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Good Enough Computing Tests Partners' Vendor Loyalty, Market Knowledge, Survival Instincts

Helping your customers choose the right alternatives to premium brands is likely to spell the difference between their satisfaction and your profitability.

May 29, 2014

13 Min Read
Good Enough Computing Tests Partners' Vendor Loyalty, Market Knowledge, Survival Instincts

By TC Doyle

T.C. DoyleGroupWise. BlackBerry. Windows XP. The peak for these innovations has come and gone. Yet millions of customers use them every day. Due to compatibility issues and feature limitations, many organizations want to switch to other platforms. The Detroit Regional Chamber of Commerce was of them.

When the nonprofit, one of the oldest and largest chamber organizations in the U.S., decided to switch, it naturally considered the leader in desktop and business productivity, Microsoft. But after reviewing its options with its trusted technology adviser, Newmind Group Inc. of Kalamazoo, Mich., the Detroit Regional Chamber concluded that it didn’t need or want Microsoft’s full-featured Windows platform or Office productivity suite. Instead, it chose an alternative that isn’t as feature-rich, but offers compelling advantages just the same: Google Apps. After relying on Newmind to migrate its data and applications, the Chamber tallied up what it hopes to save over the next few years: $500,000. That’s a lot of savings for foregoing a few features most users will never miss.

Microsoft Corp., which grew handsomely for years by locking customers into long-term license agreements in exchange for providing incremental improvements to products on a regular basis, has been buffeted by alternative innovations that, while not necessarily better, are “good enough” for most customers.

But don’t feel bad for Microsoft. What Google Chromebooks and Google Apps are doing to Microsoft’s stranglehold on the market for personal operating systems and productivity applications, Microsoft is doing to Cisco in unified communications and to VMware in hypervisors. Microsoft’s alternative, “good-enough” innovations in these categories are giving the established market leaders fits.

They are hardly alone. In market category after category, industry leaders with feature-rich products — think IBM, Cisco, Microsoft, SAP and others — are being pressed to defend their premium prices and complex technologies. Thanks to cloud computing, bring your own device (BYOD), mobility and more, the options for scaling data centers, backing up and recovering applications, or mining data have multiplied. Customers — large and small — are wondering why they should pay big-ticket prices when they could spend a fraction for most of the same functionality.

While not necessarily new — former HP CEO Carly Fiorina championed a form of “good enough” computing a little more than a decade ago — the case for alternative solutions has evolved thanks largely to the cloud. Some customers are drawn to new ideas because they are easier on budgets. Others swear by them because they are less difficult to implement. Some choose them because they don’t require as much customization.

Rather than sit back, industry titans in enterprise applications, data center computing, virtualization, networking and more have developed or acquired disruptive solutions of their own. In November, for example, Cisco spent more than $800 million on Insieme, a developer of software-defined networking (SDN) technology that could challenge Cisco’s twin cash cows — routers and switches. EMC, meanwhile, is feverishly readying a new offering code-named Project Nile that will provide customers scalable and flexible on-demand storage solutions similar to those offered by Amazon Web Services (AWS).

While these and other innovations are sure to cannibalize existing sales, they may be enough to blunt the advances of certain newcomers. Given what’s at stake, no vendor’s revenue stream seems safe today, and no market share feels secure.

“I’ve been in the business for 30 years and haven’t seen anything quite like it,” said Phil Gallagher, the global president of Avnet Inc.’s $10 billion distribution business, Avnet Technology Solutions. “The new norm is that there are going to be many different options out there.”

If you are a channel partner, helping your customers choose the right ones is likely to spell the difference between their satisfaction and your profitability. Your vendor loyalty, market knowledge and survival instincts are going to be put to the test in new ways.

The Rise of Choice

Do you ever wonder about the cost of overspending? Moshe Kozlovoski does, every day. He’s the co-CEO at SoftWatch, a company that helps organizations monitor their software usage and consumption.

Most users simply overbuy, Kozlovoski said. “They all suspect that this is the fact, but they cannot prove it,” he said. Or at least they couldn’t until recently. SoftWatch provides business partners tools that can show enterprise customers detailed statistics about their end-user usage patterns. With SoftWatch’s technology (as well as innovations like it from other companies) users can see exactly what their employees are using and for how long.

SoftWatch focuses on Microsoft Office. A recent study of more than 150,000 end users from multiple organizations worldwide revealed some startling statistics about Office users. Eighty percent of them spend less than an hour per day working with the applications that are part of the Microsoft Office suite (e.g., Word, Excel, PowerPoint, Outlook, etc.) Of the 48 minutes per day that knowledge workers use Office applications, more than half is spent working in email. What is more, half of Office customers never use PowerPoint. And the overwhelming majority of those who do use it only look at presentations; they never edit them. The same is true of those who look at spreadsheets from time to time.

