SMB Spotlight: IBM’s New Midmarket GM Talks About the SoftLayer Acquisition

ibmsmarterplante-150x150Laurie: Hi, this Laurie McCabe from the SMB Group, and in today’s SMB Spotlight I’m speaking with John Mason, who is IBM’s new General Manager and VP for Midmarket. Hi John. Thanks for joining me on this two-part discussion about developments at IBM in the midmarket and SMB space. In our first discussion, I’d like to focus on the IBM acquisition of SoftLayer, which I understand provides dedicated hosting, cloud computing and cloud services offerings.

Before that though, I’d like to learn more about you and your background. I understand you’re relatively new to IBM. Can you tell us a little bit about where you’ve been and what kind of experience you bring to your role?

John: Thanks Laurie. I appreciate the opportunity to speak with you. I joined IBM three months ago. I started my career at Compaq in the 80s. I spent thirteen years there and moved to Cisco, and ran the SME and midmarket business with Cisco in Europe, Middle East, Africa.

Then, I ran global channels for Nokia’s Enterprise business. I also ran a mobile cloud service in eReading and News for a couple of years, and a white label mobile messaging service provider that had been acquired during my time there.

So, when the discussion started with IBM, it was an interesting combination of different hardware, software and services businesses in small and midsize enterprise and across mobile and social. It was the opportunity to combine that with IBM’s amazing global reach in over 170 countries and find ways to get that to the millions of small and midsized companies. Many are possibly not even doing any business with IBM today but can benefit from those solutions.

Laurie: What will you be focusing on in your new role as GM, John?

John: Finding new opportunities to grow the business and bring mobile and social and analytics, and particularly cloud solutions to small or midsized businesses. This means working very closely with our partner organization and focusing on MSPs as the key route market.

Laurie: Thanks for that background. So help me understand a little bit about the SoftLayer acquisition and why it’s so important. IBM makes a lot of acquisitions in general, and I think probably at least a dozen in the cloud area. What makes SoftLayer stand out for IBM?

ibmsoftlayerimage-150x110John: This is one of those few times in our industry where there’s an absolutely fundamental shift that changes everything. When client-server computing started taking off was one, and when mobile really went to a whole new level was another. Now, with cloud, we’re seeing a major shift, which is very beneficial to smaller and midsized companies. They may not have the IT expertise in-house to take advantage of some of the technologies that larger companies are able to use, but now through cloud, they can use more advanced solutions without having to deal with the complexities.

Laurie: Tell us about what SoftLayer does and how that will help IBM help SMBs? What does it give IBM you that it didn’t have in the cloud area?

John: The SoftLayer acquisition was driven by a change in the way that customers are looking to buy. I would say it’s as simple as answering these questions. Is this technology solution is going to be hosted at your place or mine? Is this something that I have to build and manage on my premises, or is it something that I can tap into through a web browser to connect to infrastructure that’s sitting somewhere else outside of my physical office buildings? Then, is that going to be dedicated to me or is it something that I share with somebody else? So, it’s really your place or mine, shared or dedicated, and what software brings is the ability to offer the full range of different deployment options.

That’s whether it’s a complete public cloud solution or it’s a private cloud or it’s some mix of some parts public, some parts private in a hybrid deployment. SoftLayer lets us accelerate our ability to deliver those pieces across a broad range of different businesses and different services.

Laurie: What about purchasing and pricing mechanisms for customers?

John: Yes, that’s really key. It’s really important to make it easy and simple to understand what the offering is, and how can I choose the combination that is right for me. Then make it really easy for them to purchase and deploy that solution.

The beauty of SoftLayer is they have a very simple credit card purchase capability. You can be up and running literally within the hour and choose whether you want to be billed monthly or hourly. It’s simple and flexible, and that’s as important as the underlying technology.

Laurie: One of the other things that I’m curious about is that it seems like managed services is another big part of the SoftLayer business. IBM has been heavily courting managed service providers (MSPs) for quite some time. Does this create a conflict with them?

John: SoftLayer is really complementary to what we’re doing with MSPs. In fact, we’ve had a number of key wins with MSPs for SoftLayer with service providers who have said, “I really don’t want to have to manage this infrastructure myself. It’s not my core business. My focus is on security services or hosted exchange services. So, rather than me scarce resources building and managing an infrastructure layer, I’d rather focus on the higher value services on top of that, and I’ll use SoftLayer as infrastructure.”

Laurie: Will they be able to resell SoftLayer?

John: Yes, there’s that too. MSPs can use SoftLayer themselves as part of their own infrastructure, or they can resell it to customers together with other value-add services that they bring to the mix.

Laurie: Where does SoftLayer sit in terms of IBM’s SmartCloud services?

John: SoftLayer gives us the ability to accelerate our own leadership position, scale out the smaller cloud service portfolio, add additional higher value services and solutions across mobile and data analytics, social–together with partners. It’s the combination of all of that into a solution that adds value for customers.

Laurie: What kind of experience in SMB and midmarket does SoftLayer bring that IBM can leverage, and how will you do that?

John: I mentioned this earlier in our conversation when we talked about what attracted me to the role at IBM. Frankly, the SoftLayer acquisition hadn’t closed but had been publicly announced. That was a real additional level of credibility that we could use to address the SMB market because SoftLayer had over 20,000 SMB customers already. They clearly have a very strong focus on that market and a solution that is very simple, easy for the smaller customer to understand, choose, purchase, deploy and operate.

So, to me that said IBM’s not just talking about the midmarket, but actually putting a significant investment in technologies, ease of purchase and deployment to enable this. SoftLayer convinced me that we very serious about this and that was a decider for me.

Laurie: What does the bigger go to market plan look like? Many SMBs still think IBM doesn’t have solutions that are relevant for them. How are you going to change that?

John: First, we need to be careful that we don’t hug SoftLayer to death. We need to give them space to continue to operate their own very successful go to market model. There’s always a risk when a big company acquires a smaller company that sometimes the big company process can slow down the smaller company. We will be very diligent about ensuring that doesn’t happen and that SoftLayer continues to operate somewhat independently with their existing go to market model.

At the same time, we need to take advantage of what they bring and combine that with IBM’s traditional business partners, managed service provider partners, and some of the ISVs that we work with. Really, this is more about connecting the ecosystem that needs to work together to deliver solutions to small and midsized companies. SoftLayer helps us accelerate that with a full range of all types of different deployment options–everything from bare metal dedicated servers, virtualized shared servers, managed private and public cloud through to a full range of storage and networking and managed services.

Laurie: So, what does success look like here if this all goes according to plan?

John: I think we’ll see continued acceleration of cloud adoption within small and midsized companies and SoftLayer will help to significantly accelerate the deployment of both hybrid private and public cloud solutions for small and midsized companies. I certainly expect the 20,000 existing SoftLayer customers will increase significantly without putting a specific number on it. Beyond that, it’s about helping MSPs to accelerate their offerings with more value-add services above and beyond the infrastructure layer. That way we really bring complete solutions for small and midsized companies that are simple to deploy and use.

Laurie: John, thank you for joining me, and I look forward to our next discussion, when we will talk about IBM’s other new plans for SMB and mid-market customers.

John: Thank you Laurie. I appreciate the opportunity to have this discussion and certainly look forward to future discussions we’ll have.

This is the first of a two-part SMB Spotlight interview with John Mason, IBM’s General Manager and VP for Midmarket, sponsored by IBM. In the second post, I’ll ask John about other new IBM strategies and developments for SMB and midmarket companies and channel partners.

MSP Cloud Challenges in the Midmarket–and How IBM Helps Meet Them

In my recent post, A View From the MSP Trenches: Cloud Opportunities in the Midmarket, I examined how MSPs see the midmarket opportunity shaping up, and why they are partnering with IBM to capitalize on these opportunities. I discussed how MSPs are taking advantage of cloud-based technology solutions and IBM’s offerings to help their midmarket companies offload infrastructure management, deploy the leading-edge solutions, and achieve the performance, availability and security required for mission-critical applications.

