Are there any fans of Extreme Makeover: Home Edition out there? If so, keep an eye out for Avnet employees on Monday night’s show. Eighteen members of the company’s IBM Solutions group spent two Saturdays in San Antonio, Texas, planting sod, moving rocks, cleaning up construction debris and directing traffic. Avnet also donated three MacBooks and other components of a home tech system.
Technology solution providers representing the Microsoft Office 365 cloud applications suite for small businesses should take note of a huge change in the competitive landscape.
This week, Microsoft rival Google stopped offering a free version of its Google Apps for small businesses, saying that new customers will need to opt for the Premium edition, which costs $50 per user per year. Features of that service include 24/7 phone support, a 25-gigabyte inbox and a 99.9 percent uptime guarantee.
The changes means Microsoft partners will be able to discuss the two services on a more level playing field.
Within four weeks of its launch, Windows 7 managed to capture 83 percent of Windows device hardware sales in the retail channel. But Windows 8 has so far fallen short of that market: it accounted for about 58 percent of Windows sales within the same timeframe, reports NPD Group.
That finding comes from the research firm’s weekly tracking service.
Software as a service (SaaS) is moving beyond early enthusiasts deeper into enterprise accounts but adoption rates differ dramatically depending on the region, reports Gartner.
The research firm’s latest survey of SaaS trends shows that 71 percent of the businesses now using applications delivered as a service have been doing so for less than three years, which signals wider mainstream adoption, according to Gartner’s report, “Survey Analysis: Buyers Tell Us About SaaS and Cloud Adoption Through 2014.”
The latest America Recycles Day came and went this week, with the requisite flood of press releases about electronic waste (aka e-waste) flooding my email inbox.
That’s because the high-tech industry continues to churn through and discard a troubling amount of gadgets — especially (as you might expect) mobile stuff like cell phones. The United States alone sends roughly 135 million of them to landfills every year.
That’s a number that companies like Sprint are determined to reduce: the company now collects about 40 percent of the devices it sells or distributes at the end of their life (about 11 million gadgets last year). It is striving to increase that rate up to 9 out of every 10 devices by 2017.
What about the bigger stuff? Many of the biggest high-tech companies including Dell, Hewlett-Packard and IBM have established collection programs to facilitate take back of servers, personal computers, monitors and other accessories. It’s a big push for the leasing arms of all these companies.
Channel partners and systems integrators have been much more quiet about the issue, but that may be changing.
Global IT services giant Dimension Data this week launched an expansive e-waste collection service that is part of its broader technology asset management portfolio. It figures that more than 60 million tons of e-waste will be considered for reuse or recycling in 2013, and it believes it has an opportunity to help its clients asses the best options for those items.
“Expanding our technology lifecycle management assessment to include an e-waste solution means our expert advice doesn’t start at the point of disposal,” said Colin Curtis, the company’s director of sustainability, in a statement about the new service. “We can now assess the strength of each item in a technology base, determine its point in the lifecycle, and then use best practices to dispose of elapsed devices and equipment in an ecological and regulatory-compliant manner. In addition, the organization’s security and brand are not negatively impacted.”
That last point is something that can’t be emphasized enough.
There is one big reason that businesses are paying more attention to e-waste: compliance.
That’s because ignoring the proper disposal of IT equipment means a company could become liable for sending toxic substances to a landfill, not to mention the data privacy implications.
As the technology consolidation movement continues and upgrades start to happen throughout 2013, this will only become more of a pressing issue – one that your services team must be ready to discuss.
The latest prognostication about public cloud computing from IDC calls for a compound annual growth rate (CAGR) of 18.5 percent between now and 2016 – with$43.2 billion in revenue anticipated by the end of the forecast period. (That compares with $18.5 billion in 2011.)
This forecast doesn’t include private cloud infrastructure or hybrid cloud integration work; it only covers services that are “shared among unrelated enterprises and consumers, open for a largely unrestricted universe of potential users, and designed for a market, not a single enterprise.”
