MONETIZING THE CLOUD IN THE SMALL AND MEDIUM- SIZE BUSINESS MARKET

Transcription

1 MONETIZING THE CLOUD IN THE SMALL AND MEDIUM- SIZE BUSINESS MARKET This EMC Perspective is addressed to communications service provider executives seeking ways to increase revenue, share and profit in the SMB market. We discuss: Why the SMB market is underserved How communications service providers can meet SMB needs with cloud-based services What it takes to become a full-service provider to the SMB market How to target SMB market segments and develop a go-to-market playbook Communications service providers (CSPs) have an unprecedented opportunity today to penetrate and expand their shares of the small and medium-size business (SMB) market by providing the comprehensive range of IT infrastructure and application services that SMBs want and need. The catalysts behind this opportunity are cloud computing, software as a service, and mobile applications. Given their longstanding relationships with SMBs and track records of reliable service, CSPs are in the best position to put the pieces together, monetize their technological capabilities, and gain revenue and share in the enormous, but fragmented, SMB market. The opportunity is there, but it turns into a threat if aggressive competitors seize it first. E M C P E R S P E C T I V E

2 AN UNDERSERVED MARKET Small and medium businesses need complete application services, but would rather not deal with the hassle of building and maintaining their own IT hardware and software solutions. In contrast, large enterprises may differentiate themselves, and even gain competitive advantage, by developing and deploying innovative information systems. They can afford the investment, and they need complex systems to coordinate business operations and trading relationships that may span the globe. SMBs want to keep it simple with IT solutions. They want to use the best affordable applications available, but they distinguish themselves in the eyes of their customers by how effectively they use applications and information not by their ability to develop software and operate systems. They would rather focus on their operations and customers not their technology. While important to their businesses, IT solutions still tend to distract SMB proprietors attention from their primary focus. SMBs have traditionally struggled to use IT effectively because they ve had to do too much themselves. Very small businesses may have one person an employee or contractor whose part-time job is to take care of IT needs. But as soon as a business grows, it needs capable, general business and even industry-specific applications; its technology setup gets more complex; and it must manage and protect its information and systems more comprehensively. That s when IT gets complicated and cumbersome for SMBs buying hardware, buying or licensing software of several types, making sure systems and databases are properly secured and backed up, and maintaining and managing the computing environment. SMB staff typically has to do too much manually, including moving data between applications. SMBs have their own versions of the technology problems that can plague large enterprises silos of information and functionality, and legacy systems and infrastructure that are increasingly difficult to maintain and change (Forrester s 2009 survey found legacy systems to be the top challenge for SMBs). 1 And SMBs are typically unable to take advantage of the most capable applications available, because it s too difficult to swap applications in and out, and too much trouble to add new ones. So financial applications stop at bookkeeping; employee applications stop at payroll; operational applications stop at order entry or inventory control; and basic opportunities for performance improvement, cost savings, and employee productivity are forfeited. Many SMBs rely on local technology services firms and value-added resellers (themselves often small businesses), which involves a trade-off. The SMB gets individual attention but is limited by the technological capabilities and often narrow scope of these providers. SMBs may prefer to outsource more of their IT, but there are no full-service providers no one who can offer a full range of applications, operate a secure and cost-effective infrastructure, and be responsive to the business patterns and growth opportunities of SMBs. If there s an exception to the SMB s technology service problems, it s usually the CSP, who delivers reliable services including telephone, Internet access, mobile phone, and web hosting in flexible, comprehendible, and useful bundles. These current communications offerings may be largely commoditized. However, CSPs can leverage their customer relationships and technological capabilities to become full-service IT providers in the SMB market, adding new revenue streams and adding volume to established ones. 2

