—don’t wait for an employer to do it for you!

(Disclosure: Infusionsoft covered my travel expenses for ICON14)

 

VerticalResponse: Taking the Guesswork Out of Email Marketing and Social Media for Small Businesses

vrlogo-gradient_1000pxLaurie: Hi, this is Laurie McCabe from the SMB Group, and today I’m talking to Janine Popick, CEO at VerticalResponse. VerticalResponse helps small businesses grow with email and social marketing tools, and recently Vertical Response introduced a new version of their solution which is what I’m here to talk with Janine about today.

So Janine, before we get into what the new VerticalResponse solution is all about, can you just let us know a little background about the company and what you’ve been doing up until now.

Janine: Oh sure, and thanks for having me here, Laurie, this is great. I launched VerticalResponse back in 2001 really with the premise that there was a lot of email marketing solutions out there for big businesses but there’s not a lot of solutions for small businesses. We’re based in San Francisco, we’re still headquartered here today, but really those big companies have that expensive software to manage all of their marketing, especially their email marketing. It was the right time for us to launch a company and get those small businesses from sending email out of their Outlook to more professional looking emails and a more professional solution. Currently here we have about 105 current employees at VerticalResponse.

Laurie: Ok, and about how many customers do you have?

Janine: Well we have over a million businesses that have come to use us over the course of the last 13 years. We’ve got probably on any given month about 40 to 50,000 active customers that are in there using the system.

Laurie: Ok, thanks. That’s a great introduction too. So why are you introducing a new version of VerticalResponse now?

Janine: Well, over the course of years newer technology surfaces so that companies like VerticalResponse can build some really neat stuff for small businesses to use, easier to use technologies, and we really decided it’s time for us to do that. Our self-service platform really lets those small businesses connect with their customers using both email marketing and social media marketing.

Laurie: Right, I did get a look at it last time we spoke and it does look really easy to use, which is always a good thing for any of us.

Janine: Yeah, you know small businesses really want to get in there and get out and do what they do best which is running their business.

Laurie: Exactly. Who would benefit from this? Is it your existing customers, is it new customers? How will it help them?

Janine: Well definitely new customers and existing customers. It really solves lots of problems but two that come to mind are time and money. Right? So with VerticalResponse these customers can keep in touch with their customers through the email marketing and social media marketing without spending, like you said you thought, without spending a lot of time to learn a complicated technology. This new platform has lots of amazing features. We really focused on drag and drop designer and with that drag and drop come templates that are mobile friendly. We’re really over 50% of all consumers today are checking their email on their mobile phone or on their tablet, so we really put an emphasis on mobile friendly templates, but you can also post messages to Twitter and Facebook right from the same dashboard, so you don’t have to log in to all those different platforms to do your social media as well, it’s kind of like that nifty one-stop shop for email and social.

Screen_Shot_2014-04-08

Laurie: Right, and that’s very convenient. Also, if I remember correctly, once you create your email marketing campaign it will render across any of the mobile devices or somebody’s laptop or desktop without you having to do anything different to it. It’ll render correctly, right?

Janine: Absolutely. We really wanted to take all that guesswork out of it for our customers who are the small businesses.

Laurie: Yep, make it idiot-proof. How about for the customers using the original version that you have, are there any gotchas? Should they switch to the new version or is it something they need to kind of look at some trade-offs or what?

Janine: Well I think at the get-go they should look at the new version, especially if they have under a thousand contacts on their list, it’s free, the whole product is free. That’s one benefit for our current VerticalResponse customers. Over the course of the next two to three quarters, we’re going to be incorporating all of the features that most of the Vertical Response current customers are using into the new platform in an even better and easy-to-use way. As those features come available we’re going to be communicating to those customers that use and love those features that hey, they’re available in the new Vertical Response, come on over and start using them. So that’s pretty exciting for current VerticalResponse customers, I think.

Laurie: Yeah, definitely, so kind of get your feet wet now even if it’s not got every bell and whistle that you want, it will have it and you can learn it and be ready when it’s all available.