The three biggest verticals for public cloud services right now are discrete manufacturing, professional services and process manufacturing, according to IDC’s report, “U.S. Public IT Cloud Service by Industry Sector.”
Indeed, professional services alone accounted for nearly 40 percent of all public cloud services in spending during 2011, according to the data.
The verticals that will grow fastest, however, moving forward are communications and media, education and construction.
Infrastructure as a service (IaaS) is the most active segment of the public cloud services world right now, accounting for 12.3 percent in 2011. By 2012, it will still account for 12.9 percent of spending, according to IDC’s projections.
For years, I have been watching all sorts of research predictions about IT spending plans. But for the past three or four years, I have put less credence in them.
That’s mainly because I feel that focusing strictly on what businesses are saying they intend to spend for hardware or software or networking gear over a given time period under-represents what they are actually willing to pay for a solution to a business problem – a solution that happens to be based on technology.
In my mind, there are quite a few businesses — at least the ones that are thinking about the future — that are willing to spend more on technology than their actual IT budget suggests, if that technology helps address a specific business need.
So, instead of trying to figure out the size of a given company’s technology line item and how much of it they can claim, solution providers should be thinking about what portion of each business process is dependent on technology. And on helping the business decision-maker in charge of that process find the money to improve it.
This really isn’t a new concept for the IT solution providers of this world that spend their time really consulting with their clients about their plans and that take the time to figure out what is motivating them.
What’s different right now is the fact that the services are now in place that make it simpler for businesses to make those decisions and to act without having to wait in line for an internal IT department.
Research firm Gartner calls this “The Nexus” – a convergence of social, mobility, cloud infrastructure and information management trends that are “digitizing” different segments of their business.
Marketing is a great example of a business function that is being completely transformed by these things. Historically speaking, the marketing function may not have requested many of its own applications (or been allocated all that much). But now, a much larger portion of what marketing teams spend is being dedicated to all sorts of new cloud services tied to the social media world.
Gartner figures that in the past, about 20 percent of all technology spending was outside the domain of the IT department. By the end of this decade, it will account for 90 percent, the research firm predicts.
“The Chief Digital Officer will prove to be the most exciting strategic role in the decade ahead, and IT leaders have the opportunity to be the leaders who will define it,” said David Willis, vice president and distinguished analyst for Gartner. “The Chief Digital Officer plays in the place where the enterprise meets the customer, where the revenue is generated and the mission accomplished. They’re in charge of the digital business strategy. That’s a long way from running back-office IT, and it’s full of opportunity.”
In just three years, one-quarter of all companies will have a Chief Digital Officer, Willis believes.
That will create even more fragmentation — and opportunity — when it comes to helping companies manage those digital services in the context of the larger picture. Security, in particular, will play a critical role. In fact, Gartner forecasts a 56 percent increase in overall spending on security solutions, while usage of cloud security services “will almost triple.”
Whether or not you believe those numbers, the shift that is going on is very real. The existence of cloud services – which may or may not have to be approved by an IT contact before they show up on a credit card or invoice – is completely rewriting the rules of engagement for solution providers.
You can choose to lament that fact or use this as an opportunity to dig deeper into organizations to find the right decision-makers, who may be willing to spend more than the IT budget spending data suggests.
Every fall, many CIOs and information managers flock to the annual Gartner conference to hear the research company’s proclamations and predictions about the IT world for the upcoming year. I won’t regurgitate all of the items on the latest list issued this week, but I do want to hone in on five trends that I believe will have particular relevance for IT solution providers.
- Windows 8 won’t really matter until 2015. Just two days ago, Microsoft went nuts with its big Windows 8 operating system launch – an upgrade that is a dramatic departure from the past. Gartner is suggesting that 90 percent of enterprises will wait until the OS becomes more stable – maybe by 2015 – before they opt for broad migrations. That’s probably true, but I think that smaller companies that are using tablets in any kind of meaningful way for their business will move sooner – because of the software’s close link with that form factor.