I also wanted to learn more about the challenges that MSPs face, and how they work with IBM to surmount these hurdles. This post focuses on that side of my conversation with the same three MSPs, who I’ll reintroduce here:

  • Oxford Networks characterizes itself as “a 112 year-old start-up,” which began as a phone company and has since reinvented itself a couple of times over to become a high-end carrier’s carrier transport network. Oxford recently acquired an MSP and a data center, and is building on this to offer a spectrum of IT and telecom services to SMBs.
  • Perimeter E-Security delivers highly secure infrastructure protection and compliance solutions via its security-as-a-software platform, including: firewall management and monitoring, vulnerability scanning, intrusion detection and prevention, hosted email, hosted collaboration, email security, message archiving and mobile device management. Perimeter offers its services in the cloud, and on customer premises.  About two-thirds of its customers are small and midsize businesses (SMBs).
  • Velocity Technology Solutions provides virtual private cloud managed application and hosting services for its customers’ ERP solutions. It also hosts and manages connected applications, such as analytics and workforce automation; and complementary technical solutions, such as imaging. Velocity offers remote managed services for customers’ on premises applications, including a full replication service for disaster recovery.  Velocity’s customers range from businesses with about $50M in annual revenues to the Fortune 500.

MSPs must keep pace with a rapidly changing technology landscape and provide consistent, high performance cloud services. After all, that’s precisely why their customers are outsourcing infrastructure and application management to them in the first place. In their view, IBM provides them with the proven solutions and expertise that they need to deliver superior quality of service. As Tom Bruno, President & CEO, Velocity Technology Solutions, noted, “IBM has the most stable infrastructure. We can tap into the strength and girth of IBM to get the peace of mind that we need to deliver high-availability service.”

Some of the specific areas in which MSPs find strong value in the IBM partnership include:

  • Resources to scale and grow. By standardizing on IBM hardware and middleware, they are able to efficiently create and manage a high-availability environment. For instance, Velocity Technology Solutions works closely with IBM to identify and standardize the server, storage, and middleware stack to support “just about any application the customer wants,” according to Bruno.  “One of the biggest challenges is that ERP is advancing so fast–with a rush of analytics, mobile apps, collaboration and process flow. Customers want to upgrade, and with IBM, we can get these upgrades down to a science, and offer customers freedom of choice.” Or, as Craig Gunderson, President & CEO of Oxford Networks told me, “When we acquired the data center, it wasn’t up to snuff. IBM technologists helped us to reconfigure it and build for the future.”
  • Speed and agility. The bar to stay ahead of the technology curve is rising quickly, and MSPs must move at warp speed to stay ahead of it. While MSPs are often small or midmarket companies themselves, their IBM partnerships help give them the agility they need to take advantage of leading-edge technologies. “The IBM SmartCloud, DataFlex, V Systems and other IBM solutions are core to our PaaS and IaaS offerings. This means we can make more capabilities available more quickly to customers,” notes Gunderson.  MSPs need a stable but flexible technology foundation, says Perimeter E-Security’s Andrew Jacquith. “We add a terabyte of data per day to our cloud email and archiving platforms. IBM helps provide a secure, scalable cloud fabric to support our growth.”
  • End-to-end services. MSPs don’t want to or can’t provide everything a customer may need across the entire technology spectrum. But they are taking advantage of IBM’s ecosystem to broaden their service portfolios and give their customers a one-stop shopping experience. At Oxford Networks, for example, “Customers are asking us to be more of a business solutions provider. This wasn’t our core competency, but we can provide end-to-end solutions via IBM SaaS partners’ says Gunderson. “Partnering with other partners in the IBM ecosystem gives us the ability to meet the converging needs of our customers.”

In late September, IBM launched new global initiatives for MSPs, which provide additional resources to help them meet core technology challenges, including:

  • Access to four new Global Centers of Excellence (in addition to 40 existing IBM Innovation Centers). These centers provide MSPs with hands-on technical skills in technologies such asIBM SmartCloud, PureSystems, storage, security and collaboration.
  • A new virtual briefing center for MSPs to share ideas and knowledge about industry trends, customer requirements and best practices with their peers and with IBM experts.
  • PureSystems, which provides a new, integrated, by-design platform to tune hardware and software resources for data intensive workloads, and gain more flexibility to configure applications for either an on-premise or hosted environment.
  • More options for IBM SmartCloud, giving MSPs the choice to either integrate SmartCloud as an IBM-backed solution, or provide SmartCloud under their own brand.

Profitable business growth is another key challenge for all companies, and MSPs are no exception. The MSPs I spoke with believe that IBM sets itself apart with the quality of business planning and marketing support that it provides. “IBM partners with us to help us plan and capture more midmarket business,” states E-Perimeter’s Jacquith.  “The level of partnering is very deep.”

In the case of Oxford Networks, IBM and its advertising firm, Ogilivy and Mather, helped Oxford to determine which markets to focus on and how to grow intelligently. IBM also brings in Avnet personnel to help Oxford educate customers and prospects.  “IBM is very hands-on. We have never seen another company provide this level of support,” says Gunderson.

IBM new global initiatives for MSPs also offer more marketing and operational support. These included dedicated marketing and sales support, and a new program to help MSPs build a complete marketing plan. Other assistance includes a four-part education seminar to help MSPs use social media to grow their businesses, and IBM analytic capabilities to identify new customers and drive more repeat business.

IBM Global Financing (IGF) is stepping in with flexible, affordable financing options to help MSPs acquire the solutions and services they need to grow. Plans include 12-month, 0% loans for IBM Systems, Storage and Software. MSPs that select PureSystems platforms can also defer their first payment for 90 days.

All told, IBM’s focus on MSPs adds up to a tremendous value not only for MSPs, but for their customers. Instead of just throwing resources at them, IBM has put together an integrated program to address their technology and business challenges. In addition, IBM’s dedicated marketing and sales support provides MSPs with real people who get to know them and understand their individual goals and challenges. With this coordinated and personalized approach, IBM can to get the right resources to MSPs when and how they need it. In turn, these MSPs will be able acquire the skills and resources they need to help their midmarket customers achieve their goals.

This is the fourth of a five-part blog series by SMB Group that examines the evolution of midmarket business technology solutions and IBM’s Managed Service Provider Channel programs. In the next post, I’ll discuss upcoming IBM’s MSP program announcements slated for November.

Cisco OnPlus: IT Infrastructure Advisory and Management Services Solution For Small Businesses

–by Sanjeev Aggarwal and Laurie McCabe, SMB Group

Last month, Cisco introduced a new IT Infrastructure advisory and management service solution designed for VARs to provide to small businesses with less than 100 employees. Delivered via Cisco’s value-added reseller (VAR) channel, Cisco OnPlus enables VARs to offload the mundane, time-consuming tasks of managing a network environment from small businesses, and provide them with higher value advisory services.  In addition to monitoring and managing network infrastructure devices, such as switches, wireless access points and routers, OnPlus also monitors devices that are connected to the network (including smartphones and tablets).  VARs can deploy a small OnPlus Network Agent appliance at the customer site, and remotely monitor and manage it through the cloud via a secure web portal or mobile application.

Perspective

 Cisco’s OnPlus IT infrastructure advisory and management service solution is designed to meet the needs of small businesses. SMB Group’s 2011 SMB Routes to Market study indicates that small businesses’ top technology related challenges include: Gaining ‘peace of mind’ that IT is under control (40%); containing IT costs (38%); finding/hiring qualified IT staff(35%); upgrading IT infrastructure(34%); protecting business from IT related failures(32%); and getting more done with fewer/flat IT resources (26%). As illustrated in Figure 1, Cisco’s OnPlus with Assess, Manage, Advise, Maintain features helps directly address several of these technology challenges.

