Sanjeev Aggarwal's Blog

February 1, 2012

What Can We Learn From This Year’s Holiday Season?

—by Brent Leary, CRM Essentials

In conjunction with IBM’s Smarter Commerce initiative, the SMB Group and CRM Essentials are working on a series of posts discussing how technology is empowering today’s customer, and why companies have to change their approach in order to build strong relationships with them. This is the fourth post in the series.

Christmas 2011 is a great example of Smarter Commerce in action. It’s a lesson in why businesses need to transform the way they market and sell their products and services. According to the National Retail Federation, retail industry sales for the 2011 holiday season increased 4.1 percent year-over-year to $471.5 billion, beating its expectation of 3.8 percent growth. And while the overall numbers probably made for a pleasant holiday for the industry as a whole, what was happening online was astounding:

  • US online holiday shopping season reaches a record $37.2 billion, up 15 Percent vs. 2010 – a rate of increase almost 4X higher than the overall rate for retail.
  • A post-holiday 2011 retail study from Kabbage, Inc. focusing on small-to-medium online merchants found 69% of respondents reporting increased sales. On average, study participants experienced a 32% hike in sales compared to the 2010 season.
  • As late as one week before Christmas 2011, one-quarter of consumers hadn’t even started holiday shopping. (Consumer Reports)
  • 93% of retailers have offered free shipping at some point during the season vs. 85% last year. (USA Today)
  • The 2011 US Holiday Season edition of the ForeSee Results E-Retail Satisfaction Index of the top forty Internet retailers increased by a point from 78 to 79 (on a scale of 1-100)
  • Almost one in four retail searches online on Christmas Day were made using mobile phones or tablet devices, according to the British Retail Consortium (BRC).
  • The number of adults in the United States who own tablets and e-readers nearly doubled from mid-December to early January, according to a new Pew Research study. (New York Times)

Technology’s Impact on Behavior Is Accelerating

The world is changing. While still a fraction of the overall sales figures, ecommerce is growing at a much faster rate than traditional retail. And not just for the big retailers. As the Kabbage study illustrates, small and midsize online retailers enjoyed tremendous growth as well. This in part stems from the effect technology is having on the customer buying process, and the ability of companies to adapt their business processes to support online shopping.

When you think about twenty-five percent of shoppers not starting their Christmas shopping until after December 18th, it really hits home how the process of shopping has changed. Five to ten years ago most people still were going to multiple stores in search of ideas for things to buy, to find recommendations, compare items, and to look for deals, so they had to start their shopping efforts earlier. Now they can do most of that online – with a lot less time involved. And from the online retailer’s perspective, they leverage the latest technology not only to provide this information to online shoppers, but also to deliver the goods on time as well. Jewelry specialist Blue Nile offered free FedEx shipping guaranteed to arrive by Saturday, December 24, for all orders placed as late as 7 p.m. the day before (Friday, December 23). And other online retailers offered similar shipping capabilities.

This all adds up to shoppers more efficiently finding what they want, knowing the price they want to pay and having the confidence of getting it in time – with the added benefit of not having to wrestle with issues like parking, crowded malls, weather etc.. And as both companies and consumers accelerate their technology adoption, look for ecommerce to steadily increase its portion of the retail pie while customers leverage social and mobile to decrease the time and effort it takes to buy things.

Technology’s Impact on Behavior is Dramatically Affecting Expectations

One of the more interesting developments is how technology is impacting customer expectations as well as their behavior. Now that companies like Amazon can get items to us in two days for free, we expect this kind of service all the time. And while 93% of them did offer free shipping at some point during the holiday season, a study also showed 73% of consumers recently surveyed by MarketLive named “free returns” as a top promotion in determining their online purchasing behavior.

This is a great example of customers understanding what technology can do, and expecting vendors to find ways to leverage it to continuously improve their shopping experience. And improving the experience is crucial to keeping customers satisfied. According to the ForeSee study, satisfaction scores are important because a one-point change in website satisfaction can predict a 14% change in revenues generated on the web. And when they were highly satisfied with a purchase:

  • 64% of survey responders said they were more likely to buy from the same company the next time they needed a similar product;
  • 67% were more inclined to recommend the company to others; and
  • 65% felt a sense of ‘brand commitment’.

This illustrates that investing in improving customers’ web experience is a terrific way to build brand loyalty and capture the benefits of viral marketing (or something like this).

