Intuit and Microsoft – two SMB market leaders partnering on cloud platform strategies to deliver web applications

This agreement provides an end-to-end applications development environment and marketing/sales channels for application developers to develop and market application solutions to small businesses. Key elements of the agreement include:

• Broadening the applications developer community to develop SMB focused applications – Intuit to provide a SDK to help developers build applications on Microsoft Windows Azure Platform (and Visual Studio) and federate these web applications into Intuit Partner Platform (IPP) and launch these applications through the Intuit App Center (IAC).
• Expand channel for application developers to promote and market their applications – Business Productivity Online Suite into Intuit Partner Platform (IPP) by year-end – Salesforce.com’s Force.com PaaS platform. Microsoft and Intuit will join forces to expand channels for application developers by introducing them to IAC. With capabilities to buy and access these cloud-based applications from the IAC and support for single sign-on will make it easier for SMBs to use these applications.
• Microsoft to integrate Microsoft Business Productivity Online Standard Suite (BPOS) is a set of messaging and collaboration solutions hosted by Microsoft, and consists of Exchange Online, SharePoint Online, Office Live Meeting, and Office Communications Online. SMBs that use BPOS will have access to Intuit’s SMB focused business applications like QuickBooks and additional applications available through the IAC.

This relationship is focused on the U.S., the region where Intuit has majority of its presence. Microsoft and Intuit will support joint marketing programs targeted at the applications developers, channels and SMB companies.

In today’s fast-paced and volatile business climate, SMB need cloud-based application as they provide much better total cost of ownership (TCO) compared to on-premise installed applications. This relationship will provide significant benefits to SMBs that have shown increasing appetite to adopt cloud based solutions. The key benefits to the SMB community from this relationship are:

• For Microsoft Windows Azure cloud platform service (PaaS), the Intuit relationship is a key endorsement of Microsoft as a key player in the SMB segment and of a company that has a good understanding of how to work with application developers. This combination will provide good competition to the
• With Microsoft withdrawing from the small business accounting application area, creates a much more favorable partnership environment between the two companies to collaborate on the applications and channels front. A cooperative relationship between these two SMB focused companies will yield tremendous benefits to the SMB community.
• With more than four million Intuit’s QuickBooks customers, the Inuit App Center will present a very attractive opportunity for applications developers to showcase their applications to the QuickBooks user community.

Deciding what survey software to use?

Being a market research, we make extensive use of market surveys, to measure market/customer needs and sentiments. For years I was outsourcing the programming, testing and hosting to outsourced survey houses. However, driven by the current economic conditions and reduced market research budgets, this year I decided to do try the survey programming/testing exercise myself.

My survey software solutions requirements are more complex compared to the standard small consumer type survey. They are usually long (30-40 questions each with several options), with complex and branching, follow-on questions based on previous responses, etc.

Finding the right survey software could be a hard task. There are a large number of vendors to choose from, a cursory look at any of them give an impression that most of them are almost alike. One needs to consideration several factors before picking the right solutions. Some of things you need to know and look for before deciding:

• Survey tool features (considering the complexity of your survey)
• Ease-of-programming and hosting
• Cloud-based or on-premise server based
• Price (use of software and survey hosting)
• Reporting functions
• Performance of solution, especially when reporting
• Training provided
• Support (both telephone, web and user forums)

After evaluating numerous survey tools from several vendors (Checkbox, SurveyMonkey, SurveyGizmo, Vovici, Zoomerang, QuestionPro, NoviSystems, SurveyCrafter, etc.), I selected SurveyGizmo solution for my fairly complex survey needs.

SurveyGizmo is very easy to use; value priced and provides the most extensive set of features among all the survey software solutions I evaluated. It has a simple user interface with an extensive list of question types and survey action that makes designing and testing survey very easy. The reporting functions are also very good. Several other vendors that I evaluated had very poor performance, especially when using the reporting and analysis functions. They also provide very flexible pay-as-you-use pricing, without the need to commit a significant amount of capital upfront (as some of the other vendors do) – this is especially important in the current difficult economic climate.

 

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!

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.

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.