The SMB industry is a constantly changing market, which provides a constant opportunity for MSPs. However, it's important to understand these changes so that you can understand the opportunities at hand. And what better way to understand these opportunities than data?

On this episode of MSPradio, we're joined by an SMB expert, Anurag Agrawal, CEO of TechAisle. He talks about the state of small business, where SMB IT priorities are and how MSPs can take advantage. And of course, he backs it all up with cold-hard data!

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Episode Transcription:

Nate:                       Hi everyone and welcome back to another episode of MSP radio. I am your host Nate Teplow. I think you all know the drill by now but I have to remind you follow us on Twitter or tweet at us if you go to @follow Continuum. We’d love to see you on twitter; we do a great job of providing some great content for you in terms of industry news and best business practices for IT solution providers, MSP’s, small businesses, we’ve run the gamut there. So follow us on Twitter. If you want to tweet about the show use the hash tag MSP radio. We will be monitoring that hash tag and looking forward to what you have to say about the show.

So today we’re talking about small business. It’s definitely an important topic for MSP’s. First off because they are small businesses, also their clients are small businesses so it’s really an important segment to focus on, stay on top of the industry and understand what’s going on in that market both so you can focus on your internal business and also externally with the people you sell to.

So today we are joined by a small business expert. He’s got a lot of great stats about the state of small business and the opportunity for MSP’s. His name is Anurag Agrawal. He is the CEO of Tech Isle. Just a little background, Tech Isle is a global SMB IT market research company. They are also an industry analyst organization; they conduct surveys with SMB’s and channels and really work to understand the different trends in the market. Anurag has a ton of great data and experience working with SMB’s. He is known as the SMB guru. So Anurag, welcome MSP radio!

Anurag:                  Thank you! It is simply fantastic to be here.

Nate:                       Yeah, we are thrilled to have you on the show. I think this will be a great topic for today so we are really excited to have you.

Anurag:                  Thank you.

Nate:                       Before we get into the show a little bit I just wanted to mention that you will be speaking at our first ever user conference. We’ve actually had a few of our speakers at the conference join us on MSP radio. But you are speaking there at Navigate 2014 and could you give us a little sneak peek of what he could expect from your talk there?

Anurag:                  Sure. Absolutely! So we all know that we live in a post-PC world where the new normal is multiple devices and multiple Os’s. And cloud is having an impact on how SMB buyers source of their delivery platforms, infrastructure services and applications and SMB’s are really committing to cold technologists rather than a vendor. And as for our status and what we have researched, we have found that by 2016, nearly a million US SMB’s; and it could very well cost more than 1 million SMB’s, will be turning their attention to managed services. So what we actually anticipate is that this session at Navigate will discuss insights from Tech Isle’s study on MSP demands of SMB’s and how to address the transformation of the market opportunities which is there in front of the MSP’s.

Nate:                       Yeah, that sounds great! I know mobile devices are bigger and bigger headache for MSP’s and mobile device management is a growing topic for our partners and just the industry as well. So it sounds like a great topic for navigate.

Anurag:                  Absolutely is, absolutely.

Nate:                       Great! And one other question just about Navigate; I have been asking this to all of our guests who have joined us on MSP radio but what are you looking forward to most of all about this year’s conference?

Anurag:                  Just having an interaction with the various MSP’s that will be there and the other channel partners to understand the pain points as we really navigate this rapidly evolving marketplace which is getting extremely complex. So just to the interaction itself with the various MSP’s who are your audiences, I think it would be really, really great opportunity for us.

Nate:                       Great! We think so too. So definitely come see Anurag and come see Continuum at Navigate 2014. We’ve got early bird tickets still available up on till June 13. So definitely if you go to www.it.continuum.net/navigate you can learn more about the event and just tickets. Definitely take advantage of this early bird special.

                                    So for segment one of the show I just want to touch on or focus on the state of small business in the US. We will get later into the show about the opportunity for MSP’s. But I thought we would outline the state of small business and talk about where it’s at. Just to be begin Anurag, do you mind telling us a little bit about your company Tech Isle? And what some of the focus of your research is?

Anurag:                  Yeah. Tech Isle, as you said, Tech and is an SMB channel partner, IT partner in market research and analyst organization. And we are founded on the premise that go to market strategies really require some insightful research, flexible data and deeper analysis. And our insights are actually built on a really strong data-driven foundation to achieve the objectives. We actually conduct surveys with SMB’s and channels across 15 different countries to really understand market trends, opportunities, buying behavior as they pertain to business issues and basically what we are able to do is because we have got so much rich information with us, we are able to connect the dots between various types of SMB’s, the channel partners, what type of technologies that they are adopting and why. And our research studies cover cloud computing, managed services, mobility, collaboration, virtualization, business intelligence, analytics, upcoming big data, networking and various sectors.