3 NEW OPPORTUNITIES FOR PROVIDERS AND THEIR CUSTOMERS Three trends have converged over the last few years to change the game for SMBs and the technology companies that serve them: Cloud computing offers the SMB remote processing and storage infrastructure that is reliable, scalable, cost-effective, and managed largely via self-service. The SMB can have computing resources on demand and pay for them by usage, with utility services like backup and recovery built in. Technology investment and management expenses are dramatically reduced. For the CSP, the challenge is to partner with cloud experts and quickly build out a platform for service deployment to the SMB market. Software as a Service (SaaS) offers use of a wide variety of robust and easy-to-use applications. The applications operate in the cloud and are maintained by their authors. SMBs have access to more and better applications, including a growing number of industry-focused ones, with usage-based payment options. Applications and usage can scale with the business, and the SMB can experiment with new functionality at an extraordinarily low cost. For the CSP, the challenge is to select and partner with a sufficient variety of software providers and implement processes for working with them. Mobile applications are becoming as ubiquitous as the cell phones and other devices they run on. It s no longer just a matter of accessing information and applications on a mobile device and hoping the interface doesn t garble things. More and more business applications are configured to run completely and securely on mobile devices. That s great news for SMBs because on average over half their employees work remotely or on the road. For the CSP, the challenge is to integrate mobile and other services. If the CSP does not provide mobile services, then partnership number one is with a mobile provider. Properly harnessed, these three trends can together enable SMB customers to spend less time on IT, make better use of their applications and information, and meet their basic business objectives, which include: Reduce costs. SMBs want to minimize upfront investments in hardware, software, and staff, and then keep IT costs predictable. They want the effort of managing their technology to be reasonable, so they like convenient product/service bundles and want to control their usage with the help of simple metrics and clear billing. They also want efficient, available, and cost-effective support. Support growth. SMBs want information systems and technology to scale-up with the business without the need for costly conversions, including being able to rapidly install common applications in newly opened or acquired locations. They need information and systems to be available to employees wherever they are working and developing business and to communicate and collaborate readily with new customers and business partners. Improve business process performance. SMBs may be conservative when it comes to adopting new technology, yet they are open to performance-enhancing innovation. As they become aware of the potential, they want to capitalize on better business applications, not only in traditional areas like bookkeeping and scheduling, but also in new (for them) applications in areas like collaboration, employee management, and business analytics. Cloud-based services fit those objectives through on-demand capacity, pay-by-use billing, local control via self-service, secure mobile access, facile collaboration, and a wide variety of available business applications. Technology costs come down, track with actual usage, and become more predictable and manageable. The technology environment can scale up and down as needed without hassle. More and better applications can be put to use, including remotely. And the SMB can manage its technology resources via a self-service portal, with constant visibility to usage, performance, and cost. 3 Here s another way to describe success. It s when the SMB customer says, We work with the CSP because he or she meets all of our computing, communications, and applications needs securely, reliably, and effectively. We trust the CSP to take care of the systems, and we focus on our work and our customers.