Janine: Exactly.

Laurie: So right now the new version is completely free or is it a freemium kind of model where there’s an up charge or how does that work?

Janine: Well it is a freemium model, it is completely free if you have a thousand or fewer customers. Once you go over the thousand contacts on your list it’s as little as nine bucks per month, depending on your list size that’s where it starts. It is completely free but as soon as you start growing and you might want some more bells and whistles, then we’ll ask you for a charge.

Laurie: Yes, sure, typical freemium model. What’s your URL, what’s the website address where they can learn more both about the new product and maybe the existing one too?

Janine: The website is www.verticalresponse.com, they can go, they can sign up right then and there and begin trying it out. It’s pretty easy, they get in there and just try it out and see if they like it.

Laurie: When did you put it up there for people to start trying?

Janine: On the 14th of March.

Laurie: Ok. Have you had a lot of hits or how’s it going with that?

Janine: We have actually. We have the most sign ups that we’ve had over the course of many years, which is just great to see. We think it’s catching on, we think people like it and it’s just going to keep growing, so we’re pretty excited about what we’re able to offer to our business customers.

Laurie: Ok, well that’s great, Janine. I really appreciate your time today and thank you for joining us to share the information and the news.

Janine: Thank you.

SMB Technology: Mind, Matter, Money–and the Cloud

SMB Group recently wrapped up our 2014 Small and Medium Business Routes to Market Study, in which we looked how U.S. SMB (small businesses are defined as those with 1-99 employees, medium businesses as those with 100-999 employees) technology adoption and the buying cycle in ten key solution areas. As part of this study, we gather SMB perspectives their top business challenges, how technology impacts their businesses and technology spending plans.

Top of Mind: SMB Business Challenges

As SMBs grow, so do their top business challenges, as shown on Figure 1. Small businesses with are most concerned with growth and cash flow issues, such as attracting new customers (57%), growing revenue (47%) and improving cash flow (37%).  These challenges remain important for medium businesses, with growing revenue (45%) and attracting new customers (40%) continuing to top the list.

Figure 1: Top SMB Business Challenges

Slide1

Business growth creates added complexity and some very significant differences in terms of business challenges. Most notably, medium businesses (33%) are twice as likely as small (16%) to view attracting and retaining quality employees and securing and protecting my company information as threats (22% and 9%, respectively) as one of their top three priorities. Medium businesses are also much more likely to put improving customer experience and improving employee productivity as a top challenge than small businesses.

Technology Matters

Regardless of what their top business challenges are, SMBs share a mostly positive view about technology’s role in helping their businesses. As Figure 2 reveals, 67% of small and 81% of medium businesses say that technology solutions help them to run their businesses better or that technology solutions help them to significantly improve business outcomes.

Figure 2: SMB Views About Technology’s Role in Business

Slide2

SMB IT Spending: A Mixed Bag

While most SMBs’ believe that technology helps them achieve business goals, IT spending plans are a mixed bag. Although 46% of small businesses plan to increase IT spending over the next year, 45% anticipate flat or decreased spending on technology (Figure 3). Considering that 51% small businesses spend less than $10,000 annually on IT (excluding salaries).

For medium businesses, the calculus is more bullish, with 57% expecting to spend more on technology, and just 35% expecting flat or decreased technology spending. However, most medium businesses plan for a relatively modest 1% to 10% IT spending increase.

Figure 3: SMB Technology Spending Outlook

Slide3

SMB Group recently wrapped up our “2014 Small and Medium Business Routes to Market Study,” in which we

And the Cloud…

The good news for technology vendors is that most SMBs are making the technology-business performance connection. In addition, cloud-based solutions are making easier than ever for SMBs to benefit from technology. Our study shows that SMBs are steadily moving to the cloud, which eliminates the barrier of big upfront capital investments. All else being equal, the cloud has made it easier for SMBs to digest technology—both financially and technically—than comparable on-premises offering.

However, given IT spending constraints, and the exponentially expanding array of tech solutions, vendors need to double down on demonstrating a direct relationship between helping SMBs gain business outcomes in the areas most critical to their businesses.