Nate:                       That’s great! It sounds like you guys do a lot there!

Anurag:                  Yeah, yeah. We do actually.

Nate:                       And it’s really do sounds like it’s because that’s really something and MSP would be looking at. It seems very tailored to the IT industry and MSP industry.

Anurag:                  You said it, absolutely!

Nate:                       That’s great. So you guys are doing all this data, what are some of the recent findings you are seem just about the SMB market?

Anurag:                  So we are always swimming in rich data that shows the technology interconnections and the factors that are driving their adoption within the SMB’s. So let us look at five key points that we are seeing as the evolving trend. The first point is, for the first time in five years, cost is not the number one business issue for SMB’s; business growth is the top issue which manifests itself in many different ways; why they are they adopting cloud? Why are they going for managed services? Why are they looking at analytics and so on and so forth.

Second point, the SMB buying community has expanded. The BMU is bigger than it used to be and it wants more different kinds of people than it used to. So it’s not no longer a factor where I have to just approach the IT person within a small business. I need to approach this business executive and I need to have a top-down and a bottom-up approach as well.

Third, SMB cloud is real and immediate. But what you are seeing is a migration not a company switch which also lends itself to the fact that the hybrid cloud is the way to go.

Fourth, the path to channel success in the cloud is not exactly well paved but it’s not unmarked either which means that your MSP customers or the MSP’s and various channel partners can really take advantage of this shift in the technology adoption and they are being given signs all along the way how to be really successful. And fifth and the most important which we touched earlier was that SMB’s are living in a multi-device world. Multiple devices mean less attention on each device which probably means that longer PC refresh cycles are here to stay and the era of building a channel business around just hardware attached and especially PC attached sales is over but service attached is just about to begin.

Nate:                       Yeah, that’s interesting. Some great data points there. I think it’s important that businesses have really transitioned from focusing on cost and ways to cut costs but really they are looking to grow now. I think, you said it’s now the number one issue.

Anurag:                  That’s true.

Nate:                       And I think presents a great opportunity for MSP’s because they can provide the technologies that help their clients grow and their clients aren’t inclined to just four weeks to cut costs but really want to purchase services and products that help them achieve their growth goals.

Anurag:                  Yes, yes absolutely. If you start to think about it, let’s look at [09:08 B.Y.O.D] as one example. You will surely agree that it is one of many favorite topics for MSP’s themselves and what we have seen third 24% of SMB’s in the US usually have some kind of formal employee/employer contract for the use of employed [09:34 protesting] devices but the majority of them do not. And in the last 12 months itself, 17% of tablets that are being used within the SMB organizations were purchased by employees rather than by their employers.

So there is all of these activities actually points to the fact that there may be some kind off a [09:52 inauble] option there that maybe this is like MDM , there would be issues like MAM and so forth which is the MSP’s can really step in and not only be able to provide appropriate technology solutions but also play an advisory role for all of these SMBs and I think that they are really great!

Nate:                       Yeah, that’s great, that’s great to hear. So we are coming up on our commercial break in the next few minutes but I just want to ask one last question before we get there. What has surprised you the most about small businesses? Anything you found through your research but what would surprise you the most about small businesses in the past year and maybe the past few years?

Anurag:                  The agility that SMB’s have demonstrated and continue to demonstrate in adapting to the changes in the economic conditions. When the economy was down, SMB’s sharpened their medium and longer term priorities, loaded investments which led to smart IT investments. And now when the economy is rebounding, they have turned their attention towards growth acceleration and six times out of 10 the top 10 IT investments, they are making is driven by need for business growth.

Nate:                       Interesting, yeah, that’s great to hear. So yeah, we are going to go into our commercial break now. We are talking here with Anurag Agrawal. He is the SMB guru providing us some great tips for… Or some great data around SMB’s in the SMB market. So we will take a quick commercial break. Coming up next we would be talking about the opportunities for MSP’s and how they can take advantage of this now growing SMB market. So stay tuned and talk to you guys in a minute. 

Nate:                       Alright welcome back everyone from our commercial break. You are listening to MSP radio. I am your host Nate Teplow. We are speaking with Anurag Agrawal. He is also known as the MSP guru. We had a great discussion earlier about the state of the SMB market. Anurag provided some great statistics and details and research about the SMB market and now we’re going to transition into the opportunity for MSP’s and how they can take advantage of the growing SMB market.