Figure 1: Cisco OnPlus – Comprehensive IT Infrastructure Management for Small Businesses

Source: SMB Group, January 2012

Several IT infrastructure monitoring and management solutions are available for small and medium businesses (SMBs) ,  but they are often cost-prohibitive for many small businesses. Cisco’s hybrid solution, consisting of an agent embedded in a small network appliance and a secure cloud service, is aimed squarely at VARs that provide managed services to small businesses. These companies often lack dedicated IT staff and tend to depend on part-time IT people or external contractors to manage IT. With scarce resources typically stretched thin, small businesses are often unable to keep up with the demands of routine technology management–let alone support growth goals with new technology solutions.

At the same time, many VARs are looking for ways to quickly and efficiently offer remote management services to their small business customers, and the ability to provide more proactive guidance and management advice.

 Cisco OnPlus gives VARs an efficient way to expand their managed service offerings through remote management and visibility into the customer  network and the devices attached to the network. VARs simply plug the OnPlus Network Agent appliance into a switch or router on the customer’s network, and the OnPlus Agent then transmits information about the customer’s network and all connected devices to a secure data center for access by the VAR (Figure 2). Native apps for Apple and Android mobile devices are available for free from those companies’ app stores. The VARs have the flexibility to define their own business model for using OnPlus.  Some  will add additional fees based on their coverage and response times. Others will use OnPlus to enhance their service capabilities without additional charges to their customers.  In addition, VARs can use OnPlus as a tool to accelerate pre-sale assessments with prospective customers.

Figure 2: Cisco OnPlus Solution Service Data and Communications Flow

Source: Cisco, 2011

Cisco OnPlus appliance discovers Cisco and third-party devices with an IP address connected to the network and displays them in topology and inventory views. Partners can access a real-time view of customer networks from anywhere, through a highly secure portal using a PC, tablet, or mobile device. VARs work with small businesses to define and customize alert thresholds. Through OnPlus, VARs can also provide small businesses with automated reports of all the activity and tasks performed on the network.

Pricing is $250 (approx.  $7 per month, after typical discounts), which includes a three-year OnPlus subscription and the network agent appliance that is installed at the customer site. The OnPlus service from Cisco is available now in U.S. and Canada, with a rollout in Europe and Asia planned for 2012.

Quick Take

Cisco OnPlus delivers cost-efficient scalable IT management and peace of mind that small businesses need without sacrificing the local VAR that many SMBs want to do business with. On the VAR side, it provides a fast, efficient way to onboard customers into a managed service practice, provide more proactive services, and provide more efficient service to more small businesses customers.  With the advantages, Cisco OnPlus should be very attractive to Cisco VARs and enable Cisco to make significant inroads in the small business segment.

That said, Cisco OnPlus can significantly strengthen its story by:

  • Offering additional functionality in the areas of IT asset utilization and management (both hardware and software) to support compliance
  • Providing additional performance management solutions
  • Making it an extensible solution so that VARs can easily add additional value-added solutions like remote backup, Infrastructure on-demand, and business continuity services
  • Help VARs position and demonstrate the value of OnPlus as a comprehensive IT infrastructure management solutions vs. a network management solution
  • Investing in demand generation marketing to educate small businesses about the benefits of managed services

However, Cisco continues to invest in and develop solutions for small business, and OnPlus provides strong evidence that Cisco understands both small business pain points and how to create solutions that provide clear benefits to its partners. Cisco’s OnPlus should be a big step forward in helping Cisco VARs to move beyond the role of network product suppliers to become more strategic managed service providers.

Sage Summit 2011: Tackling the Sage NA Branding Challenge

A couple of weeks ago, I attended Sage Summit 2011, Sage’s first combination partner and customer event. I’ve been attending Sage partner, customer and analyst events for several years, observing and commenting on its ongoing attempts to unify it’s corporate brand across multiple small and medium business (SMB) solutions. Earlier this year, following Sue Swenson’s retirement, Pascal Houillon took over the reins as CEO of Sage North America.  I was interested to find out how Houillon plans to deal with what has seemed like an age-old dilemma at Sage North America: having many strong individual SMB brands (think Peachtree, ACT!, Timberline, etc.), but a relatively weak Sage corporate brand.

The Sage North America Branding Challenge

Over the years, Sage North America has added a myriad of SMB-oriented accounting, ERP, CRM, HR, payments and industry-specific solutions to it’s portfolio. In most cases, these solutions brought large groups of loyal customers with them. Sage has undergone many identity-building initiatives in the past, including co-branding all of it’s individual solutions with the Sage master brand in 2009, developing capabilities to seamlessly integrate Sage CRM, ERP, HR and other applications, and a concerted corporate-wide initiative to make customer experience it’s top priority. But, for the most part, Sage customers have continued to identify more with their individual brands, ala Abra or MAS, instead of the Sage moniker.

This has not only hampered Sage’s traditional cross-selling efforts, but it also threatens Sage’s Connected Services strategy, which provides Sage customers with online, connected services (both from Sage and Sage partners) that integrate with on-premise Sage solutions to provide additional functionality.

Clearly, for Connected Services to achieve it’s goals, Sage needs to make sure that, for instance, Sage Integrated Payments Solutions are the first stop for Peachtree or ACCPAC customers looking for payments solutions that integrate with their accounting software.  In addition, without a strong corporate brand, Sage is at a disadvantage when going up against competitors such as Intuit, Microsoft or SAP.

Tackling the Branding Dilemma Head-On

Houillon wasted no time addressing the elephant in the room. At the opening keynote of the partner session, his first announcement was that Sage NA would embark on a phased approach to drop individual product brand names (again, think ACT!, MAS, Peachtree, etc.) in favor of the Sage brand. So for instance, Sage Peachtree Pro, Complete, Premium and Quantum would become Sage 50 Pro, Complete, Premium and Quantum.

Note the word “phased.” This re-branding won’t happen overnight, but take place over the next 12 to 18 months. Sage has lots of products and in many cases, product overlaps. It will most likely start with entry-level solutions, such as Peachtree and ACT!, and those products that have a well-defined space within the Sage line-up.

As important, along with the re-branding, Sage will ramp up existing efforts to create a more consistent user interface and experience among its products, and make it easier to integrate them. For instance, Sage will be incorporating Sage Advisor (first available in Peachtree), which provides in-product assistance to help guide users through tasks, resolve error messages and find functionality as needed, into more of its products.

Needless to say, all of this re-branding talk caused quite a stir among partners, press and analysts. In many cases, partners have invested a lot of passion in an individual brand–in many cases, partners had been selling the individual brand long before Sage acquired it. They have legitimate concerns about making the brand switch, and the new investments they’ll have to make in marketing collateral, web sites, etc. However, in subsequent sessions, Tom Miller, Sage NA’s channel chief, noted several programs already underway at Sage to help ease partners through the transition.

We (press and analysts) also raised a lot of questions about the risk of eroding brand equity that they’ve built up over the years for the individual brands. Several analysts also worried about the blandness of using a numbering system for product names (as noted in both Denis Pombriant’s and Paul Greenberg’s posts on the topic)–which I’m not crazy about either. And of course, there’s the problem that some products overlap with others–such MAS and ACCPAC.

But, after listening to the Q&As and debates, querying Sage execs one-on-one, and talking to Sage customers (most of whom told me they had no problem with rebranding), I think Houillon has made the right decision.