A Christmas Carol…

You really don’t have to look much further than Christmas Day 2011 to see how technology has changed customer behaviors and expectations. Digital content & subscriptions (digital downloads of music, TV, movies, e-books and apps) accounted for more than 20 percent of sales on Christmas Day. On any other day of the holiday season, that number was only 2.8%. And these numbers were driven by the rise of mobile devices, with the iPad leading the way on Christmas Day with a staggering 7% of all online sales coming through just that one device – accounting for 50% of sales that day, according to the IBM Coremetrics Benchmark.

While the numbers tell the story, it really hits home personally when I saw my parents (both octogenarians) sitting at the kitchen table Christmas Day – my father with his iPad, and my mother with her Kindle Fire. And my mother, having received the Fire as a gift, was reading an ebook she purchased Christmas morning… with an Amazon gift card.

This is a totally different story of Christmas than Charles Dickens told in the 19th century, but it’s a tale of what to expect in the 21st century when it comes to customer engagement. Because of technology and its empowering effect on customers, they are developing “great expectations” their vendors must live up to. Which means vendors must be smarter in their approach to smarter, more informed customers.

This is the fourth of a six-part blog series by SMB Group and CRM Essentials that examines the evolution of the smarter customer and smarter commerce, and IBM’s Smarter Commerce solutions. In our next post, we’ll look at key points to consider when planning a smarter commerce strategy. In our next post, we’ll look at IBM’s Smarter Commerce offerings to help illustrate how midsize companies can reshape the way they do business to meet the expectations and needs of smarter customers.

April 16, 2010

Highlights from Iron Mountain Digital 2.0 Industry Analyst Meeting

Highlights: The overall annual growth in data volumes is beings driven by an increase in unstructured data created by social media and collaboration solutions, mobile solutions and rich media which is leading to much higher costs for information storage and management. This problem is further exasperated as the information creation moves from customer on-premises sources, to now include mobile edge devices and the cloud. SMBs and mid-market enterprises now need to take a much more holistic approach to information management. Driven by the need to support compliance, litigation, business continuity and disaster recovery requirements – SMBs need to carefully consider who they partner with as their trusted guardian of their information considering their need to store, protect, manage and retrieve this information in a virtual world anytime, anywhere, and anyplace.

Quick Take: I’ve been following Iron Mountain for a while, and this was their 3rd. analyst event that I attended. Everyone recognizes Salesforce.com as a cloud solution market leader; I would venture to say that the 2nd biggest cloud solution and services provider is Iron Mountain Digital. Key insights from the conference are:

  • Shift in company focus from Storage-as-a-Service to ‘Integrated Information Management Solutions‘ that is based on a location agnostic strategy – from on-premise to edge to cloud

  • Key Value Propositions to address the customers Total Cost of Ownership/Total Cost of Management of Information include:
    • Help customers reduce their spend and risk in owning / storing their rapidly growing information through policy-based intelligent information storage and access
    • Help customers improve operational efficiencies and reduce their spend in managing their information for use
    • Trusted partner in information management for both physical and electronic records and information, and in bridging from one to the other in terms of document conversion, data restoration, scanning, etc. 

What makes Iron Mountain different?

  • Information management platform with intelligence-driven and policy-enabled applications. This has been enabled through internal development and innovation (Digital Record Center for Compliant Messaging, for example), partnering (Total Email Management Suite, powered by Mimecast), and a carefully crafted acquisition strategy that started with Connected® and LiveVault® for backup to recent acquisitions that include Stratify® for eDiscovery and Mimosa for archiving.
  • Unique capabilities
    to “look into” and “look across” information
    . This will help with categorization of data – even at the point of creation – to enable intelligent access, compliance (including risk management), discovery, recovery, destruction and other potential use cases

  • Trusted partner who is financially strong. There are several companies offering remote backup solutions, and hosted email archiving, including you local VAR. But will these companies be around when you need the information 10-20 years from now for compliance purposes or to support litigation?
     What is still missing? Iron Mountain is accumulating a good war chest for location-agnostic information management solutions. They do have global relationships with large enterprise and upper mid-market companies – developed as the dominant leader in the physical information management services business that includes the storage of paper documents and magnetic tape storage media for backup and archiving purposes. They serve the SMB market through some core services, through direct and indirect channels. However, in my opinion, there is a larger opportunity in the SMB and core mid-market that includes:

    • Backup and archiving to support daily operations for desktops, servers and mobile devices
    • Backup and archiving to support business continuity and disaster recovery
    • Information management to support risk and compliance management
    • Virtualization of servers and desktops, and cloud computing is creating new and unique information creation and management opportunities which need to be addressed. The vendors that address these solutions (on public clouds based solutions) will be in the unique position to provide the services that Iron Mountain Digital 2.0 is seeking to provide. 