Reading between the lines, it may be time to look at cloud pricing models the financial ability of SMBs to absorb additional monthly subscription costs. In anecdotal conversations with SMBs, I’m hearing more lately about what I call “subscription fatigue.” While price of an individual cloud solution may be quite reasonable, the costs for multiple solutions can add up quickly–and so can the complexity of managing different contracts. As monthly bills mount, solution vendors will need to go the extra mile to prove value–and continue to prove it month to month.

In addition, especially in the small business space, some vendors, such as Google and Intuit, are moving to push the cloud price curve significantly downward. All of which points to the fact that its time for cloud vendors that target SMBs to take a more realistic look at the pricing and pricing models that they will need to build significant volume in these markets.

For more information

SMB Group’s 2014 Small and Medium Business Routes to Market Study examines how U.S. SMB technology adoption and the buying cycle in ten key solution areas:

Business solutions: ERP, financial and accounting; collaboration; marketing automation, contact and customer management, workforce management, business intelligence and analytics.

Infrastructure solutions: security; data backup, online storage and sharing; server virtualization; desktop virtualization; integration.

The study assesses the entire SMB technology solution purchase cycle, including needs identification, information sources, advice sources, key selection and short-list criteria, and purchase channels. Fielded in February 2014, the study is based on the results of a 700-respondent web-based survey of SMB technology solution decision makers and influencers, and segmented into eight employee-size segments and 18 vertical industries.

Please contact Lisa Lincoln at (508) 734-5658 or lisa.lincoln70@smb-gr.com for more information about the study, including a Table of Contents.

Cloud Is The New Normal for SMBs—But Integration Isn’t

SMB Group recently wrapped up our “2014 Small and Medium Business Routes to Market Study,” in which we looked how U.S. SMB technology adoption and the buying cycle in ten key solution areas, as shown below.

Business Application Solutions

IT Infrastructure Solutions

·   ERP, Financial and Accounting

·  Security

·   Collaboration

·  Data Backup

·   Marketing Automation

·  Online Storage and Sharing (new addition for 2014)

·   Contact and Customer Management

·  Server Virtualization

·   Workforce Management (new addition for 2014)

·  Desktop Virtualization

·   Business Intelligence and Analytics

·  Integration (new addition for 2014)

Cloud Adoption is Soaring

The most dramatic finding is that 92% of SMBs are now using at least one cloud business solution, and 87% already use at least one cloud infrastructure solution. (Figure 1).

Figure 1: SMB Cloud Adoption

cloud adopt

Furthermore, when compared with our 2012 Small and Medium Business Routes to Market Study, we see  cloud adoption increasing in every solution area. For example, since 2012, SMB cloud adoption is up 10% for collaboration, 5% for business analytics and 2% for accounting and ERP. The same types of gains hold true for infrastructure  applications. In addition, we see that as SMBs shift to the cloud, purchase channels are also changing to favor direct purchase from software or a software-as-a-service/cloud vendors  and to managed service providers (MSPs).

Integration Remains Problematic

However, while the cloud has made it much easier for SMBs to access and use new applications, it has yet to do much to help SMBs integrate them. Although 63% of SMBs have at least partially integrated some applications, 79% still rely on manual Excel file uploads or custom code for integration, instead of using modern integration solutions or pre-integrated solutions (Figure 2).

Figure 2: SMB Integration Methods

integration

Integration is essential to helping SMBs reap the full business process value of new applications—and of course to gaining a more unified, consistent view of the business. But as this research signals, vendors need to do a lot more both to educate SMBs about the value of application integration, and to make their integration solutions easier to use and more affordable.

For more information

SMB Group’s 2014 Small and Medium Business Routes to Market Study assesses the entire SMB technology solution purchase cycle, including needs identification, information sources, advice sources, key selection and short-list criteria, and purchase channels. Fielded in February 2014, the study is based on the results of a 700-respondent web-based survey of SMB technology solution decision makers and influencers, and segmented into eight employee-size segments and 18 vertical industries.