4 SMBS AND CLOUD-BASED SERVICES The game seems to be on to provide SMBs with a wide variety of cloud-based offerings. In the 100 or fewer employees segment, for example, IDC predicts cloud services growth from $2.4 billion this year to $4.1 billion in IDC also says that may be conservative: We re at an acceleration point. We re seeing real innovation and real growth, and it s all coming from cloud computing. 1 BT BUSINESS ON THE PATH BT Business, serving the U.K. SMB market, is on a path to becoming an integrated and full-service provider. Until recently, it took a conventional approach to these customers push more of whatever BT offered without close attention to customers needs, and sell an often confusing array of individual components (private line, VPN) and technologies (frame relay, ISDN) rather than solutions to customers business communications problems. A steady decline in SMB revenue led BT Business to adopt a dramatically different approach, starting with more customeroriented offerings. Basic services (such as data and voice networks, web hosting, and mobile services) are managed as three clusters communications and infrastructure, applications and content, and hardware/devices/it services. The emphasis is now on selling bundles of services that fit together and meet the needs of SMBs in different size ranges. BT offers software from a growing variety of partners such as Salesforce.com and NetSuite. And they ve created BT Tradespace, an online community for SMBs to communicate and even trade with each other. A CSP can expand its services stack in different ways. BT Business has focused first on supplying SaaS applications enabled by connectivity while it builds a more robust IaaS offering. And results are coming in. Despite recent economic conditions, annual SMB revenue is up in all three clusters over 100 percent in the relatively small but hot applications and software cluster. Along the way, the company has rediscovered the importance of customer focus and innovation, even in trying economic times. 4 Forrester Research reports that about one-third of SMBs already use SaaS applications for customer service or sales force automation, and SMBs also have growing interest in collaboration, content/document management, and business intelligence software, all of which are good fits for cloud services. 2 Meantime, their concerns over using SaaS cost, security, integration are declining fast. Research & Markets sees explosive growth in the SMB market for applications software a $30B opportunity by The question remains how much of that software will be provisioned as SaaS and who will share in that revenue stream. 3 Are we at an acceleration point in SMB adoption of cloud-based services? It depends on whether providers can simplify the technology landscape for SMBs, offer comprehensive sets of services, and make it easy for SMBs to capitalize on the cloud. THE CSP AS A FULL-SERVICE PROVIDER What does a full range of cloud-based IT services look like? The following diagram compares the CSP service stacks of today and tomorrow. TODAY S SERVICE STACK Selected Applications Services Web Hosting, Network Services Anti-virus, Anti-spam, Security Services Ports and Pipes Voice, High Speed Internet, Video TOMORROW S SERVICE STACK Content as a Service (CaaS) Information Delivered as a Service Software as a Service (SaaS) Business Applications and Productivity Tools Platform as a Service (PaaS) Applications Development and Authoring Platforms Infrastructure as a Service (IaaS) Compute, Storage and Networking Today s stack typically centers on direct network services together with selected networkbased infrastructure (e.g., backup and recovery) and applications (e.g., web hosting) services. Adding in computing, storage, and automated infrastructure management services creates a complete Infrastructure as a Service (IaaS) offering. Incorporating integrated tools for customizing applications and services creates Platform as a Service (PaaS primarily of value to larger and more technologically sophisticated SMBs, including those that want to customize their mobile applications). Offering a variety of third-party business applications and productivity tools creates Software as a Service (SaaS). Finally, providing selected information feeds of interest to SMBs, from news to databases, creates Content as a Service (CaaS). 4

5 Who can put these pieces together and capitalize on the opportunity to serve as an integrated, full-service provider to the SMB market? CSPs are in the best position to seize this opportunity because of four advantages: They have longstanding relationships with SMB customers and track records of reliable service. The CSPs have the credibility to provide broader infrastructure services. They already provide SMBs a large and critical portion of the IT environment voice, data, and Internet communications. SMBs may not think of it in these terms, but they have long been outsourcing network operations to their CSPs. They can differentiate their services by offering network-based features and performance options. CSPs already handle a variety of flexible service bundles, usage-based pricing, and the associated combined billing. They have extensive (and typically underutilized) IT infrastructure of their own that can be exploited to provide cloud-based services, thus monetized. These economies of scale should enable CSPs to provide highly reliable computing services at very competitive rates. Competitors in the SMB market for cloud-based services have individual strengths. Google and Amazon have extreme scale economies, but their offerings are generic and their support capabilities limited. Specialized providers of services such as web hosting and data management have focused expertise but cannot offer comprehensive bundles. Only the established CSP enjoys the combination of trusted relationships, technology foundation, and service capability. To become full-service players in the SMB market, CSPs need to put three major pieces in place: Cloud technology for operating an efficient and secure multi-tenant infrastructure that operates as a scalable, self-service platform to SMB customers An application mall where SMBs can discover, evaluate, order, and provision software from a critical mass of certified SaaS providers. To operate the mall, the CSP needs new processes for third-party application retail services, partner certification, revenue sharing, and relationship management Other new processes for the smooth migration of customers existing data and applications to the cloud and SaaS environment, plus revised processes for sales, service provisioning, customer self-service, tiered support, billing, and customer relationship management CLOUD TECHNOLOGY Cloud functionality comes about by deploying a set of sophisticated virtualization, storage, security, and infrastructure automation technologies. Working together, they implement six foundational delivery principles: 1. Secure separation ensures the physical or logical separation of basic services such as servers and storage in use by customers, or tenants. 2. Service assurance automates provisioning of services and enables reliable performance to tunable service-level agreements. 3. Service provider in control supports the management of the cloud s operations for the CSP, including integration of provisioning, support, billing, and reporting systems. 4. Tenant in control supports the customer s management of on-demand services, access to support, and transparency into utilization and billing. 5. Security and compliance employs identity and access management, encryption and data loss prevention, enterprise key management, and other security methods to protect the tenants cloud environments. 6. Data protection employs backup, recovery, replication, and data redundancy methods to ensure the tenants business continuity. 5