- Big data will drive the creation of 4.4 million jobs. The second part of that prediction is that two-thirds of those jobs will go unfilled, which means enormous service opportunities for VARs and systems integrators that spend time developing practices that can support interest in solutions for data management, analytics and related business expertise. Incidentally, a separate Gartner report out in mid-October predicts that big data will account for $28 billion in IT spending in 2012.
- 40 percent of enterprises will suffer mobile information leaks by 2017. Because so many people are now using smartphones or tablets for both personal and professional purposes, this will affect how corporate contact information is being used. This is especially true for those using Facebook – the social network now downloads personal information from profiles indiscriminately. So, companies need to think more carefully about how to protect customer records and other private information.
- The number of employee-owned devices compromised by mobile malware will be twice that for company-owned devices. While it is unlikely that this will thwart the BYOD trend, it offers another good reason why IT services companies should be involved with helping their customers define clear policies for managing these devices.
- Market consolidation will displace 20 percent of the top 100 IT service providers. Gartner believes that the converging forces of mobility, big data, cloud services and social media (not necessarily in that order) will accelerate a consolidation between the biggest outsourcing companies and systems integrators — especially those that fail to redefine their value-add. That could be a good thing for smaller channel players that really take the time to specialize or that can provide the benefit of local touch.
There is no denying the fact that direct purchasing and retail channels account for a larger portion of IT hardware sales than in the past, but small and midsize businesses (SMBs) prefer to work with VARs and systems integrators to define their strategies for networking, storage and server solutions, according to research from NPD Group.
The value-added channel still accounts for at least one-third of core IT hardware sales, according to the research firm’s SMB Technology Monitor.
“While direct selling is well-established in low value categories, we are seeing SMBs of all sizes turn to value-added channels to provide them with complex products such as servers and networking infrastructure,” said Stephen Baker, vice president of industry analysis for NPD, in a press release about the data.
Another interesting trend: really small businesses that used to default to retail or e-commerce channels for almost all of their technology purchases are more inclined to see the advice of VARs for managing their networking and storage needs. Approximately one-third of them will look to the value-added channel for their purchasing needs in these categories during the next 12 months, according to the NPD research.
“Smaller SMBs use more channels and use them more diversely across product categories,” Baker said.
More evidence of how software as a service and other forms of cloud computing are reshaping IT infrastructure is out this week in the form of IDC data showing that the number of data centers started shrinking in 2009.
That’s significant because the amount of data center capacity grew by about 1 percent in the same time frame, according to the IDC Datacenter 2012-2016 forecast.
The data center consolidation that began accelerating in 2009 is inspiring the closure of literally hundreds (if not thousands) of smaller remote locations, many of them smaller data center closets or server rooms. That trend will continue: the number of data centers in the United States will decline to about 2.89 million by 2016, compared with 2.94 million this year, according to the IDC predictions.
At the same time, individual data centers will get significantly bigger. Total data center space will grow to more than 700 million square feet in 2016 versus 611.4 million in 2012. Fewer locations plus more space means the average size of each data center is growing, although IDC doesn’t offer a figure in its press release about the report.
Cloud service providers are helping drive this shift and will account for more than one-quarter of all the U.S. data center capacity by the end of the forecast period.
“CIOs are increasingly being asked to improve business agility while reducing the cost of doing business through aggressive use of technologies in the data center,” said Rick Villara, vice president of Datacenter and Cloud Research at IDC. “At the same time, they have to ensure the integrity of the business and its information assets in the face of natural disasters, datacenter disruptions or local system failures. To achieve both sets of objectives, IT decision maker had to rethink their approach to the datacenter.”
The primary implications for technology solution providers are twofold.
Those who have been primarily focused on data center installations supporting branch offices of larger companies could see that business disappear during the consolidation movement, unless they focus on helping drive that consolidation in the first.
What’s more, the movement toward larger cloud service providers will mean that MSPs will need to keep adding value to their own infrastructure service offerings – or risk losing out to economies of scale.