Please contact Lisa Lincoln at (508) 734-5658 or lisa.lincoln70@smb-gr.com for more information about the study, including a Table of Contents.

 

 

New Patterns Emerge: IBM PureApplication Service Takes to the Cloud

ibmpulseEarlier this week, I attended IBM Pulse along with a crowd of about 11,000 other customer, partner, press, influencer and analyst attendees. Historically, Pulse has been the IBM event that focuses on service management and infrastructure. This year, the vendor positioned Pulse as “the premier cloud computing conference.”

Pulse followed closely on the heels of IBM’s acquisition of SoftLayer last year, and on its decision to put SoftLayer technology at the center of its cloud strategy. So it’s not surprising that many industry observers viewed the event as a great opportunity to reassess IBM’s cloud strategy at a time when customers are accelerating towards the cloud. How ready is 104 year-old Big Blue to compete in the cloud infrastructure and platform as-a-service (IaaS and PaaS) space against players such as Amazon, Google and Salesforce.com’s Heroku as technology transforms at a dizzying rate?

The sweeping range of announcements that IBM unleashed signal that it is now all in on cloud computing. IBM launched Bluemix, an open-standards, cloud-based platform to build, manage and run applications; announced its acquisition of Cloudant, a cloud-only database as a service (DBaaS) for building mobile and web apps; introduced Service Engage, which provides cloud-based subscriptions for systems management; and cited plans to bring Power Systems into SoftLayer’s cloud to support Watson-based analytics solutions.

In addition, IBM announced that it is bringing the power of its PureSystems patterns approach to the cloud. Extending PureSystem’s cloud capabilities gives customers and business partners tools to simplify and speed delivery of cloud services across both public and private clouds.

PureApplication Service on SoftLayer

First, IBM announced the beta of PureApplication Service on SoftLayer.  As background, PureApplication Service uses best practice “patterns” to rapidly deploy specific applications. In a nutshell, patterns are like tried and true recipes to set up, deliver and manage the infrastructure plumbing for a given application. Instead of having to piece together all of the ingredients, customers get pre-formulated virtualization, operating system, middleware, wiring, and installation patterns that dramatically slash the time it takes to stand up an application. Putting PureApplication Service on SoftLayer brings these portable, reusable patterns to the cloud, and opens up new opportunities for new use cases. As important, it makes it easier for businesses (and partners) to support a hybrid IT environment that’s consistent regardless of where the app resides.

This will make it easier for some tech-savvy SMBs to take a do-it-yourself approach. But by far, the bigger SMB opportunity is via business partners. For instance, with PureApplication Service on SoftLayer, partners can more quickly move SMB on-premise apps to a public or private cloud, and spend more time on higher value-added business process services.  It also provides the opportunity to quickly provision new services, with the ability to rapidly access a development and test environment, implement disaster recovery, or provide added capacity for peak use periods.

To provide the best experience during the beta, IBM has selected 8 key patterns that deliver mobile, web, database, analytics, BPM and Java capabilities to help clients create new applications on PureApplication Service on SoftLayer. IBM also has several partner patterns available for beta, targeting the financial services industry.  The goal is that all 200+ patterns on PureApplication System will become available as a service on SoftLayer by the time the offering is officially launched.

DevOps on PureSystems

Second, IBM announced a soft-bundle to help clients jump-start DevOps with PureSystems. IBM’s PureSystems integrate networking, storage, scalability, virtualized environments, middleware, license management and monitoring into one solution for cloud solution development and delivery. DevOps on PureSystems pulls together key components of IBM’s Rational tool set to make it easier for developers to plan, develop and test cloud solutions, and then to monitor and iterate to meet changing requirements or correct problems.

This means that programmers can access a development environment much more quickly and thus dedicate to actually building apps, iterating on the code, and  incorporating timely feedback from customers to deliver a stronger solution.