6 HOW DO SMBS LEVERAGE CLOUD COMPUTING? Applications updates: A regional specialty paper goods manufacturer found the software to accurately keep up with constantly changing sales tax rates and rules in the half-dozen states where the company sells products. The vendor keeps the software up-to-date, and the company can expand to new states effortlessly. Customer collaboration: An accounting firm was expanding its CFO services to its SMB client base, but accessing and dealing with the wide variety of clients financial applications was proving infeasible. The answer was a cloud-based portal for ongoing communication and realtime financial updates. CFO outsourcing quickly grew to be over half the firm s business. Business continuity: After thieves stole a recycling company s entire office computing setup of eight PCs, the company bought eight more the next morning and was back in business by noon. Information, applications, access nothing had to be recreated because it was all running and backed up in the cloud. Business communications: To compete with much larger firms, a risk management consultancy needed to use excellent communication and collaboration tools..a cloud-based suite from messaging and to shared workspaces and online meetings provides on-demand capability while reducing technology costs by thousands of dollars a year. Business scalability: When a workforce scheduling and management firm moved to a hosted application for its sales force, it anticipated a 20 percent reduction in associated technology, training, and personnel costs. What it also got was steady IT costs even while the firm tripled its business. Fresh start: When one of its products surged in popularity, a provider of multi-player games for mobile phones hit a wall when its own modest server facility was overwhelmed. The solution in terms of revenue generation, customer satisfaction, and technology was rapid conversion to pay-by-use cloud infrastructure. Start-up: A company running online marketplaces for artisans and their products faced three challenges geographic reach (the 10 employees are scattered across the U.S., and they are bringing local artisans to a national market), image storage (hundreds of thousands of images of arts and crafts), and payment processing (many relatively small payments called for automation, not clerks). For a company like this, cloud infrastructure and applications was by far the best way to start and grow a business while minimizing the cost. The first four principles enable multi-tenancy, the flexible yet secure sharing of technology resources in a cloud. The last two focus directly on the protection of the data and applications hosted there for customers. Cloud configuration is an overlapping three-phase process. First, gain the efficiency and often dramatic cost savings of virtualizing technology resources, from servers and storage to the applications, user interfaces, and other business services being hosted. Second, maintain control through automation of access and security and the overall operation and management of the virtualized environment. Third, provide customers with choice by provisioning a variety of business services, many of them offered in partnership with third parties. Choice Control Efficiency Provision business services and federate with outside providers Automate access, security, and management of the computing environment Consolidate and virtualize technology resources of all kinds The effort of cloud configuration depends, of course, on where the company is today, and CSPs tend to be well underway in putting the pieces in place. All of the following are steps toward implementing a cloud: Consolidating servers, storage, networks, and other technology resources Virtualizing technology resources, including information and applications Automating technology resource and security management Organizing and provisioning IT offerings as business services Structuring and managing IT as a shared services organization Building standard interfaces with compatible service providers Making effective use of selected public cloud services Cloud computing is a natural extension of all these improvement initiatives, as well as the architecture for integrating them and monetizing their capabilities in the marketplace. For a CSP, the destination should be familiar. Cloud is the means of provisioning a comprehensive range of technology-based services with much the same efficiency and discipline that CSPs demonstrate in provisioning their variety of network services. 6

