By: Anurag Agrawal
On 7th January, Harry Brelsford, Founder, SMBNation had a Q&A webinar with Techaisle on the challenges of SMB-focused MSPs and cloud channel partners. Given below are his questions and Techaisle’s responses.
Harry: Referring to this blog SMB IT Channel has reached an inflection point can you better define “inflection point?” does that mean a tipping point before collapse or a pivot?
Anurag: It is a pivot not a collapse – “one stop solution shop” is dying as each of cloud, mobility, managed services and CI/virtualization gets too complex for generalists to manage. The IT channel is changing, permanently and in ways that are entirely different from what we have seen in the past. In the same way that “cloud” refers to a very wide range of very different IT models and deployments, “the channel” is becoming a generic phrase that describes a set of business approaches that is increasingly specialized and fragmented. The areas that I just mentioned – cloud, mobility, managed services, virtualization - today, there is substantial overlap across these categories – but it is our belief that over time, success in any one of these areas will require discrete focus and investment, reducing opportunity for equal success in/focus on other competencies.
Harry: I like how you provide historical context – the comment you made regarding a market defined by the adoption of a particular type of technology (e.g. small Business Server (SBS)) is a point well taken by this crowd. But I’m not sure I’m seeing a cult-like community emerge around any particular cloud product (e.g. Office 365). Would you agree?
Anurag: Talking from a channel POV, agreed. If there is a cult growing, it is around Hybrid IT; possible that Cloud Broker business model will get to this level as well. SMB organizations will accept the notion that their focus on cloud needs to evolve into a focus on hybrid IT, as firms realize that their platforms and management scope must encompass on and off-premise systems. Truth of the matter is that Office365 also disintermediates the channel. There is no stopping an organization from going directly to Microsoft and purchasing and installing Office 365 as opposed to using SBS from a channel partner in the past. It is a classic cloud vs. on-premise conundrum. The ecosystem should evolve but it will evolve around integration of data and applications.
Harry: Along those lines, I just had a conversation that I’m not seeing the same ecosystem building up around a cloud product or service. For example, we’d like to take credit that SBS really helped build Trend Micro and today it’s a $1b company. But I’m not seeing these add-ons in the same way with Office 365. The only thing I can point to are a few SharePoint snap-ins and a few tools (migrations, etc.). Do you agree or disagree?
Anurag: Mostly agree. There is a lot of potential around Salesforce, but a lot of cloud software suppliers sell direct, using online trials rather than channel members to educate customers about offerings. This does not mean that there will be no aggregation opportunity in the future, but the cloud broker model is still pretty immature, and the traditional channel has several barriers to surmount before they can adopt this kind of role with respect to cloud.
Harry: You put a lot of emphasis on mobility. While I think mobility is a game changer and you have kids walking around with cranked over necks on city streets, I guess I’ surprised. Please defend your lead-off statement about mobility, sir!
Anurag: Seen on the web recently – “Software is eating the world, and mobility is eating software; therefore, mobility is eating the world.” Everywhere, and especially outside the US, the mobile device is the key to information access and use. Today, the workspace is not defined by windows and walls and common area couches. For millions of SMB employees, the “workspace” is not a physical location – it is a virtual space defined by access from multiple screens which are used from multiple locations. Techaisle data shows that more than one-third of SMB employees today spend at least 20% of their work time away from a central office, and that 80% use mobile devices to access corporate information. If the “office” is defined by devices, so too is “workplace” defined by the ability to work from wherever those devices (and their users) are located. SMBs are investing in mobility because it contributes to both cost savings and increased market reach, with “improved productivity” and related answers connected to establishing “better ways of working” viewed as the greatest benefit of mobility within SMBs. Techaisle’s data shows that small and midsized businesses have different challenges in supporting the mobile workforce: while both cite TCO as their most significant challenge, small businesses struggle with the “on ramps” to mobility (such as finding appropriate suppliers and solutions), while midmarket firms report that they are more concerned with security/data protection and mobile management. Empowering the SMB mobile workforce becomes a huge opportunity for MSPs.
Harry: Let’s go throw the four points of overlap in your first blog installment. For the benefit of the listeners, could you expand on your four bullet points?
Anurag: In our research, Techaisle has divided the SMB channel into four technology-focused groups:
•Mobility, which includes the channel members who are looking to regain relevance in the client market by providing management solutions that address the sprawl of applications (and as a result, complexity and GRC exposure).
•Managed services, which hones in on firms that are successfully pursuing a services-led, recurring revenue-based business model.
Cloud, which represents – at least in our view – the mainstream opportunity of the future, and which will ultimately divide further into segments clustered around delivery models, customer sets and/or technology specialties.
•Virtualization and converged infrastructure, which represents the evolution of the traditional channel focused on sales of back-office technology.
Today, there is a great deal of overlap between the four groups, but we have hit an inflection point, and the (more or less) common starting point is launching multiple distinct paths. At present, though, this diffusion of channel interests and capabilities is the source of a great deal of complexity within the channel, and as a result, within the vendor and buyer ranks as well. All three of the core supply chain communities – buyers, vendors and the channel – need to understand what is required for success so that the channel can make the investments needed to support emerging requirements, vendors can commit to the investments and partners needed to drive success, and buyers can identify the suppliers able to deliver business benefit from advanced technology acquisition