Today, DevOps on PureSystems is only available in an on-premise model, but I have little doubt that this too will become available via SoftLayer in the very near future.  Again, while few SMBs have internal development teams, this offering—especially once its available in the cloud—should help IBM woo more next-generation developers to its fold. For more on DevOps on PureSystems, see an IBM blog discussing DevOps at Pulse.

Perspective

IBM is betting big on software development for the cloud, with a $1 billion investment in cloud software development on tap through 2015, representing a double-digit percentage increase over the past two years.

The PureSystems announcements—in combination with those for BlueMix, Cloudant and Service Engage—underscore that IBM also intends to get out in front of the next generation of cloud development and delivery. More automated, integrated and accessible cloud delivery and development solutions will fuel new development and delivery options for IBM partners, and help more customers—including more SMBs—to benefit and get more value from the cloud.

For additional perspectives on IBM’s PureSystems announcements, watch my interview with Pete McCaffrey, Director of PureSystems Marketing, recorded at Pulse.

Disclaimer: I attended Pulse as an invited media guest.

 

Can IBM Make the Collaboration Connection With SMBs?

ibmconnectLast week, I made my annual pilgrimage to IBM Connect to learn about the latest and greatest developments in the company’s collaboration and talent solutions. Over the years, IBM has transformed its former Lotusphere conference to Connect, grown a portfolio of cloud-based messaging and collaboration solutions, and added talent and workforce management solutions into the mix.

This year’s Connect theme was “Energizing Life’s Work,” which plays across IBM’s collaboration and mail solutions, as well as Kenexa, IBM’s talent suite (IBM acquired Kenexa in 2012).  Here, I’ll focus on news in the cloud-based collaboration space, which is arguably IBM’s best possible route to the small and medium business (SMB) market.

What’s New?

IBM’s big news in this arena focused on:

  • The unveiling of Mail Next, IBM’s web-based, enterprise-focused email service: It combines mail, meetings, chat and content management systems, creating unified hubs for in which users can interact via email and create groups based on shared interests or projects, and track projects. For instance, users can mute email that doesn’t need immediate attention to view later. IBM intends to make the solution available in 2014, both on-premises and via the cloud.
  • A new name and enhanced user capabilities for IBM’s cloud-based collaboration suite: In 2014, IBM will rebrand IBM Smart Cloud for Social Business (which includes business-grade file sharing, communities, Web meetings, instant messaging, mail, calendars, etc.) to “IBM Connections for Cloud”. (In 2012, IBM renamed LotusLive Engage cloud suite to SmartCloud for Social Business.) IBM also announced several enhancements for the suite, including the new Mail Next web mail discussed above, as well as improved audio/video for meetings and chat, a better guest model experience, and “mobile everywhere” capabilities.
  • Automated, dynamic infrastructure capabilities enabled by SoftLayer: On the backend, the company is now running IBM Connections for Cloud in its recently acquired SoftLayer data centers. SoftLayer not only expands IBM’s data center footprint (an increasingly important capability as more countries legislate that cloud providers operate in-country) but also provides enhanced automation capabilities to get infrastructure and applications up and running much more quickly, allowing new images to be set-up in 15 to 20 minutes. This enables IBM to stand up a small footprint first, and expand dynamically as new customers sign on.
  • Added sales and distribution capabilities: IBM has done several things to fuel sales of its SaaS solutions, including its Connections for Cloud portfolio. First, the company has changed the SaaS compensation model for direct sales. In the past reps got bonus for selling SaaS; now SaaS sales are part of their quota. Second, the application programming interface (API) is now the same for both IBM’s on-premises and SaaS collaboration apps, so that older on-premises apps can now be certified to run in the cloud. IBM hopes that this will help ease the path for traditional Lotus ISVs and resellers to join the Connections for Cloud partner ranks (which currently have about 60 reseller and 100 ISV partners). Finally, IBM is working with Parallels to create an automated platform for telco partners to easily rebrand, provision, sell and bill IBM Connections for Cloud and other SaaS offerings in an integrated, streamlined manner.