The first mover vendors will gain tremendous benefits, as these solution partnerships are now easy to replace – Iron Mountain can attest to this with their decade-long relationships with a large percentage of their customers. Iron Mountain needs to craft an SMB and core mid-market strategy with a more aggressive go-to-market plan than what I see at present.


 

November 8, 2009

Increasing interest for Corporate Performance Management (CPM) in Mid-Market Enterprises

In today’s world overloaded with buzzwords, terms such as “Business Intelligence (BI)”, “predictive analytics” and “Corporate Performance Management (CPM)” are confusing to mid-market enterprises.

BI technologies provide historical views of a company’s business operation. Some of the enterprise –class BI solutions now include predictive analytical capabilities also. BI is a term used to describe the technology used to access, analyze and report on data relevant to an enterprise. It includes ad-hoc query, reporting, on-line analytical processing (OLAP), dashboards, scorecards, search, visualization, etc. Initially, most BI vendors lacked the ability to build models that can project in the future. However, in the past 3-4 years, the enterprise-class BI vendors have added some of these capabilities to replicate functionality offered by CPM vendors. BI and CPM are complementary solutions, and the BI platform provides a natural-basis to build a CPM solution. BI solutions are usually very complex and expensive for most mid-market companies. However, some of the more focused and template/wizards driven “Express” or “Fast-start” solutions, which are more affordable (especially if they are available in a online or appliance) and can be implemented in a reasonable amount of time – are becoming interesting for the mid-market if the vendors can show measurable benefits and short-term ROI.

In the CPM world, “predictive analytics” is generally used to refer to software solutions that automate and manage process related to corporate performance – financial forecasts, budgets, financial strategies, financial consolidation, scorecarding, and reporting. Another term used to identify CMP is BPM (Business Performance Management but this is sometimes confused with Business Process Management – two very different areas). Some CPM solutions regularly monitor some key performance indicators (KPI) in terms of actual vs. budget and, whenever a significant discrepancy is identified, help perform root causes to identify sources that could be causing this.

The BI and CPM solutions do not need to come from the same solution provider, as the two technologies are complementary and could co-exist. However, there may be economies and synergies related to getting them from the same vendor (if offered). In some instances, mid-market ERP solution vendors are now developing deeper integration to some CPM solutions (like NetSuite with Adaptive Planning).

In the current tough economic conditions, this segment is under tremendous pressures to improve financial processes, measurements and management of the mid-market enterprises. To adress the above, mid-market businesses are increasingly deploying CPM solutions to improve planning (forecasts and budgets), manage costs/optimize profits and more importantly risk and compliance.

The following companies provide enterprise and mid-market CPM solutions:

Increasing interest and deployment of these solutions by mid-market enterprises is demonstrated by the double-digit growth rates most of these mid-market solution companies are experiencing. The CPM applications are targeted at the mid-market company CFOs, C-level executives, finance team and corporate strategy teams.

How were majority of these mid-market companies addressing the financial planning issues until now? Majority of these companies are using Excel spreadsheets. Using Excel, has significant accuracy limitations and  the amount of time spend on the planning process. It also denies the organization a collaborative, connected and productive planning process. Mid-market organizations need to take a more objective view to replace Excel based planning and replace them with CMP solutions. Some basic analysis on time (and accuracy achieved) spent on Excel planning and the results achieved will quickly show the benefits and ROI that can be achieved by CPM solutions – these can be split into the “hard” benefits quantifiable by replacing Excel and the many potential “soft” benefits derived from using a CPM solution.

July 7, 2009

The Compelling TCO Case for Cloud-based business applications in SMB and Mid-Market Enterprises

A 4-year total cost of ownership (TCO) perspective comparing cloud and on-premise business application deployment

Small and medium businesses (SMBs) face a tricky dilemma in today’s tough economic climate. It’s no longer business as usual; companies need to figure out how to survive through the current downturn, and get on track to capitalize on new opportunities that will emerge as the economy starts to grow again. They need business solutions to help them to manage more efficiently day-to-day, and also the intelligence they need to move the business forward.