When partners show enterprise customers their usage patterns and calculate the amount of money they could save by going with “good enough” solutions from Google and others, including Micro’s own Office 365 cloud solution, they begin to think about IT differently. “They don’t all give up on Office and move to Google apps,” said Kozlovoski, “but they begin to realize that they have a choice.”

The rise of choice is turning out to be a powerful catalyst for change. Consider an April 2014 report on the ERP market produced by Nucleus Research. In it, the analyst firm stated: “As companies look to consolidate or modernize their ERP environments, they seek vendors that are providing not just advances in functionality and usability, but thought leadership and a clear migration path that helps them get more value from innovation without significant cost and disruption.”

Many companies today are seeking to either consolidate or rationalize their ERP footprints, the report continued, and looking at a potential upgrade that is more of “a reimplementation in terms of scope and cost.” Naturally, many “are re-examining their vendor strategy,” the report concluded.

While it’s too early to tell how many customers will bail on the industry’s ERP leaders, it’s obvious from the growth of born-in-the-cloud upstarts that SAP, Oracle and others are missing a lot of opportunities that likely would have gone their way a few years ago. Consider Acumatica, a fast-growing, cloud-only ERP software developer founded in 2007. After a relatively slow start, the company has begun to hit its stride among enterprises looking for a more flexible, cost-effective alternative to ERP market leaders. Its sales have doubled in a mere few years. This spring, Acumatica named 20-year Microsoft veteran Jon Roskill as its CEO. The former worldwide leader of Microsoft’s channel operations, Roskill wants to dramatically scale the company’s channel ecosystem, which today numbers less than 300.

Roskill’s promise to would-be partners is simple: Acumatica may not offer every capability that an SAP does, but what it does offer is a solution that is more cost-effective, easier to use and more than “good enough” in most instances. Furthermore, he pledged that Acumatica will not cut any partner out of any deal; 100 percent of its revenue, he told Channel Partners, will go through a channel partner.

In response to Acumatica, Workday and other software newcomers, SAP is working at a frenetic pace to transform its business solutions for cloud delivery. Nucleus said the competition between SAP and its upstart challengers is too early to call. But like Cisco in networking, Microsoft in business software and EMC in storage, SAP understands that it must retool to survive.

“Based on the direction and scale of investment SAP is investing in [new] resources, and SAP’s renewed focus on increasing business value, lowering IT costs and engaging users with more intuitive apps, Nucleus sees potential for SAP to both cement its positioning in much of its existing customer base with modernization initiatives and win new customers that would not have considered ‘the old’ SAP,” the report concluded.

The old or the new? When it comes to “good enough” alternatives, partners have a lot to consider.

The Case for Good Enough

You can ban them. You can demonize and educate against them. But you can’t stop knowledge workers from using modern conveniences that have transformed how they work, play and learn. Ask any user of Dropbox, Google Mail or Amazon S3 Storage if they are more productive using these services and the answer undoubtedly will be “yes.”

Despite corporate concerns over security, compliance and reliability, the use of alternative, cloud-based services and conveniences continues to grow. And not just free ones. Gartner Inc. said in March 2014 that end-user spending on public cloud services will grow 19 percent in 2014 to $158 billion worldwide. In 2014, growth in cloud services will be led by IaaS and PaaS, at annual rates of 45 percent and 33 percent respectively. “High growth in cloud services will cause IT spending to shift from traditional IT systems to cloud [solutions],” the Stamford, Connecticut, researcher said.

Why the huge increase? Mike Triolo, general manager of the eastern region at 2nd Watch, a Seattle technology consultant and managed service provider that specializes in AWS solutions, offered some perspective in a blog he penned in March 2014. According to him, customers are drawn to newer solutions for a number of reasons. They want to save money, increase their competitiveness or offload technology management to a third party. These gains all can be achieved, he insists.

To those who believe they are tied to traditional technology due to legacy systems, security concerns or organizational structure, Triolo responded with the following:

Legacy: “Many companies have a lot of legacy systems and infrastructure out there. So much so that it clouds (no pun intended) their view on what’s possible,” he said. “It’s like quicksand; the more time and money invested in legacy systems and architectures, the deeper and deeper you get.” There is a way out though. Step back, size the landscape and see what can be moved to the cloud.

Security: “The public cloud is extremely secure,” he said. The environments have been built to adhere to the most stringent security standards. “[And] cloud providers take an in-depth approach, going above and beyond to ensure that security permeates throughout the environment.”