IBM said that 2013 was a tipping point for adoption of its Connections for Cloud, touting triple digit growth in new customers and quadruple digit growth in new signings. Although IBM doesn’t release information about the number of active accounts using Connections for Cloud, it claims to have millions of users, and a 50/50 split between large businesses and midmarket accounts. In a breakout session, executives noted that some midmarket customers have replaced Office 365 or Google Apps with IBM Connections for Cloud. They cited IBM’s strong security and governance capabilities, and the fact that the company doesn’t sell ads or mine customer data as key competitive differentiators.

Missing the B2Me Connection

Judging from the demos, IBM Connections for Cloud is making headway in terms of creating a more user-friendly and SMB-friendly collaboration experience and developing lightweight, lower priced bundles. In fact, I have spoken with several smaller organizations such as Apex Supply Chain and Colleagues In Care that are very satisfied with IBM’s collaboration solutions (more customer stories can be read here. IBM’s growth metrics are also impressive.

In addition, IBM’s new design thinking philosophy puts the user experience at the center of its development and roadmap planning, indicating IBM’s recognition that  consumer-oriented applications have a big influence on user expectations. The vendor’s design thinking philosophy incorporates best practices from popular social apps, brings features such as activity streams, social feedback and network updates to the forefront, and use analytics to flag high-priority items for users. IBM is also putting mobile-inspired design first. For instance, event demos showcased tablet-optimized design principles for Mail Next even when accessed through a traditional web browser.

But IBM remains a distant third to Microsoft and Google in the SMB email and collaboration market. Given the company’s current position, its traditional B2B sales model, and the ongoing consumerization of IT, the odds look slim that IBM can dramatically grow SMB share.

Slide1Across the technology spectrum, and especially in the collaboration space, decisions are increasingly being made in a bottom-up instead of top-down manner. User preferences forced a massive corporate shift from BlackBerry to iPhone, and business users are signing up on Dropbox and Google Drive by the millions without IT’s blessing. I’ve dubbed this trend “B2Me.” As consumer technology gets friendlier and friendlier, people are increasingly likely to seek the same type of technology access and experience in their business lives as in their personal ones.

Therein lies the rub for IBM. Although it offers a self-service model, including a free trial, onboarding services and credit card purchase options for IBM Connections for Cloud, it lacks any presence in the consumer or prosumer space—a growing onramp for SMB technology adoption. In addition, IBM’s service and support model is geared towards making large corporate accounts happy. Shifting gears to serve far-flung issues and requirements from the masses presents another big hurdle for Big Blue and other enterprise-facing vendors.

Without the ability to create and a support a viral, bottoms-up business model, its hard to see how, no matter how good the solution is, IBM Connections for Cloud can make serious headway in the SMB Market.

Does It Really Matter Whether IBM Connects With SMBs?

IBM has an impressive stronghold in the large enterprise collaboration space. In fact, the company has augmented, reshaped and restyled the Lotus portfolio—which was once declared dead—into its now thriving Social Business division.

So why should IBM divert attention and resources to SMBs? Especially as Google, Dropbox and others drive pricing downward, many IBMers likely view this as a profitless tail-chasing game.

However, I believe that if IBM chooses to put SMBs and the B2Me phenomena on the back-burner, it does so at its own peril.  IBM needs to grow its SMB market footprint to fuel growth, especially after missing revenue targets during 2013. Furthermore, there’s the pesky fact that small companies grow and large ones go out of business. Consider that 238 of the companies that made the 1999 Fortune 500 list had slipped off the 2009 Fortune 500 rankings. Technology, generational and cultural shifts will only intensify this turnover. IBM needs to get a foothold in fast-growth companies while they are young.

Finally, and perhaps most importantly, IT consumerization is not a passing fad. As evidenced by Apple displacing (crueler people might say killing off) Blackberry, consumer and B2Me can’t be ignored. Collaboration is the one activity that every person engages in every day, both in business and at home. Perhaps more than any other area, collaboration solutions will be adopted from the bottom up instead of top down. In fact, one of the IBM Connect keynote presenters noted that some employees are willing to pay for rogue collaboration tools out of their own pockets if those solutions make their lives easier. That makes collaboration the natural—and possibly the only—starting point for IBM to get in touch with its inner consumer.