Short-term Pain, Long Term Gain

No doubt that Houillon’s decision will produce some short-term pain, probably most acutely felt by channel partners. But what’s the alternative? Former CEO Sue Swenson stepped in to stop the bleeding, but major surgery is still necessary for Sage to make a full recovery. In the long run, Sage needs to reset, refocus and re-energize the company for growth–something it hasn’t seen much of recently, for these key reasons:

  1. Although all Sage execs appear on board with the change, I’m sure that there are at least a few that have resisted the corporate call. This is just human nature–either inertia, the fact that an individual brand is doing fine as is, or that some people like to run their own little empire without a lot of corporate oversight. The rebranding and what’s underneath it–common look, feel and experience–should help shake out execs that are idling, and foster a more innovative and collaborative environment.  Ultimately, this should yield more value for customers and partners.
  2. A strong corporate brand is key to the success of Sage Connected Services.  Connected Services enable existing Sage customer to easily tap into add-on online services that give them additional functionality. Sage has about 50 connected services already available and coming soon, spanning HR, payments, payroll, tax, sales and marketing functions. For example, Sage offers a dozen Sage Payments Solutions as connected services to Sage ERP and accounting solutions, and several sales and marketing connected services for Sage CRM solutions, such an e-marketing service, as well as business information services via Hoover’s. But, if customers don’t self-identify as Sage customers, they may not even look at Sage Connected Services when needs arise.
  3. Sage needs a strong corporate brand to help its cloud offerings take off. Sage already offers SageCRM.com, ACCPAC Online, SalesLogix Cloud, Sage Payments Solutions and Sage Intergy on Demand (for healthcare) and Sage Billing Boss as cloud solutions, and several more are on the way. As more companies look to the cloud to deploy new solutions, on demand offerings will increasingly erode the sales of packaged software. Sage needs a strong brand to compete in this space and capture new customers as they turn to the cloud.

Or, as Benjamin Franklin said, “When you’re finished changing, you’re finished.”

What Sage Must Do to Pull It Off

That said, Sage will face many challenges along the way. Here’s my take on what Sage must do to increase the odds that it will be successful:

  1. Facilitate the branding change for partners. The biggest concern I heard partners voice was about the money and time they would need to spend to accomplish re-branding. Sage needs to make it fast, easy and low- or no-cost for partners to re-brand their web sites, marketing collateral, etc. at every step of the re-branding process. Given Sage’s history of providing partners with innovative tools and programs, I’m confident that it will be able to develop and roll out do the same here.
  2. Put more emphasis and resources to make sure that changes beyond product name changes are achieved. Develop and provide Sage employees, partners, customers, press and analysts with a clear vision and solid plan for what the Sage portfolio of the future will look like. Sage has already made good inroads on integration across product lines, and needs to continue investing here. But other areas are fuzzy. For instance, when and how will it bring a common interface to different solutions?  What’s the roadmap to roll out Sage Advisor technology into different solutions? In cases where there is product overlap, how will it rationalize this?
  3. Make the Sage brand stand for something and stand out. Simply using the Sage name to brand all of its products won’t be enough to get new customers in the door. What can the Sage brand represent? IMHO, Sage should piggyback on the Firm of the Future education it’s offering partners. This workshop helps partners analyze their existing business models, understand and navigate change, and build a plan to create a new business model to succeed in a changing world.  Why not take this a step further and help its SMB customers become Firms of the Future? In almost every industry, SMBs are grappling with changes wrought by a global economy, increasing volatility and new technology. Everyone sees the change coming, but few even know where to start to get ahead of the curve and position to capitalize on it.

No one ever said change is easy. But change is inevitable and for Sage, essential if it is to thrive and grow. Sage has taken a big first step is in the right direction, now it just needs to keep moving ahead.

What is Systems Management, and Why Should You Care?

(Originally published March 23, 2011 in Small Business Computing)

What is Systems Management?

Systems management is an umbrella term that refers to the centralized management of a company’s information technology assets, and it’s one that encompasses many different tasks required to monitor and manage IT systems and resolve IT problems. Systems management solutions can help small business owners address many requirements including (but not limited to) the following:

• Monitoring and management of network, server, storage, printers and client devices (desktop, laptop and mobile devices), including notification of impending or actual failures, capacity issues and other systems and network events

• Hardware asset inventory and configuration management, including firmware, operating systems and related license management

• Application software usage and management

• Software asset inventory, versioning and patching, and license management

• Security management, including anti-virus and malware management tools, including virus definition updates.

• Automated backup and restore, to back up systems data in a central data repository

• Service desk problem management, which provides an automated process to generate and track trouble tickets and resolve problems

Systems Management: Why Should You Care?

As businesses grow, so do IT requirements. In many companies, it’s tough to find a facet of the business that doesn’t depend on IT. As dependence on IT to run the business grows, it becomes vitally important to efficiently manage and safeguard IT and data assets.

System management solutions — such as service desk management, single sign-on authentication and patch management — can help keep systems up and running, and maximize IT and employee productivity. They can also help your IT team efficiently roll out new software solutions, or upgrade existing ones. In a nutshell, effective systems management solutions help IT organizations move beyond fire-drill mode to provide the business with proactive guidance and support.

System management solutions also help companies protect against the fallout from downtime and threats, whether caused by system malfunctions, lost or stolen mobile devices, network sabotage, power outages, security breaches, identity theft, human error and natural and man-made disasters. Should any of these events occur, they can result in lasting financial loss, brand damage, legal liabilities and other extremely unpleasant consequences. Consider these sobering facts:

• In a survey by Kroll Ontrack Inc., 74 percent of respondents experienced a data loss incident in the last two years. And 32 percent of organizations take “several days” to recover from a data loss — another 16 percent never recovered.

Symantec’s 2009 SMB Disaster Preparedness Survey indicates that the average SMB has experienced three disruptions to computer or technology resources within the past 12 months; 26 percent reported losing important data. These firms estimate that these outages cost them about $15,000 per day.

Many small businesses fail to perform regular data back-ups, and even if they do, tools and procedures can fail due to malfunctioning hardware and storage media, corrupted data, or because backup software isn’t reset to include new files or applications. Whatever the reason, costs to replace the data and restore employee productivity can be enormous. Businesses also face stiff penalties if they can’t store, retrieve, monitor and transmit data in accordance with regulatory requirements.

Systems Management: What to Consider

Criteria such as company size, number of devices, complexity of IT infrastructure, IT resources and expertise all come into play when considering centralized systems management.  For instance, in a small business with just a handful of PCs, centralized systems management may require more of an investment in time and dollars than it would take to just manage each device individually.

But as companies grow, a lack of centralized system management can become a pain point and true vulnerability. However, the sheer number and assortment of products and approaches available can be confusing, and the cost of traditional enterprise system management solutions can send small businesses into sticker shock. Driven by the need for a quick fix, businesses can end up with several disparate point products that don’t work together. This can create both short-term gaps and integration and scalability problems over time.

Unfortunately, there’s no one-size-fits-all solution or short-cut to a short-list. But small businesses can avoid these potential pitfalls by taking action on these tips:

• Assess gaps, bottlenecks and vulnerabilities in your IT environment

• Look for vendors and solutions that can address immediate pain points, but also provide incremental capabilities that your company may need over time

• Seek out vendors with solutions designed to meet the needs of SMBs, such as Dell KACE, HP Insight Manager, IBM Service Manager for Smart Business, Kaseya and Spiceworks

• Evaluate managed service provider (MSP) offerings. Major vendors, such as Dell and IBM, as well as many regional and local service providers offer managed infrastructure services that can be a great fit for companies with limited or non-existent IT staff. MSPs can often provide a level technical expertise, trouble-shooting and proactive 24/7 support that surpass the capabilities of most internal SMB IT shops

By investing time upfront to consider business priorities, IT requirements and constraints, and evaluating the pros and cons of different approaches and offerings, small business owners can find a systems management solution or an MSP that will support the business now, and in the future. 

Dell 2.0: Top Takeaways from Dell’s Virtual Era Event

A couple of weeks ago, I attended Dell’s Solutions for a Virtual Era analyst and press event in San Francisco. At the event, Dell unveiled its new strategy to help companies more readily and easily provision computing capabilities to in the ubiquitous anytime, anywhere information era. At the event, Dell introduced several new hardware offerings based on the new Intel Xeon 5600 architecture to enable cloud-based solution deployment. But for me, the more interesting focus was Dell’s ambitious vision and roadmap to capitalize on the shift to cloud computing, and market demand for better, more cost-effective and easier to deploy, use and manage IT solutions. Here are a few of my top takeaways about what Dell’s vision, how it plans to execute on it and my commentary.