As SMBs weather through turbulent economic storms, total cost of ownership (TCO) is often top of mind when evaluating new business applications. Many customers have become interested in how cloud computing or software-as-a-service (SaaS) can help lower their costs by eliminating upfront capital investments and ongoing maintenance costs associated with on-premise solutions.

Hurwitz & Associates recently completed an in-depth study comparing TCO of cloud-based business application and equivalent on-premise solutions.

Cloud computing essentially eliminates the need for customers to buy, deploy and maintain IT infrastructure or application software individually. Regardless of the application, the cloud computing vendor takes responsibility for all of the infrastructure required to run the solution–servers, backup, software, operating systems, databases, updates, migration, power and cooling, facility space, etc., and associated internal and third-party staffing costs. Because cloud computing vendors manage all of their customers on a single instance of the software, they can amortize costs over thousands of customers. This yields substantial economies of scale and skill, and lowers TCO.

Key findings from our analysis include:

  • Overall TCO for cloud-based integrated solution suite is significantly lower than a comparable on-premise solution. This holds true for both SMB and mid-market firms.
  • IT Infrastructure costs (hardware, software and maintenance) account for about 10% of the total cost of deploying on-premise business applications.
  • The cost advantages of cloud computing slowly taper off as the number of users increases beyond mid-market to larger enterprise companies.
  • Application subscription costs account for two-thirds of the total solution cost in the cloud computing model, where the subscription fee encompasses underlying IT infrastructure and personnel costs required to manage business solution. In comparison, business application costs comprise about 27% of total cost in an on-premise situation.
  • Costs for internal IT staff and/or value-added reseller (VAR), consultant or systems integrator (SI) resources required for application implementation and support represent a significantly higher percentage of total cost for on-premise solutions than for cloud-based business solutions.
  • Pre-integrated front and back office functionality in the integrated business application offering contributes to reducing integration complexity and lowers application implementation costs.

March 27, 2009

Can Cloud Computing and Managed Services Resolve the Telecom Crisis?

The telecom dilemma is not new, the failure of telecom network service providers to leave their legacy technologies and embrace the all-IP world has not materialized as anticipated, especially in helping them generate significant revenues. They are still dependent on a handful of commodity services, even when one considers their cellular operations. They have not succeeded to create mobile IP applications that would have provided the growth engine – Apple with their iPhone platform is successful leading that effort.

Telecom companies (like AT&T, Verizon, BT) are painfully aware that their existing services telephony (PSTN services are experiencing a rapid decline and mobile services are also experiencing stagnation; some growth in VoIP services), Internet access markets are experiencing slow growth as adoption reaches saturation, and their Managed Services are still not breaking even as they not widely promoted. However, what these giant Telecom companies have going for them is that they still own the networks that power the cloud and large data centers in the cloud.

These companies need to introduce new services if they are to gain new and retain existing customers and grow revenue streams. If they can partner with some strategic global vendors and develop a vision to monetize these assets, they can become a key player in the cloud ecosystem. The current turbulent economic conditions provide the market disruption that provides an entry for these Telecom based partner ecosystem.

‘Cloud Computing and Services’ presents this market disruption, an opportunity for the telecom companies, as enterprises and SMBs look for alternatives to significantly reduce their capital and IT staff expenditures to more flexible pay-as-you-use operational expense models – if they can address IT needs of the enterprises and SMBs, not just ISVs or custom application developers (the existing cloud computing vendors are primarily addressing the needs of the software developers).

Cloud Computing and Services presents is a significant growth market opportunity. As the management/services of IT infrastructure and applications accounts for a more than 60% of the total IT spend, IT segments getting more specialized, cost and complexity of data centers increasing exponentially – enterprises and SMBs are looking for alternate IT solutions that can help these enterprises focus on their core business. This represents a very significant revenue and growth market opportunity in cloud computing and services for solutions that address the IT needs of mainstream enterprises and not only tech savvy software developers.

The significant Telecom companies surely have the financial resources to do this. However, they need to transform and act more like a technology company – partner with the technology companies that are successful at developing and implementing compelling new ideas – with go-to-market urgency, marketing prowess, technology partnerships with vendors that are market leaders and can bring channels to quickly reach the enterprise and SMB businesses, easy-to-understand and implement business models, and proactive customer service models.