Discussing SMB Tech Trends: Part 4, The Affordable Care Act Puts Workforce Management in the SMB Spotlight

Recently, I was a guest on Act Local Marketing for Small Businesswith host Kalynn Amadio. Each week, Kalynn shares information and actionable tips to help inspire and motivate small and medium businesses (SMBs) reach their business goals.  On this episode, Kalynn and I discussed  SMB Group’s 2014 Top Ten SMB Technology Trends and what they mean to the marketing and running of your business. The last of a four-part series, this post summarizes our discussion of “The Affordable Care Act Puts Workforce Management in the SMB Spotlight.”

acaKalynn: You know, there are ten different SMB technology trends.  We’re not going to have time to go through all ten things, but there is one more that I do want to talk about.

 Even though we talk about small business and marketing and how to grow business on this show, I think we would be remiss if we didn’t discuss your prediction regarding the Affordable Care Act or ACA. I know it’s at the forefront of my mind, it’s in the media constantly, and it’s a real issue for people right now. 

Laurie: Absolutely. Our prediction is really that the Affordable Care Act puts workforce management front and center for SMBs. 

Many SMBs have already automated and integrated things like sales and marketing and customer facing kinds of solutions, because they see this as key to business growth.

But many have put workforce management solutions on the back-burner.  They think of that as a cost area so they often limp along with a bunch of disconnected things and manual tracking to take care of things like payroll and time and attendance, scheduling and benefits. 

Kalynn, as you said, the Affordable Care Act has made everybody kind of sit up and pay attention.  We’ve gotten a little bit of a reprise because they’ve delayed the mandate for the companies with more than 50 full-time employees until next January to provide health insurance. It was supposed to kick in this January. 

But, now everybody is realizing because a lot of, unfortunately, very negative publicity and all these issues that this is very complicated and it’s a situation that’s in flux. 

SMBs are worried, and rightly so, about uncertainty, costs and regulatory risks. They are starting to realize that need to be able to more easily do things like calculating employee eligibility for benefits, choosing the right plans, managing compliance and keeping costs under control. 

So, for purely practical reasons, SMBs that haven’t paid much attention to automating in the workforce management are going to start to do so to gear up for 2015.

Kalynn: Yes, and it could take longer than they thought the whole thing did turn out to be more complicated than we were led to believe.  So, it’s probably a good idea to take this year and make sure you have in place whatever you need to have in place to make your life easier and so that you’re ready January 1st of 2015 to go live, you’ve got everything handled, you know what’s going on, and everything is taken care of from a legal stand point.  

telescopeLaurie:It’s really about having the visibility into what’s going on in the workforce. Now there are a lot of cloud-based workforce management services for SMBs. With many of them, you can usually just get the modules you need. So maybe you just need payroll and time and attendance, right, but you can add other modules like benefits as you need them and they all integrate automatically. 

Automating and integrating this gives you better visibility into things like hours worked, overtime, and all the things that you need to know about to make good choices, not only for ACA, but for other workforce management decisions.

Kalynn: Right, because any of those kinds of solutions you’re going to have reporting modules that will let you look at all of your data so that you can make the best choices, and so document it all.

Laurie:It’s like in your own personal life you want to kind of evaluate the risks and benefits of different healthcare options, right.  Well, think of how complicated that is to do that just for your own family. It’s not easy information to sift through.  Well, now think about if you have to make that choice for your workforce.

You want the ability to do what if scenario kind of thing. What if I use this plan?  What will it cost?  What are the downsides? What are the upsides?  In some cases –not that I’m advocating this– some businesses want to know if they should be cutting down workers to part-time. 

So, you want to be able to play with all that.  It’s very difficult to do that if you have any more than just a handful of employees without having some kind of workforce management solution to do it with.

Kalynn: It goes back to something that you had talked about at the very beginning of the interview. If you don’t have metrics that you can run reports with then you don’t really know what the health and well-being of your business is and what decisions you should be making.  That’s just the bottom line. 