  • Change the economics of IT. Companies spend more than 50% of their IT budgets just to keep the systems they have up and running—stunting investments in new IT solutions that can help them to innovate and grow. Dell intends to apply its “direct” DNA and supply chain know-how to automate IT and change the economic equation to help companies get out of this quagmire. By delivering “open, capable and affordable” solutions with industry standard-based building blocks, Dell believes that it can reduce technology lock-in, complexity and cost for customers. Some specific capabilities in the works include autonomic self-maintenance and management; automated dynamic allocation of resources, and policy-driven management. In a recent keynote at Oracle OpenWorld, IT budgets in North America amount to $1.2 trillion, but through widespread adoption of x86 servers managed in a more automated fashion, $200 billion could be saved, asserted Michael Dell, president and CEO of Dell. He used Dell’s own plan to take $200 million out of its own IT spending by the end of 2010 as evidence that Dell–which provides two of every five x86 servers shipped–can help customers achieve this goal. Our recent research on Dell Managed Services customers also provides a strong proof point that Dell can deliver on this goal: built on its Silverback and Everdream acquisitions, web-based technologies, and Dell data center expertise, Dell Managed Services offers SMBs web-based, standardized infrastructure management services on a pay-as-you-go basis. I’m kind of surprised that its taken so long for Dell to get around to this, as its business model and technology legacy (Dell has no proprietary systems of its own) affords it a significant opportunity to differentiate.
  • Move from delivering solution components to delivering the total solutions experience. In Dell’s view, companies today spend far too much time, energy and money deploying, running and managing IT solutions. Dell wants will to simplify and make IT more affordable with turnkey, pre-tested, pre-assembled solutions that combine hardware, software and services. Although this may seem like a radical departure for Dell—best known as a hardware vendor—the company has been building towards this for quite some time, acquiring software companies (including KACE, Silverback and Everdream), along with Perot Systems. In addition, Dell is partnering with companies including Joyent, VMWare, Microsoft, Aster Data, Canonical and Greenplum) to provide additional solutions expertise and components.
  • Give customers “and” instead of “or” choices. Dell intends to help customers simultaneously pursue evolutionary and revolutionary paths towards cloud computing. To facilitate the evolutionary path, Dell’s Cloud Partner Program (partners include Citrix, Microsoft and VMware) enables companies to migrate legacy applications to more efficient virtual environments, pre-tested and optimized for Dell systems. On the revolutionary path, Dell’s platform-as-a-service (PaaS) will offer an efficient, scalable and flexible platform to deploy and manage new Web application workloads. Dell’s inspiration for this comes from its own Data Center Solutions Group, which provides cloud and high-performance computing solutions for companies that require massive hyper scale environments such as Facebook, Ask.com and Microsoft Azure. Dell’s open source platform is built on PHP, Python, Ruby on Rails, and runs Apache, MySQL, Rails and Java. The vendor plans to offer a full spectrum of delivery options, where customers can self-integrated components or turn on everything as a service. The initial target market for the platform is ISVs, telcos and others who would build on top on it, and sell through their services to end-user customers. However, Dell left the door open to offering it directly to the end-user market at some point in the future.
  • Start with a mid-market design point. Dell’s design point for the Virtual Era is the mid-market—which is a very big deal! Starting with mid-market requirements and scaling up or down from there can give Dell a big competitive edge—for a couple of important reasons. First, mid-market companies have complex IT needs, but scarce IT resources–they can’t afford a lot of expensive labor or IT tools. This aligns well with Dell’s theme of automating IT. Second, Dell’s major competitors, HP and IBM, offer mid-market solutions, but tend, more often than not, to gravitate towards a large enterprise design point for infrastructure solutions. Finally, history has proven that it’s very hard to scale down successfully. One concern I do have is that I heard different definitions for how Dell is defining mid-market in this context. Will Dell center the design point around its traditional definition of medium business (100 to 499 employees), or upwards into what I would call the upper mid-market—topping out at about 5,000? Dell needs to be clear on this because there’s a big difference in designing for 5,000 versus 500 employee firms.
  • Lead in listening. Dell has been a pioneer in building open community forums for customer input and dialogue. The vendor learned the hard way that in a Web 2.0 world, its important it is to let it all hang out–the good, the bad and the ugly. Dell was blindsided in 2005, when professor and blogger Jeff Jarvis used the phrase “Dell Hell” in his blog to describe his experience with Dell support. His blog unleashed a torrent of blogger complaints about Dell service, and escalated into an avalanche of unwanted media attention in publications such as The New York Times and Business Week. Once the shock wore off, Dell took action to listen proactively to and get involved in conversations relevant to its business and interests, globally and 24/7. Since then, Dell has dug deeper into social media to harvest and apply the collective wisdom of ever-larger crowds. Taking advantage of what it calls its “direct nature”, Dell intends to expand these initiatives. As an example, to reach and support their almost 400,000 fans on Facebook, Dell now provides “Dell Support on Facebook” widget on the Dell fan page. The widget is designed to provide Dell fans a way to engage with Dell support via Facebook to get assistance with technical and non-technical issues, check on an order status or any other issue they may be experiencing. Since the launch, Dell’s “customers’ heroes” team is touching about 3,500 customers a week through this widget, catching potential issues and flagging them so Dell can alert impacted customers and get issues fixed early. With social media rapidly displacing traditional one-way marketing in terms of influence, this should provide Dell with an enormous return.
  • Turn up the marketing volume. At the same time, Dell readily admitted that it needs to beat its own drum louder and more clearly to rise above the din in the industry. I think Dell is off to a good start with this event (the first analyst event they’ve held in a few years). I was also impressed with their executives’ ability to rein in business and IT jargon in most pitches. And, when execs did use motherhood and apple pie terms such as “open, capable and affordable” (which almost every IT vendor uses) they did a good job of following up with explanations about how they will actually deliver to those lofty goals. To really fire things up though, Dell will need to get more creative with broad and creative marketing campaigns that spark attention and interest around this new Dell and what it has to offer.

Since essentially reinventing the PC and x-86 server markets with its direct and efficient supply chain model, Dell has taken its share of lumps over the last few years for not moving past its traditional hardware-centric comfort zone. In the cloud era, Dell has the opportunity to create a new game, with new rules—ones that will favor its strengths and approach. Improving operational efficiencies has always been at the core of Dell’s DNA—a strength it can capitalize on again if it executes well in the solution, marketing and partner endeavors that back up its vision.

A Closer Look–Dell Managed Services for SMBs

Last April, I participated in Dell’s Managed Services launch for SMBs. At the event, Dell had a couple of customers on hand who were both very satisfied with the service. Later in the year, Dell asked my colleague Sanjeev Aggarwal and I to conduct a Dell-sponsored research study to learn more about how Dell Managed Services was working out for a broader group of early customers. This project was very interesting one for me because I’ve been looking at how managed services and cloud computing can benefit SMBs for quite some time.

Dell’s goal for this study was to get a better understanding of why SMBs are turning to managed services and why they chose Dell. Most importantly Dell also wanted to quantify time, cost and productivity benefits that customers are realizing from using Dell Managed Services. For the research, we conducted both in-depth one-on-one interviews with Dell Managed Services customers, and we also fielded a Web-based survey.

Next week, on February 25, I’ll share with you the key highlights about what we learned in our research during a webcast, “How to Solve Your IT Management Dilemma.” During the webcast.  I’ll discuss key study findings, including:

  • The business and IT demands that small and medium businesses are facing.
  • Why they are turning to managed services.
  • The measurable results that customers are getting from Dell Managed Services in terms of time and cost savings, and productivity gains.

For example, on average, respondents’ annual downtime decreased by more than 50% after deploying Dell Managed Services, and 89% say the service is freeing up time so that they concentrate resources on more strategic business requirements.

The webcast which will also feature Tom Myers, President, The Myers Group, Inc., one of Dell’s Managed Services customers, talking about his first-hand experience with the service. Jim Roth, Director, Dell Small and Medium Business Services, will provide participants with links to the two research papers that document the findings in detail.