The question is can these traditional Telecom companies comprehend and exploit the market momentum for this opportunity – Can they be aggressive and innovative like the IT technology and Web 2.0 companies or will their traditional bureaucratic structure relegate them to a me-too status!

March 19, 2009

Why are SMBs and Mid-Market Enterprises interested in Cloud Computing?

As SMBs and mid-market enterprises are looking at their IT budget and face the realities to cut them, they look at what is discretionary and what can be supported through innovative IT strategies. However, at the same time they need to adopt new technology solutions that will make them more competitive in the current economic environment and prepares them to grow when the economy improves. They following arguments shed light on why these companies are actively exploring various cloud computing initiatives:

  • Vendors Making it Easy to Adopt Cloud Services – Amazon leads the cloud computing movement because they make it very easy for companies to adopt their platform and storage services with implementation and pricing services that are easy to understand and try without the need for complex contracts and pricing. Vendors that seek to service the SMB market need to learn from the simplicity and flexibility of the Amazon Web Services model.
  • Change in Appetite for Risk – SMB and mid-market companies focus on risk has changed, driven by the realities of the current economic environment. Instead of making do with outdated systems and slowing adoption of new technologies, these companies are now more comfortable with the risks associated with cloud computing solutions. This is driven by examples of success achieved by some of the high-profile companies through “show-me” examples. They are feeling more comfortable with security, access and reliability issues.
  • More Effective Backup and Disaster Recovery SMBs usually do not have remote data centers. Cloud services provide them the ability to encapsulate the internal virtual machines and replicate them to the cloud off-site. Virtualization vendors like VMware and Citrix are making this easier.
  • Shift away from New On-premise Hardware Purchases – As SMBs and mid-market enterprises look at the Key IT initiatives that are being considered in the decision-making processes, initiatives that will help save costs and show quick ROI are getting attention. IT strategies based on flexible monthly operating expenses, without a significant upfront investment is gaining momentum. New hardware purchases and upgrades have a lower priority; business applications that are critical to the business operations are getting approval. However, implementing new business applications sometimes require additional new hardware purchases, the spending on hardware purchases can be alleviated by adopting flexible pay-as-you-use cloud computing solutions and services with business applications which are delivered software-as-a-service (examples NetSuite and Salesforce.com) or hosted in the cloud (example Rackspace).
  • Increase in Adoption of Virtualization – As SMBs and mid-market enterprises adoption of virtualization solutions enters mainstream, adoption of cloud computing solutions is becoming easier.
  • Significantly Reduced Application Implementation Time – SMBs don’t have to go through a two week purchase order process and an additional two weeks of configuration and testing before an application is available for productive use.
  • ISVs Solutions Supporting Cloud Platforms – Majority of the ISVs are now developing solutions that are multi-tenant and built to be delivered over the cloud. Some of them are using cloud platforms like force.com or Quickbase built to support cloud solutions.
  • Savings in Power and Data Center Space – Cloud computing enable SMBs to control server and storage sprawl by moving some of the applications and storage to the cloud vendors data centers, freeing up data center space and at the same time saving on power consumption costs. These SMBs do not want any more hardware in their equipment closets.

February 23, 2009

Cloud Computing and Managed Services Opportunity – Is it the Large Enterprises or SMB/Mid-Market Enterprises?

The convergence of web delivered IT services – Cloud Computing, Infrastructure-as-a-Service, Hosted Applications, Software-as-a-Service, Virtualization – will continue to redefine and add value to the SMB/mid-market IT services landscape, especially in the current economic climate.

Our outlook calls for rapid increase in adoption of various Cloud Computing and Managed Services components over the next 2-3 years as businesses look to cut costs and reduce capital expenses. This adoption will still be on a piece-meal – with Online Storage/Archival and related services, Hosted applications, Business Continuity/Disaster Recovery and SaaS delivered Business Applications being the most sought-after capabilities (SMB/Mid-Market Key IT Initiatives in the Current Market Environment blog). We see early adoption of these services starting in 2008-2009 and gaining more momentum into the mainstream market by 2011-2013 when the global economy emerges from the current financial conundrum.