Laurie:  Yes, and again you want to have flexibility. Think about it; right now the economy is in a lot better shape than it was a few years ago, so your decisions today might be a lot different from they would have been four years ago. 

And, you know what, in a couple of years hopefully the economy will continue to improve.  We may have a very tight labor market if that happens and companies may go back to providing richer benefits packages.  So, it’s all about being able to adjust and adapt to kind of get ahead. 

Kalynn: Right; you want to have all your options available so that you can look and scoot them around on the table and see what happens and make some good decisions.

You can listen to the complete podcast discussion here.

Discussing SMB Tech Trends: Part 3, SMBs View Payment Systems In A New Light

Recently, I was a guest on Act Local Marketing for Small Business with host Kalynn Amadio. Each week, Kalynn shares information and actionable tips to help inspire and motivate small and medium businesses (SMBs) reach their business goals.  On this episode , Kalynn and I discussed SMB Group’s 2014 Top Ten SMB Technology Trends and what they mean to the marketing and running of your business. This, the third post in a four-part series, recaps our discussion of why “SMBs View Payment Systems in a New Light

Kalynn: The next trend I’d like to cover is payment systems; looking at payment systems in a different way.  Can you touch on that?

baroquon_Add_MoneyLaurie: Yes, I think for a long time most businesses have looked at payments as that’s how I get paid, that’s how I get my money.  I’ll take cash, I’ll take credit cards, I’ll take whatever I decide to take. But they haven’t thought about payments as a business enabler. 

Now we’re seeing some SMBs starting to look at payments a little differently and I’ll tell you why. First of all it’s just a basic instinct; everybody wants to get paid more and get paid faster. Businesses see new payment methods are starting to become important. 

For instance, consider mobile payment processing. Maybe I’m a fitness trainer and I want to be able to just swipe my client’s credit card at the gym. One guy I spoke with sells sod. He’s in the field in his tractor and a landscaper pulls in ready to buy. The sod farmer doesn’t want to waste time going back to the office to process the transaction. And he doesn’t want to take checks because a check can bounce. 

We find in our research that about a quarter of small businesses already use some kind of mobile payment processing solution, and another quarter are planning to add this capability. 

Kalynn: What else is changing?

Laurie: A lot is happening in terms of new forms of paymentmobile wallets, gift cards, PayPal, even Dwolla or Bitcoin. These provide new ways to transact and more companies are saying, “You know, I’ve got to be able to accept and process the forms of payment that my customers want to make.”

Think about it. Most businesses now take credit cards. But, I remember when this wasn’t the case, and you might have wanted to buy something but you were going to find another place to buy it that would take a credit card.

More SMBs want to be ready to accept anybody’s money however they want to pay them. 

Kalynn: You also mentioned integrating payments and accounting, right?

men with puzzle piecesLaurie: Right. Many small businesses in particular are double processing.  This means that payment transactions don’t automatically go into their accounting system, and they  have to input payments twice.

In an age when most of us agree time is at a premium, more businesses see this as a time-waster. They reach a certain transaction volume, whether it’s 20 or 30 or 40 transactions per week, and they start adding up the time to reenter data and don’t want to do it anymore. 

If you’re processing more than a handful of payments every week, talk to your accounting vendor and see what you can do to integrate that payment processing.  It can save you time help you reduce errors, because every time we as humans reenter information we’re more likely to make mistakes.

Kalynn: That only makes sense. I’m surprised that people are doing things twice. That didn’t even occur to me.

Laurie: For a lot of the businesses I’ve talked to it’s kind of like that was fine maybe when they just started up but then they reach a certain transaction volume and they say to themselves, “We can’t continue like this because it’s just sucking too much time from the day and things aren’t balancing out.” 

In the fourth and final post in this four-part series, I’ll summarize our conversation about why “The Affordable Care Act Puts Workforce Management in the SMB Spotlight.” You can listen to the complete podcast here.

 

 

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