By the way, in my post last year about the service, I also suggested that Dell should come up with something a bit less clunky than “ProManage Managed Services” as the name of this solution—and I’m happy to report that they’ve done this. Based on results from this study, it also looks like Dell Managed Services is helping to lift the IT maintenance and management burden off SMBs’ shoulders, giving them more time to focus on running their businesses.

2010 Top 10 SMB Technology Market Predictions

Fellow SMB analyst Sanjeev Aggarwal and I have teamed up to bring you our top ten technology related predictions-plus three bonus predictions–for the SMB (companies with 1-1000 employees) market for 2010. Details for each prediction follow the list below.

Remember to vote for your top prediction here!

2010 Top 10 SMB Technology Market Predictions

1. Pent Up SMB Demand Will Be There—But Won’t Be Easy to Capture

2. SMBs Accelerate Their Shift to Digital Marketing Media

3. The Collaboration Battle Heats Up

4. The New Face of Small Business

5. Savvy SMB Vendors Get Strategic About Social Media Analysis

6. SMBs Drive the Mobile Internet Tsunami

7. Virtualization Boosts Cloud Computing Adoption

8. SMBs’ Appetite for Managed Services Grows

9. Beyond Excel—Targeted Workflow and Analytic Tools Takes Flight

10. 2009 Acquisitions Drive New Value for SMB customers in 2010

Bonus Predictions

1. Time to Get Paid for Selling a Free Lunch

2. Vendors Scramble for SMB Developer Loyalty—and New Integration Needs Arise

3. SaaS Computing Lifts Off in New Areas

Top Ten Predictions

1. Pent Up Demand Will Be There—But Won’t Be Easy to Capture. In 2010, as the economy comes out of recession, SMBs will be more willing to spend again, but only for solutions that will provide demonstrable bottom and/or top line business benefits. SMBs will spend only if they believe that the investment will help them operate more profitably, grow revenues, increase productivity, save money or gain time-to-market advantages. SMBs are also evaluating and making trade-offs in areas that offer strategic, long-term advantages vs. those that meet more urgent, short-term needs. In many cases, IT investments must also be weighed against requirements for other core goods and services essential to the business.

To have any chance at making the final cut, vendors will need to redouble efforts to illuminate their value proposition in a clear and compelling manner, and provide more quantifiable evidence that their solutions will help slash costs, increase productivity and provide payback value. Time-strapped SMBs will also increasingly demand that vendors be easy to do business with—heavily favoring vendors that offer an accessible, transparent and positive sales experience from discovery through purchase.

2. SMBs Accelerate Their Shift to Digital Marketing Media. In 2010, SMB adoption of digital marketing media will accelerate, as more SMBs turn away from traditional media (yellow pages, print, direct mail, etc.) and towards social networking (e.g. Facebook and Twitter), email marketing, search engine marketing, blogs, forums, etc. As SMBs become more familiar with the basics, they will seek out solutions that help them streamline and integrate customer interactions across multiple digital venues. Prime opportunities include more specific, tailored search optimization and management services.

Examples include Lotusjump, designed to help retailers and etailers optimize organic search for hundreds or thousands of products; Yodle, aimed at helping services businesses create an integrated Web site and SEO campaign to drive foot traffic and make the phone ring; and WebVisible, which helps local businesses create more effective online marketing and advertising campaigns. Another sweet spot will be services that help SMBs manage and integrate inbound and outbound social media streams, along with more structured digital marketing tools, such as SEO, SEM and email marketing. Vendors such as Cloudprofile and Hubspot offer such capabilities now, with Salesforce.com’s Chatter slated for the second half of 2010. With the market getting more crowded and noisy by the minute, however, vendors will need to avoid overloading SMBs with techno-babble, and focus instead on providing SMBs with an exceptional user experience and measurable business benefits.

3. The Collaboration Battle Heats Up. In an age of information overload, SMBs need better collaboration tools, integrated with daily workflow, to bring order to the chaos. SMB decision-makers and employees are reaping the benefits of social networking and collaboration tools like Facebook and Evite in their personal lives—and asking how they can derive the same kinds of benefits in their businesses. They want to make information easier to find, share and use; extend and enhance the body of shared knowledge; and connect with people they need when they need them. In 2010, the collaboration battle will swing into full gear, as vendors introduce more integrated solutions that pull together people, tools, services and content. After all, collaboration is the only business activity that every employee engages in every day—offering vendors an irresistible opportunity to expand their market footprints and installed base presence.

For instance, IBM LotusLive and Lotus Foundations make powerful Lotus collaboration capabilities affordable and digestible for SMBs; Microsoft continues to extend SharePoint and hosted messaging capabilities; and smaller players, such as HyperOffice and Zoho, feature services built for small business from the ground up. At the same time, business solutions vendors from SAP to Salesforce.com are embedding richer collaboration capabilities into their offerings. Even networking vendors, such as Cisco are getting into the game under the unified communications umbrella.

4. The New Face of Small Business. In 2010, vendors need re-examine the evolving small business market with a new segmentation lens to better identify the composition of the small business market, and how they can create the most compelling offerings as the sands shift. Triggered by the recession, generational changes, and globalization, a tectonic shift is changing the face of small businesses. The generational shift has been underway for a while, of course: the U.S. Bureau of Labor Statistics forecasts that the number of workers between ages 33 and 44 will decline rapidly through 2020, and that more people in the labor pool are likely to be either under 30 years old or over 50. Meanwhile, more people are opting to start their own businesses: the U.S. Department of Labor notes that 650,000 new businesses started up in 2006, compared to roughly 570,000 in 2002.

Different types of entrepreneurs, small business owners and their employees have diverse requirements and expectations for technology solutions. While older workers may tend to stick with the familiar, younger new business owners and workers are unlikely to have much allegiance to existing market leaders. As baby boomers in the U.S. retire, younger Gen X and Gen Y workers—and soon Millenials—will replace them. But, many retiring or laid off older workers will move on to start new businesses, out of economic necessity and/or for lifestyle preferences. In addition, persistently high unemployment will accelerate the entrepreneurial trend across all age groups. Meanwhile, globalization is fueling the need for small businesses to expand interactions beyond their traditional geographies.

5. Savvy SMB Vendors Get Strategic About Social Media Analysis. Social media is becoming a mainstream way for vendors and service providers to engage with small and medium businesses. Most vendors already have a social media presence and publish content regularly through social media channels, while many have integrated social media into their customer service approaches and/or using tools to measure brand performance. However, only a handful have developed an effective approach to extract meaningful strategic insights from social media conversations, engagements and information.

In 2010, vendors will augment tactical use of social media with a more sophisticated, strategic plan to monitor and analyze broader SMB trends and directions. By listening, synthesizing and analyzing conversations at a higher level, vendors can strengthen market insights for use in marketing, product planning, channel development and merger and acquisition strategies. Coupled with more traditional research, domain expertise and analysis, this strategic perspective on social media conversations will provide actionable insights and a competitive edge.

6. SMBs Drive the Mobile Internet Tsunami. In 2010, SMB adoption of smart mobile devices and services will increase at an even faster pace, as the number of mobile applications and services grows exponentially. SMBs with services businesses are already serving up local ads in local searches delivered on iPhones and Blackberries—as evidenced by the fact that vendors providing local search solutions saw their revenues jump by 50% to 100% in 2009. Things will continue to heat up as new Google Android-based smart phones continue to swarm the market, Dell’s new division focused on mobile devices debuts, Apple’s iPhone AppStore expands, and vendors such as RIM and Nokia extend their own application stores in response to Apple’s success. Vendors that can go beyond devices and applications to help SMBs create more engaging content, and develop more effective e-commerce and permission-based strategies to reach their target customers on these devices can gain a significant advantage going forward.