It is interesting to see some of the SaaS companies like Salesforce.com focus on small number of enterprise accounts which account for half of their revenues through their direct sales force (they don’t have much of a channel presence). Even in the recent earnings call for NetSuite (again majority of the focus is on direct sales with some VAR efforts), all the financial analysts had questions only on the large account focus. In the U.S.(total 6.5 million businesses with commercial locations), there are less than 0.1% large enterprises(more than 1000 employees) and 0.4% midmarket-enterprises(500-999 employees); the remaining 99.5% are SMB companies. As the low hanging opportunities in large enterprises are already converted into customers, the growth of these SaaS companies is slowing. Why the continued focus on large enterprise, direct sales focus?

Well, to begin, if a vendor is serious about selling to the SMB segment, they should first seek to become their market channel, or connect to their channel – a strategy and value proposition they need to create. The SaaS value propositions that convinced the large enterprises do not always work well for the elusive SMB segment, which is a much more difficult and complicated market, but offers tremendous revenue potential. Although, with somewhat different value propositions, pricing and revenue models.

Who are the well positioned channels or links to the channel to enable selling to the SMB and mid-market enterprises? This can be addressed by segmenting this SMB/mid-market market and then looking at the channels that are well positioned to sell to the various segments based on the existing relationships and touch points. A topic for a future blog!

The vendors that have a good lead in the cloud computing segment are Amazon.com, some of the hosted services vendors like Rackspace and Savvis, and managed services vendors like Iron Mountain, IBM, BT and EMC. Virtualization will play a big role in this migration; vendors like Citrix, VMware and Microsoft are developing cloud services and platforms to help virtualize the data centers of some of the cloud solution and services vendors. Who out of these vendors understand how to navigate the complex SMB segment?

Cloud Computing and managed services providers (and their technology partners) need to learn from the business models of SaaS companies and early cloud computing vendors. Then put in place strategies and channels to capitalize on the huge IT services opportunity in the SMB and mid-market enterprises that lack the IT and financial resources of large enterprises, outside of the small number of technologically sophisticated SMBs and software developers (ISVs) that are the early adopters and have the IT resources to leverage the cloud solutions and services. In addition, by taking advantage of the internets’ low-cost marketing and delivery capabilities, companies can profitably mine the “long tail” of the SMB market.

February 6, 2009

IBM Dynamic Infrastructure Announcement and the Mid-Market Enterprise

With today’s ‘Dynamic Infrastructure’ initiative announcement, IBM is positioning itself as a holistic technology solution and service provider and partner. It combines all the element of separate cloud delivered services (cloud based, managed, and on-premise) and also traditional on-premise hardware, software and services.

  • Managed Services
  • Cloud Computing
  • Software-as-a-Service and Infrastructure-as-a-Service
  • Traditional on-premise based software, hardware and service

If IBM is to become a trusted partner of mid-market enterprises, they need to present a vision of a holistic technology/solutions partner that understands the mid-market enterprise and the value proposition that IBM’s Dynamic Infrastructure brings. Several vendors can offer pieces of these solutions like managed services or SaaS, etc., but no single vendor has the experience, product/services portfolio, industry experience and partner/ISV ecosystem to become this trusted partners. IBM has the market presence, solutions and partner ecosystem to be this vendor with the ‘Dynamic Infrastructure’ initiative.

Why will IBM be more successful with this strategy in the mid-market?

Several vendors have offered pieces of this service successfully to the SMB and mid-market. However, the mid-market enterprises has limited IT resources and technology expertise. Some of these businesses have adopted segments of this type of solution, piece-meal from several different vendors. Vendor A provides managed security service, vendor B provides online backup service, the vendor C provides on-premise virtualization solutions, etc. When the mid-market enterprise experiences problems – they don’t know who to turn to. Some managed service providers (MSPs) are re-inventing themselves as aggregators of several of these services and have started to see partial success. These MSPs lack some of the deep industry/technology expertise and also some of the flexible computing cloud computing infrastructure that provides the reliability, high-availability and SLA’s essential for getting the mindshare of mid-market enterprises for whom things like these are critical.

How will this service resonate with mid-market enterprises in today’s tough economic climate?