7 APPLICATIONS MALL An online applications mall is where customers can go to learn about and obtain new software for their businesses. Apps mall is a customer self-service mart managed by the provider. The best-known, general-purpose software applications store is Google s, and mobile device providers, like Apple, have very active and well-stocked stores for mobile applications. Also emerging are applications aggregators, such as Intuit Workplace App Center, that offer onestop shopping across a variety of vendor offerings. Why would a CSP want to manage an apps mall? A TM Forum survey 5 of CSPs found several reasons: Revenue. This includes a share of software sales or subscriptions, pull-through increases in core communication services as more applications are used, and potential content and advertising revenue at the Content-as-a-Service level of the stack. Relationships. CSPs can attract new customers and reduce churn among existing ones by offering them greater choice of software or differentiated offers and bundles. Brand. The CSP s image is enhanced through the demonstration of continued innovation and comprehensive service offerings. SMBs will find an apps mall very convenient, and hosting or participating in one may become table stakes for providers in that market. It may be best to open a store soon in order to control the channel, manage the customer experience, and position the CSP as a full-service provider. In stocking the mall, the focus should be on general business applications targeted at various SMB size categories, together with industry-specific applications with popularity or strong business performance potential. Apps malls take several formats. The CSPs can take the lead in creating their own applications and white labeling third-party ones. They can establish strategic relationships with selected trusted software providers. They can set up a marketplace storefront, catalog, infrastructure for individual software providers to sell their offerings directly to customers. Or they can host the mall, but outsource its operations to a major software provider or applications integrator. Each option has a different mix of revenue potential, applications selection, control over customer experience, and time and effort required. Whatever the apps mall model, the CSPs need strong processes for the on-boarding and testing of partner software to run in their SMB clouds, as well as clear guidelines around revenue sharing, applications support, and the sharing of product rankings and other customer feedback. In order to best serve their software provider partners, the CSPs should provide promotional opportunities for partners, easy-to-use development tools for tuning or customizing applications for the network (a slice of the Platform-as-a-Service layer), analytics that partners can use to improve their offers and their roles in the customer experience, and, of course, secure protection of partners intellectual property. With cloud-based services including an apps mall, the CSP must provide excellent service and experience not only to SMB customers, but also to its ecosystem of technology and SaaS partners. 7

8 NEW AND REVISED PROCESSES In addition to new processes we just described for bringing software offerings to market quickly and managing relationships with apps mall partners, CSPs need new or revised processes at the major SMB customer connection points, including: Automated processes to migrate customers existing data and applications to the cloud environment and validating their performance, including active customer support as needed during migration ADVANTAGES OF THE CLOUD There s always been a fundamental tension in information technology management: we want the computing environment to be robust and secure, but we also want it to be flexible and accessible. With cloud computing, it s now possible to have it both ways. Cloud architecture represents a better way to configure and manage IT resources of all kinds, from servers and storage, to information and applications, to productivity tools and user interfaces. Technology assets and their capabilities are welldefined, modular, and connectable. Interface methods are standardized and published. Virtualization enables physical devices to be efficiently and securely shared, and heterogeneous technologies to work together. All of these resources can be managed as an efficient and flexible pool, shared (as authorized) across the business, its customers, and its partners. Very importantly, these resources can also be consumed differently as understandable business services that people can access on demand and often via self-service through a standard browser interface. Businesses enjoy more transparency into the services they consume and can often pay according to actual usage. The cloud approach enables better performance on multiple fronts simultaneously: cost, manageability, information access, new capability deployment, coordination and collaboration, business continuity and security, business innovation and growth. It s the way for companies of all sizes to get the best mix of capabilities, performance, and cost. And it s the best platform for provisioning technology services to SMBs. Automated provisioning of on-demand services via customer self-service, on-demand information for customers to use in managing their resources and consumption, and integrated billing across services Tiered customer support emphasizing customer self-service, but providing the direct support SMB customers sometimes need and expect. This includes clear guidelines for who does what when support responsibility is shared with partners The most important initial adjustment for CSPs may be to the sales process. SMBs may need to learn about their new opportunities to leverage information systems and how CSPs are uniquely able to assist. SMBs often view IT as a challenge and are accustomed to relying on a variety of local providers. CSPs will need to educate SMBs on what a full-service partner can do for their businesses and change their customers perceptions of what s possible. A direct sales force may make sense for working with larger SMBs, though sales channels can expand (especially online) as more everyday customer interactions are automated. For smaller customers, CSPs would like to automate sales (just like other processes) and to work via their familiar marketing, advertising, and telesales campaigns. However, the initial introduction of the CSP s expanded offerings may require a salesperson s visit. The game-changing message We can meet all of your information systems and technology needs with the same reliability and service as we now do for your telecommunications may require a messenger. In short, reaching different segments of the SMB market will require variations in initial communication (e.g., about service bundles), lead generation (often via call centers), and closing business (sometimes in person). Especially for larger SMBs, there should be increasing opportunity to coordinate branding and selling with software and technology partners. This is very much a multi-channel proposition, a new mix of traditional media, online, inbound and outbound call center, direct sales, and partner sales channels. The mix may be experimental at first and fluid thereafter. The keys to success will be measuring and analyzing as you go, and enabling channel switching as needed to close the sale. The SMB market is varied, to put it mildly. It has never been a one-size-fits-all proposition for CSPs. The provider today who wants to expand services to SMBs must have more flexible processes than ever. There may be productive and necessary process variations driven by SMB customer segment, service type, service level, and partner model. CSPs have the core processes in place, but there s work to be done to devise and accommodate the reasonable number of useful variations in process structure and performance. 8