7. Virtualization Boosts Cloud Computing Adoption. For the foreseeable future, SMBs’ will continue to take a hybrid approach to technology, combining on-premise and public cloud-based solutions to satisfy business requirements. In 2010, vendors will offer a greater range of targeted solutions for hybrid environment requirements to spur SMB interest and traction. Virtual desktops, business continuity/disaster recovery, on-demand computing and storage will feature prominently in vendors’ lineups.

As SMBs contemplate Windows 7 migration strategies, they will more closely evaluate the total cost of ownership (TCO) of cloud delivered virtual desktop solutions vs. deploying new Windows 7 desktops/laptops—as well as the added benefits around security, backups, updates, etc. that virtual desktops provide. Growing adoption of virtualization will also open the door for SMBs to consider high availability and disaster recovery solutions, which until now, have been highly desirable, but largely unfeasible for smaller companies. Look for VMware to lead the way, with others, such as Citrix and Microsoft playing catch up.

8. SMBs’ Appetite for Managed Services Grows. SMB business requirements continue to become more complex, and their reliance on technology is increasing. But most lack the resources to keep IT infrastructure up and running at peak performance. Increasing business reliance on IT infrastructure will fuel rising demand for managed services providers (MSPs) to increase performance, reliability, availability and service levels—but at reduced or at least neutral costs.

Although demand for point services (for things like backup and recovery, security and virus protection) will remain healthy, more SMBs will seek out comprehensive managed services offerings in order to free up resources to focus on core business requirements and get the benefits of “one throat to choke.” By coupling cost-effective, round the clock remote management services with onsite support, vendors will make managed services more affordable and accessible for SMBs. Examples include Dell’s ProManage Managed Services, which combines the advantages of remote management services with a scalable network operating center along with a team of local Dell and partner support professionals around the globe that provide onsite support; Mindshift, which offers horizontal managed services, as well as vertical managed services solutions for industries such as legal, healthcare and professional services; and HP, which is approaching the SMB managed services segment through its HP Smart Management Services for SMBs and Total Care Business Solutions.

9. Beyond Excel—Targeted Workflow and Analytic Tools Takes Flight. SMBs often rely on disjointed, ad hoc methods to manage many tasks and workflows, such as spend management, expense management, sales compensation and corporate performance management—to name a few. For the most part, they tackle these and other jobs with Excel spreadsheets and a messy mix of emails, paper documents and manual processing. Besides being a headache for everyone involved, this cumbersome approach has many other drawbacks, such as limited reporting abilities, high error rates, a lack of real-time visibility and collaboration capabilities, and limited flexibility.Until recently, most solutions to help manage these processes were too expensive and cumbersome for the typical SMB customer.

However, the rise of cloud computing has given wings to many software-as-a-service (SaaS) solutions that give SMBs purpose-built tools that help streamline workflow and provide critical intelligence to help improve top and bottom line performance. In 2010, vendors’ mid-market offerings in areas such as corporate performance management (CPM), with vendors such Adaptive Planning and Clarity Systems; sales compensation management, with players such as Xactly; and spend management, with entrants such as Rosslyn Analytics, which recently launched RA.Pid, a free self-service solution for SMBs. Meanwhile, traditional enterprise BI players, such as IBM Cognos and SAP Business Objects will continue to carve out more digestible BI offerings for the mid-market, offering up solutions and/or end-to-end on demand business process services to customers.

10. 2009 Acquisitions Drive New Value for SMB customers in 2010. In 2009, many deals were struck that portend great impact on the SMB market, channel and competitive landscape. Among the most notable were HP’s acquisition of 3Com, which gives HP the ability to provide a full complement of networking and connectivity solutions for SMB customers. In a market long dominated by Cisco, the HP-3Com combination gives SMBs a strong alternative, with attractively priced, competitive networking products and services with a compelling value proposition. Intuit’s acquisitions of PayCycle, Mint.com and BooRah continue to build and refresh the vendor’s portfolio of services for it’s core small business and consumer segments—which often overlap in the “prosumer” category. Intuit will likely continue on an aggressive acquisition trajectory in 2010. Avaya’s acquisition of Nortel Enterprise Solutions makes Avaya the runaway market share leader in voice and unified communications in the SMB market, with roughly twice the market share of Cisco. But at the same time, Cisco’s pending acquisition of Tandberg will enable it to bring cost effective, standards based video conferencing solutions to SMBs, creating new awareness and interest in the SMB video conferencing market. We also expect 2010 to spawn a new round of acquisition activity as vendors converge collaboration, social media and business solutions.

Bonus Predictions:

1. Time to Get Paid for Selling a Free Lunch. There may be no such thing as a free lunch in the physical world, but there is an abundance of free and very low-cost software-as-a-service (SaaS) tools for everything from personal productivity and collaboration applications (such as Google Apps, Zoho and Dimdim) to financial management (including Freshbooks, Sage BillingBoss and Workingpoint) for small businesses. With more people starting their own businesses—often on a very tight budget—use of these services will continue to rise. But in 2010, vendors with this model will start feeling the pressure to scale.

The business models for these services are predicated on the assumption that a small percentage (usually in the range of 5% to 10%) of customers will convert to a premium paid offering. Many vendors also get advertising revenues, and some see data aggregation services as another way to generate income. To profitably scale their businesses, these vendors need to stimulate rapid viral adoption (which enables both advertising and data aggregation sales) and achieve their conversion rate goals for premium services. But the combination of rapid, high volume viral growth and paid conversions is a to tough code to crack. While Google may not need to worry about cracking the code anytime soon, smaller, venture-backed vendors have a much shorter time horizon to make it work. Many will not be able to, and will need to either get acquired or shut their doors. However, some will get the formula right—with good odds on FreshBooks and Zoho.

2. Vendors Scramble for SMB Developer Loyalty—and New Integration Needs Arise. Cloud infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) are giving SMB application developers lower cost, lower risk options to develop and bring new solutions to market. In 2010, both traditional platform vendors, such as Microsoft and IBM, along with newer PaaS and IaaS types such as Salesforce, Intuit and Amazon, will need to fight tooth and nail to get both commercial SMB developers and end-user customers to create applications for their environments. Meanwhile, since its highly unlikely that most customers will only want solutions from one of these ecosystems, vendors that provide integration solutions, such as Pervasive, Boomi, and Cast Iron, have a whole new market opportunity ahead of them—integration between these different platforms and ecosystems.

3. SaaS Computing Lifts Off in New Areas. Cloud poster child Salesforce.com celebrated its 10th birthday and hit the $1 billion in annual revenues mark in 2009—and software-as-a-service (SaaS) CRM is now a mainstream—even preferred–choice for SMBs. SaaS is also gaining a solid foothold in HR, marketing and content management are other areas in which SaaS is gaining a solid foothold. In 2010, the rate and pace of cloud computing adoption among SMBs will continue its upswing.

Key areas to watch include the historically elusive SaaS financials market. Smaller companies are showing a good appetite for self-service online accounting solutions such as Intuit QuickBooks Online Edition and Workingpoint, and point solutions for things such as invoicing, from vendors such as Freshbooks and Sage Billingboss, and others. Moving upmarket, firms such as NetSuite, Intacct, FinancialForce—and after a hiatus, SAP Business By Design–should enjoy good growth spurts in midsize companies, especially in those that are faced with a costly upgrade of a legacy packaged financials solution. Both internal IT and business decision-makers move to cut upgrade, maintenance and application management costs, while also speeding time to solution value. This momentum will be further fueled as SaaS vendors make progress in bringing integrators, VARs and CPAs on board to amplify marketing and sales capabilities.

What are Managed Services, and Why Should You Care?

(Originally published in Small Business Computing, September 25, 2009)

Technology insiders tend to throw around technical terms and business jargon, assuming people outside the industry understand what it all means. By its nature, technology vocabulary is often confusing and complicated, and insiders often add to the confusion by over-complicating things. To help add a sense of clarity to the confusion, each month, Laurie McCabe, a partner at Hurwitz & Associates (a business consulting firm), will pick a technology term, explain what it means in plain English, and then discuss why it may be important to you. This month, Laurie takes a look at managed services.

What are Managed Services?