So Anurag, one area of research that you focus on is SMB IT priorities. Can you tell us a little bit about some of your recent findings in the SMB IT priority space and where SMB’s really need the most help?

Anurag:                  Yes. Obviously cloud is a big thing, mobility is a big thing, virtualization is a big thing and the migrations from legacy solutions to more modern architecture is kind of important because they have to take advantage of the new upcoming technologies; whether be business intelligence, whether it be big data or unified workspace. That means delivering the same application to the three different screens; whether it be smart phones, tablets and PCs. These are all extremely important areas and obviously that is an ongoing discussion about migration from XP to so on and so forth.

But one important point which I really want to kind of bring up here is the refresh of the server. A common belief that is there in the media across different IT vendors is that cloud computing is actually inhibiting the market for servers within SMB’s. Well, on the contrary, our data shows that 20% of SMB’s that are using or planning to use cloud server, are also planning to refresh their on premise servers. Now isn’t that interesting? And within the main market business defined as hundred employees and above, hundred to say 1000 employees, a whopping 83% of those using cloud servers are also planning to purchase new servers within the next 12 months. So what does this tell us? This tells us that there is a need for hybrid deployment of cloud solutions. There is a need for MSP’s to manage these infrastructures, there is a need for MSP’s to really be able to play that advisory role to these small and midmarket businesses. And there are several other SMB IT priorities where MSP’s can really help; Mobility, mobility solutions.

It is not always about smart phones, tablets and laptops but as I said, about seamless delivery of information to the three screens than cloud computing as SMB’s focus on revenue, fast market reaction time has become important and cloud enables that objective. But the dialogue has to change from “If you want to control cost, use cloud.” Two, the dialogue has to change and the channel partners and the MSP’s after really focus their attention on it is to say to the small businesses, “If you want to grow your business, use cloud.”

And then there is this whole collaboration and collaboration is not limited to simply using web and radio conferencing or file sharing but whole applications that integrate email, content, workflow built on top of productivity applications. And these are really, really some of the very important areas and SMB’s are continuing to move towards adopting managed services as a means of really relieving their stressed IT staff which could be used for more strategic operations and outsourcing the management of IT has also become imperative because the technology itself has become so complex and keeping pace with it for these small businesses has become extremely, extremely difficult.

Nate:                       You interesting. I mean it sounds like the cloud is no longer just a place where you can store data and have it be backed up and lived there; it obviously still is that but it’s moving towards a place where you can really store almost your business and your files and your collaboration and use it as a way to make your business more efficient and more scalable with the cloud and SMB’s are going to rely on their MSP partners in order to get them to the cloud and better utilize the cloud as it continues to take hold.

Anurag:                  Yes absolutely. At the same time, MSP’s have very important role to play to advise these small businesses whether all these small businesses should move completely to the cloud when they have got their entire data set, the crown jewels in the cloud or they have to have a pretty good mix of storing in the cloud or capabilities where there are some that are stored on premise, some which are stored in the cloud and that requires an advisory role, that requires selling and maintaining solutions. It’s not one thing or the other but how can an MSP offer the best upgrade solutions to meet a small business' business objective.

Nate:                       Yeah. And I think it is also important to point out that when you approach as an MSP, you should approach your clients about this, speak to them in business terminology and in business how it’s going to solve their business needs. Don’t talk about the cloud technologies. Don’t get into the nuts and bolts of the different technologies but help them understand that this is a technology that will have them achieve their business goals and speak to those terms again instead of selling that technology.

Anurag:                  I tell you, that this is such an important point because another corresponding story that we did where we started slightly over 1000 general partners including MSP’s and the [06:25 inaudible] and the air sites and one of the things that we found that those MSP’s and the [06:31 inaudible] that actually approach the small business customers with understanding their business, understanding their industry are more successful, in fact 3-1 more successful than those MSP’s that approach their customers with their technology capabilities.

Nate:                       Interesting. You said three times more successful?

Anurag:                  Yes.

Nate:                       Wow, that’s incredible! So moving a little bit towards the future; how do you think these needs will change in the next year, two years or even five years down the road?

Anurag:                  Interesting question Nate. Predicting the future isn’t always…

Nate:                       That’s what them trying to do right?

Anurag:                  ...is always a very tricky business. So what we’re seeing is that irreversible changes have been brought to the SMB market by the cloud company here which actually frees the SMB’s from the linear hardware/software applications and integration path to one which of direct access to affordable modern technology that can be immediately be put the effect and this will continue for some time. But in the next 4 to 5 years, what we’re seeing is that the communications collaboration, content and context will be at the center of computing for the MSP driven by mobility cloud-based applications and process optimization.

