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6/3/2011
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SMBs Want Vendors To Expand IT Services

Third-party IT providers aren't meeting SMBs' preference for single-source mobile, cloud, and managed services, according to Techaisle survey.

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Mobility, cloud, and managed services are altering how smaller companies approach IT, but just 14% of third-party providers are able to support all three areas, according to a Techaisle survey.

The market researcher found that while small and midsize businesses are quite interested in leveraging mobility, cloud, and other emerging technologies, they currently have to spend too much time--and likely too much money--to fulfill their needs. For example, Techaisle CEO Anurag Agrawal said that the average small business relies on more than four different providers for cloud services alone. Those would include things like Web-based productivity, Web hosting, accounting, and industry-specific software suites. But in reality, most smaller companies would like to reduce costs and technical complexity with a single provider.

"That itself is too time-consuming for these SMBs," Agrawal said in an interview. "What they're saying now is: You are my [provider]. Can you help me make sense of it all?"

Techaisle's most recent study focused on channel partners such as value-added resellers (VARs), independent software vendors (ISVs), and service providers. All of the survey respondents depend on SMB customers for at least half of their revenue. The channel research follows recent Techaisle surveys of SMBs on cloud, mobile, and other technologies. Agrawal allowed InformationWeek to take a closer look at the newest report beyond what it has released publicly.

The findings are especially eye-catching because of how many major technology vendors, such as Cisco or HP, rely heavily on channel partners to reach the SMB market. IBM, as another example, has no direct sales force for its midsize business lineup--it relies exclusively on its partner network for distribution.

Agrawal said that while third-party providers might have expertise in a single area, that's no longer good enough--if SMBs have to work with too many partners, the cost, complexity, and time management reasons for outsourcing are rendered moot.

"SMBs are increasingly trying to focus their attention on a single channel partner, but the channels are not ready for it," Agrawal said. "That is the disconnect that is happening in the marketplace right now."

Mobility is perhaps the category where channel partners are most sorely lacking: 60% of respondents said their SMB customers were asking for mobility support, but more than one in three providers admitted they weren't equipped to meet those needs. SMBs are more frequently asking questions, for example, about mobile security--but their channel providers aren't necessarily able to give them the answers.

"They have absolutely no idea as to what types of solutions they should offer," Agrawal said, noting that mobile security is more than malware and should include a broader view of device management and protection. "[Channel partners] have not been speaking with the vendors enough, and the vendors have not been speaking with the channels often enough." Tablets represent a key opportunity for channel providers, according to Agrawal. He said that increasing numbers of SMBs are looking for tablet support--or simply advice on developing and deploying a tablet strategy. With smartphones, on the other hand, Agrawal said small companies are most typically relying on their wireless providers for ongoing support.

That could signal an advantage for large telecom vendors like Verizon and AT&T that have already embraced bundling, primarily as a way to combat an expensive industry problem: customer churn. A recent study by AMI Partners showed a clear preference among SMBs for bundling cloud services and that telcos are well-positioned to reap the rewards. Verizon, for example, offers a small business bundle that includes Google Apps and Intuit websites alongside its own voice and broadband services.

Agrawal said the integration learning curve for channel providers will be slow, and that they're best served in the near term by developing alliances to offer integrated support from a single source. However, since many are also SMBs serving local or regional markets, they're not always able to develop meaningful partnerships with other providers. Agrawal said large vendors that rely on partner networks for SMB distribution should do more to help--after all, they stand to profit, too.

"Vendors should look into their own partner base and say: Why can't I connect the dots and make them talk to each other?" Agrawal said. "Vendors have a very important role to play."

In the new, all-digital InformationWeek supplement: Our 2011 Strategic Security Survey confronts the five biggest problems faced by midsize companies. Download it now. (Free registration required.)

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