Managed services let you offload specific IT operations to a service provider, known in tech parlance as a Managed Services Provider. The managed service provider assumes ongoing responsibility for monitoring, managing and/or problem resolution for selected IT systems and functions on your behalf.

Managed services providers can offer services such as alerts, security, patch management, data backup and recovery for different client devices: desktops, notebooks, servers, storage systems, networks and applications. Offloading routine infrastructure management to an experienced managed services professional lets you concentrate on running your business, with fewer interruptions due to IT issues.

Managed services providers usually price their services on a subscription basis. Depending on the services they provide, pricing is usually based on the number of devices, with different packages priced at different levels. Some provide customer support onsite when required. Basic services often start with a monitoring service, which notifies you of problems, which you resolve on your own. At the upper end of the spectrum, service providers offer fully managed services that cover everything from alerts through problem resolution.

Typically they perform an initial assessment of your current IT environment and management requirements to help you decide what services and service levels you need.

Why Should You Care?

Just like larger companies, small businesses need technology to operate efficiently and to compete effectively. But as reliance on IT grows, the resources to support an increasingly complex IT environment may not. In many small businesses, IT resources are scarce, and can be quickly overwhelmed with the day-to-day responsibilities of keeping the IT infrastructure that the business depends on up and running.

If you fall behind in keeping up with things such as backups, patches and security, the odds are that you’ll face an IT outage or another problem down the road that will negatively impact your business. For instance, if your e-mail server, customer relationship management system, financial application or network goes down unexpectedly, you face substantial productivity and revenue losses as a result.

MSPs act as an extension of your IT department, taking care of routine IT infrastructure monitoring and management around the clock—freeing up your IT staff to focus on higher-value projects. By proactively monitoring and maintaining your systems, an MSP can help you avoid many technology problems in the first place. Should an issue occur, an experienced MSP can troubleshoot and resolve it more efficiently.

Unlike traditional outsourcing situations, where you surrender complete control of your IT assets, you decide what you want the service provider to take care of, and what you want to handle. You retain full visibility into the process and management of your systems. In addition, the MSP subscription model gives you more expense predictability than a consultant-type time and billing model.

What to Consider

MSPs offer a wide range of different services. Many focus on managing specific areas and functions, such as storage and related management services, or desktop management and help desk services. Some provide management services for server hardware, operating systems and middleware, but limited support for applications such as e-mail. Many provide onsite services as required, but may have limited regional or local coverage areas.

If you are looking for more comprehensive services, including alerts, monitoring and management services for a wide range of client, network, servers and applications, Dell offers ProManage-Managed Services for SMBs. The service offers small businesses a choice of service levels, priced on a per-device, per-month basis. Most services are provided remotely, but Dell and its channel partners supply onsite service when required.

With so many different types of MSPs and offerings, the MSP label can be a confusing one. So, when considering managed services, think first about your requirements. How satisfied you are with the level and quality of support that you have today? Where are the gaps, pain points and inefficiencies in IT infrastructure management? How do downtime, outages and other problems impact your business?

With these requirements top of mind, evaluate MSPs that map to your IT, business and budget requirements and provide a flexible, proactive approach that can adapt with you as your needs evolve.

Managed Services: Dell’s Next Disruption?

What do you get when you combine an industrial-strength managed services platform, a software-as-a-service (SaaS) desktop management solution, and a hardware vendor that transformed the PC and server industries with its direct, Internet sales model?

The answer is Dell’s ProManage Managed Services, which is built on Dell’s Silverback and Everdream acquisitions, web-based technologies, and Dell data center expertise.  After a year-long pilot in Dallas and New York, Dell announced the nationwide rollout, which offers SMBs web-based, standardized services on a pay-as-you-go basis (full details at http://tiny.cc/IxZlA)

Back in the day, Dell made it’s mark in the industry and transformed the PC and then the industry-standard server market with its direct, build-to-order business model. By streamlining supply chain, inventory, ordering and manufacturing processes, Dell gained enormous cost and efficiency advantages over competitors with inventory-laden two-tier distribution models. Dell’s ability to pass cost savings on to customers, and give them a faster, more consistent buying process ended up revolutionizing the hardware business. Over the years, of course, competitors streamlined their own operations and sales, and Dell lost many of the cost, pricing and time-to-market advantages that had set it apart in the PC and server industry.

Today, however, Dell is aiming to bring many of the same business model principles to a messy managed services market that has plenty of room for improvement. While SMBs increasingly depend on IT to run their businesses and stay competitive, they are also increasingly overwhelmed by complexity of the systems and solutions they depend on. Dell estimates that for every one dollar SMBs spend on hardware, they spend two dollars to manage it. Even so, most struggle with outages, security threats, data loss, inadequate desktop support and other issues because their small or even non-existent IT staffs can’t keep up with the care and feeding their systems require. 

While SMBs can turn to VARs for help, not all VARs can provide proactive, 24/7 services and expertise across a myriad of different applications and devices, or provide consistent support for customers with multiple locations. Consequently, most SMBs remain stuck on the treadmill of firedrills and break/fix, without little time left to think about how they can put IT to work to help the business survive and grow in this tough economic climate.

ProManage Managed Services addresses this problem with subscription-based, proactive 24/7 services designed to lift the IT maintenance and management burden off SMBs’ shoulders and help them spend more timing running their businesses. Current offerings include:

·      Alerts, for 24/7 remote monitoring of networks, severs, PCs, mobile devices and applications—including non-Dell brands. If a problem occurs, Dell alerts he customer or their channel partner so they can repair before it causes serious harm.

·      Resolution provides the monitoring above, plus proactive remote repair. Dell notifies the customer and/or partner of the problem and flxes it. If Dell can’t fix it remotely, it will send a local Dell or certified partner onsite for the repair. During the pilot, Dell indicates it resolved over 90% of problems remotely.

·      Management supplements alerts and resolution with 24/7 help desk support (for a wide range of SMB applications), additional security features, asset tracking and management and assessment services. With this offering, Dell also provides a designated account team.

The service model is flexible, requiring no upfront investments or long-term contracts.  Customers can add additional services or devices (pretty much anything with an IP address) at any time, and scale down with just 30 days notice. Dell also offers additional services on a pay-as-required basis to help with more random issues that may crop up.

While ProManage Managed Services will set off alarm bells in the channel, Dell is encouraging partners to participate. First, Dell Silverback partners can sill offer the Silverback platform to customers—with Dell pledging a hands-off approach. Other partners can operate as sales agents, garnering 15% in recurring revenues for selling through Dell’s managed services. Dell promises to keep these partners in the loop via regularly scheduled customer status meetings and reports. This should appeal to VARs and others that simply don’t have the resources to build out their own NOC, or want to supplement their main focus (such as business applications) with additional services. In the future, Dell says that will provide another option for an integrated co-delivery approach, with details to be announced towards the end of the year.

That said, the direct model and improving operational efficiencies are a large part of Dell’s DNA. Dell has always been a business model innovator, focused on providing price performance and consistency, and giving customers a better shopping and buying experience. With ProManage Managed Services, Dell is again taking a similar approach. As with its hardware business, partners are welcome, and can play a vital role, but are not the lynchpin in Dell’s formula.

While the launch was a great start, Dell must keep the volume level high to get and stay on SMB radar and get partners engaged. On the customer front, it needs to develop an ongoing campaign to enlighten SMBs about ProManage Managed Services, fueling it with the types of tangible proof points and measurable benefits that propelled Dell Direct in the early days. Dell must also keep a close pulse on SMB requirements, and continually test, refresh and refine its offerings in to meet market requirements. (After typing it so many times, it also occurs to me that Dell should come up with something a bit less clunky than “ProManage Managed Services” as well!) From a partner perspective, Dell needs to do a better job of communicating how partners can benefit from each of the options,  and evolve their services around them. 

While it won’t reinvent the managed services model overnight, Dell is setting the stage to reset SMB expectations about IT service and support, and in my opinion, it’s about time.

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