There will still be some concepts of client and server and network but they will be much more tightly integrated focused on collaborative computing capabilities and the user interface will be a browser that will run applications that are neutral to the various screens which are available with tablets, two in one’s and so on and so forth. And clients and servers will become increasingly virtualized. The network will be software-based, environments regularly optimized to manage larger inputs from smart devices whether it be the Internet of [08:49 inaudible], whether it be some dumb application-specific devices. And more importantly the application code will become modularized and which will be combined as functional blocks that you can actually drag and drop functionality that will allow creation and editing of master documents, platforms application and there could be some [09:11 inaudible] as well. And finally, all of this content will be served up based on the context of the consumer of the employ of the executive.

Nate:                       Yeah, that’s really interesting. I mean it sounds like from what you are saying is that, I don’t want to say that business is moving online because I think there is a certain human component to business and that there still needs to be face-to-face interactions in order to keep things moving. But in terms of the technologies and the components that you use to make your business run and operate, it’s going to move more and more online into this every device accessible mobility kind of world.

Anurag:                  Yes, yes. Absolutely. And I think the trick is for these MSP’s to really understand as to how this is evolving as fast as possible. So to give an example; by 2016, we estimate that within the SMB space there will be 42 million mobile employees. Now when you talk about this 42 million mobile employees whether they are traveling for several days or traveling for a day; whether they are telecommuting or they are working at the cloud and so on so forth, that brings tremendous amount of challenges which channel partners like the MSP’s can really help the SMB’s manage.

Nate:                       Yeah, absolutely. I know, interesting things happen in the market. I think a huge shift going on obviously and technologies are always changing and with that there is a ton of opportunities for MSP’s. So Anurag, one last question for you. I’m going to turn it a little bit more personal instead of focusing on the MSP market but what’s your favorite part about conducting research and specifically research in the SMB space?

Anurag:                  Well, we are so steeped into it for the last several years and I have been in this industry for slightly over 30 years now. Well, I can say for sure that every study that we conduct brings in some new revelations. Every time we start a study, we try to test out a hypothesis and say, “Well, we maintain that is what is happening” but when we start to look at the data, something else starts to poke out at us. Like I will give a simple example; I mean two years ago, we started to understand what is happening in the channel space and very quickly we found out that those channel partners were offering three in one services, they are offering mobility and cloud managed services tend to be more successful than the ones which are offering just one service. And the now when we are looking at… So every study that we do, and you know that. We do about 40, 50,000 studies each year.

Nate:                       Wow!

Anurag:                  And once we do these kinds of studies, we look at the data and we get surprised and we are constantly swimming in this level of information.

Nate:                       Yeah, that’s cool. It’s almost more fun to be wrong and to be surprised than to be right about a hypothesis.

Anurag:                  Yeah. It’s true actually and more often than not what we do is we start with a study, we go out and conduct very in-depth interviews with the SMB’s first to understand what their pain points are then we translate that into quantitative questionnaires and use really large sample sizes. We don’t go and just do studies on the hundred or 200 SMB’s. If we have to study what’s happening in the managed services area, we go and survey about 1000 SMB’s within one country itself. And then we replicate that across different countries and we start to see where the trends are same, where the trends are different and that helps us formulate a view of the market.

Nate:                       Yeah, that’s great, great to hear it. It sounds like you have a great system, a great methodology and you are finding out some great things about the SMB market. So Anurag, thank you for joining me here on MSP radio; I thought we had a fabulous discussion here about the SMB market. You provided some great statistics for our audience to hear and to use and leverage in their business. So thank you for joining me here today.

Anurag:                  Thank you Nate! I would just say that guys, now is the best time to address the SMB market place. There has been a recent study of over 2000 SMB’s. 74% of SMB’s are feeling positive about the business outlook and 67% feel very positive about the role of IT within their business.

Nate:                       Yeah, that’s great to hear. I think it’s an exciting time to be an MSP and there is a lot of opportunities out there.

So just as a reminder to everyone you can follow Anurag on Twitter. It’s @Anurag; A-N-U-R-A-G Tech Isle, all one word. You can visit his website www.TechIsle.com. That’s T-E-C-H-I-S-L-E.com. He’s got lots of great research. You can find out more about his company and some of the surveys he’s doing online and also follow us at continuum. If you use the Twitter handle @follow Continuum, again we would love to see you on twitter. We have done a great job of pushing out some great content industry news to you so great discussion here on MSP radio.

We hope to see you all next week and don’t forget to subscribe the our podcast. We would love to see you get episodes straight to your iTunes.