Agility: “Traditional legacy or even colocation infrastructure is designed and built so that it doesn’t allow for the flexibility companies need in the constantly changing world,” said Triolo. “The need to continually evolve and the ability to ‘fail fast’ are so important to businesses today, and the cloud enables you to do just that. You can literally create a global infrastructure in a matter of minutes that runs only when you need it.”

Cost: There are tremendous economies of scale to be gained by leveraging the footprint that existing public cloud providers have built. “There are a number of TCO [total cost of ownership] calculators out there that will show you the cost of running infrastructure on-prem vs. in the cloud,” he said, suggesting doubters see for themselves by plugging in their own numbers.

Organizational structure: Contrary to popular wisdom, customers can use cloud innovations without turning their organizations upside down. They simply have to better coordinate investments and strategy.

Triolo said he expects the pace of innovation only will accelerate. His company isn’t trying to keep its customers necessarily ahead of it, but rather in stride with it. Newer ideas, he wrote, can help achieve that aim.

The Case for Tried and True

If you search the Web, it isn’t hard to find examples of Google’s rising fortunes. But don’t belabor the point to Derrick Wlodarz, the owner of FireLogic, a Park Ridge, Ill., technology consulting and service company. He’s already decided which company he’ll recommend to customers: Microsoft. Unlike other Microsoft enthusiasts, however, he’s no Google hater. In fact, he spent years promoting Google as a Google Apps Certified Trainer and Google Apps Certified Deployment Specialist. It wasn’t until late 2013 that he decided to embrace Office 365.

“After spending nearly four years on Google Apps, learning its every nook and crevice, I threw an Audible at my staff and told them we were transitioning to Office 365 by Thanksgiving 2013. And that’s exactly what we did,” he wrote in a January 2014 blog about his experiences. Why make the choice? Value, he said. Here’s a summary of his thinking:

Forget Spec Sheets, Focus on Ecosystems: Clients looking for honest direction want more than marketing drivel. Features matter little in the big scheme of things. “I’ve carefully learned that this is more of a battle of the ecosystems at this point. Who’s got the all-encompassing platform that is looking to solve business needs the way your company views them?” Wlodarz wrote. “That’s the question companies and organizations should be asking themselves.”

Distinguish Between Business Capability and Consumer Functionality: In past years, innovation came first to the business world, then the consumer one. But things have flipped. Consumers have been using Skype and other services to make easy-to-use, cross-platform video calls for years. But in the corporate world, 90-plus percent of all conference calls are still audio-only. Because consumer technology has encroached upon the workplace, advisers need to help steer their customers to technologies that are suited to their industrial needs. In the world of communications, for example, Wlodarz said, “Lync is for the workplace; [Google] Hangouts is for friends.”

Cash Cows Get More Attention Than Experiments: On rare occasions, products that vendors rely on for profits get long in the tooth or bad overhauls. Take the usually praiseworthy Honda Civic. After it was upgraded in 2012, Consumer Reports’ Jon Linkov opined, “You expect a redesigned vehicle to be better, but the new Civic is one of the worst redesigns we’ve seen in years.” Technology products are no different. Windows Millennium? Norton Utilities AV? Neither was great. When responsible vendors deliver lemons, they typically rally. Why? Because they cannot afford to allow their cash cows to fall behind. Conversely, innovative diversions that do not produce significant profits often lose their funding, executive sponsor or even their raison d’etre. Wlodarz advises his clients to follow finances as much as features.

Surinder Brar, chief strategist with Cisco’s Worldwide Partner Organization, sees things similarly. At any one moment in time, a company can come along and offer a tantalizing capability that a trusted vendor partner might not have or even thought of, he said. But that’s hardly a reason to switch. When thinking about alternatives, he suggested partners keep in mind the following:

  • Brand value

  • Technology portfolio

  • Field resources

  • Enablement investments

While loyalties are likely to be tested in new ways in this new era of “good enough” computing, many solution providers are taking the approach that Dimension Data does. Jackie Funk, vice president of marketing, Dimension Data Americas, explained: “We have very strong relationships with a very specific set of very strategic partners. We put the list on our Dimension Data website. We have a group of individuals within the company that do due diligence with them and help establish them as strategic partners. Based on that, we interact with them globally. So you don’t see us interact with any old company. You don’t see us listing anyone on our website; we have very specific criteria.”

However, if one of its clients wants something from a particular vendor on a case-by-case basis Dimension Data will work with some niche partners. “In the end,” said Fink, “it’s all about the client experience and delivering value to our clients. If our clients ask us to go beyond our strategic set of partners, we are more than willing to do just that.”

In moments like these, “good enough” can become “go-to.”

T.C. Doyle is executive editor – IT/Cloud for Channel Partners.

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