  • If these recessionary conditions are deep and protracted – the mid-market enterprises need to reduce costs by reducing IT resources, postponing upgrades of existing IT infrastructure and applications. These enterprises (especially if they are growth oriented companies) will be able to benefit significantly by this initiatives. When looking at a 3-5 year TCO provided by this initiative. This initiative helps preserve upfront capital expenditures and cash and shifts them to monthly operational expenses.
    • IBM can also benefit with the availability of IBM Financial Services programs for the mid-market
  • If these recessionary conditions are shallow and short – mid-market enterprises will be more inclined to stay the course and possibly look at new initiatives like ‘Dynamic Infrastructure’ over a longer time horizon.

What IBM needs to do to win in the mid-market enterprise with this initiative?

  • Need to engage the regional mid-market service providers(MSPs) more as they have the direct relationship with the mid-market customers.
  • These mid-market service providers can provide the ongoing day-day relationship with the client, 7X24 active management of the services provided to their client, onsite component of the interaction with the client.
  • These MSPs will provide the on-going care-and-feeding and training required to make this program successful.
  • IBM needs to provide a more comprehensive value proposition and short-term ROI with financing and flexible payment plans to get the mindshare of the mid-market enterprises and the ecosystem partners.
  • Convince VAR to work with IBM to offer a bigger portfolio of IBM Dynamic Infrastructure services.

January 27, 2009

Cloud Computing and Services – Can this provide the market disruption in the current economic environment!

Cloud computing and services include any subscription-based service that is delivered over the internet in real time, providing flexibility by extending an enterprises internal IT resources, staff and expertise. It encompasses several of the web-based solutions/services listed below.

  • Infrastructure-as-a-Service:
    • A way to add computing, storage and bandwidth capabilities in real-time without investing in additional in-house IT infrastructure or support personnel
    • The customer has no incremental investment in servers, storage, support and management people and expenses.
    • Solutions for server, storage, security, high availability/disaster recovery, web content  delivery
    • Key Examples:  Amazon, IBM, AT&T
  • Software-as-a-Service (SaaS):
    • The application developer delivers the application supporting a multitenant architecture over the internet that is accessed using a web browser.   Includes application platform and ISV applications developed  using  that platform.
    • The customer has no  incremental upfront  investment in server or software  licenses for these applications.
    • Solutions for business, collaboration, productivity applications
    • Key Examples:  Netsuite, Salesforce.com, Google, Cisco/WebEx, CitrixOnLine, Microsoft.
  • Managed Services (MSP):
    • Provide outsourcing or out-tasking of specific application, network, and systems management functions. Management can mean simply monitoring, or it can include management and performance monitoring of the application, system tuning, corrective actions for systems on customer’s premises.
    • This service is delivered remotely over the network from the Service Provider or VARs data center, some MSPs provide onsite management/support as required.
    • The customer has reduced need for IT expertise and support.
    • Solutions for security, data backup, remote server/ desktop/network management, desktop virtualization.
    • Key Examples: Iron Mountain, EMC, Symantec, AT&T, SunGard, HP, IBM, Verisign
  • Hosted Services (HSP):
    • Hosted Services provider host, service, and  update the infrastructure systems and/or applications software at their data center. These systems/software is owned and managed by the service provider, and are either dedicated or shared (multitenet).
    • The value-added services/ applications are delivered remotely over the network from the service provider or VARs data center to the end-user.
    • The customer has no incremental upfront  investment in server, storage, and support people (maybe for software licenses) for these services.
    • Solutions for business, database, e-commerce, productivity, communication applications
    • Key Examples: Savvis, Rackspace, Navisite, Sungard, AT&T.
  •  Cloud architectures have the ability to scale to meet customer demand and traffic spikes in real time. Businesses don’t have to constantly re-engineer their environment and add systems to handle peak loads. Businesses don’t have to wrestle with the underlying infrastructure and core technologies or the day-to-day operational, performance and scalability issues of their IT infrastructure. Instead, they can focus their resources on the core business functions.

    The primary target market and consumers for the various segments of the external cloud computing services are SMBs, mid-market enterprises and departments of large enterprises. In addition to the cloud services vendors, the VAR channel and Service Providers (network) will play a few role in the cloud computing ecosystem. What is the short-term prognosis for these services? The SMB and mid-market businesses are under severe pressures in the current recessionary economic climate. They are considering all option that help them control costs (both systems and people resources) to get through the current economic conditions and credit crunch. They are open to new and innovative ideas.

    Will these market conditions provide the disruption that the cloud initiatives need to drive demand and market uptake?

     

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