9 DEEPENING SMB MARKET INSIGHT Efficiently and profitably meeting the technology needs of a highly diverse SMB market begins with better understanding, segmentation, and targeting of customers and prospects. Conventional business size and industry segmentation tells us little because the common groupings disguise enormous variation. For example, a local distributor of home appliances, an independent retailer, and a sub-contractor for appliance repair may all be retail and wholesale, but their information systems needs are very different. A 30-person company may in one knowledgeable person have more technical sophistication than a much larger business with a CIO who has long tenure but low appetite for innovation. The overall pattern of technological capability in SMBs is well researched, and common sense confirms the findings. Very small businesses have few IT staff, rely most on outside help, and are most reliant on packaged solutions. As SMBs increase in size, they have on average more technical breadth and depth, better in-house technology support and project and vendor management capabilities, more formal role and structure for the IT function, and greater acceptance of complex technologies. The exceptions are, of course, SMBs in the technology business themselves. However, it takes more than these averages to learn who the real prospects are and where the opportunities await. A robust understanding of SMB prospects would incorporate: Technological ability and appetite. This can be measured through specific variables such as what technology activities the business is comfortable with for example, an SMB with experience using a SaaS application for sales force automation is better positioned for other cloud-based applications. Current technology environment. The greater the degree of fragmentation, the more opportunity to introduce service bundles. Information intensity. A business whose products and services have high information content has greater need for many services, starting with data management. Mobility intensity. A business whose employees are on the road has greater need for secure access to mobile applications and collaboration tools. Asset protection intensity. A business that handles sensitive customer information or relies on specialized computing equipment and systems has extra security and business continuity needs. Where do you begin? Likely with applications and services bundles for industry verticals. An attractive industry segment has high potential for the SMB customer because of the information intensity of the business and the untapped potential for cost and performance improvements. And it has high potential for the CSP because the service bundles can generate both new revenue and additional usage of network services. Here are a few examples: Start-up entrepreneurial high-tech companies with high computational needs, especially if they are media-related and content heavy (e.g., video, photos) Smaller hospitals, group practices, and doctors offices that have high-volume information needs (e.g., medical imaging) and must connect and collaborate to implement electronic health records Retail banks and other financial services SMBs seeking to launch payment profiles and processing as service offerings Online gaming-industry services where each new player creates a profile on each gaming platform. The CSP could host profiles for many companies so the player s profile is available to all participating platforms 9

10 STRATEGY TO ACTION Does a CSP have the market opportunity and capability to monetize cloud services for SMB customers? The answer comes from a strategic assessment of marketplace factors, new business requirements, and realistic gap analysis. What are the desired future state and business goals? What are the current state and the capabilities in hand to move forward? What are the specific gaps, and how can they be filled incrementally, coherently, and in time to meet the goals? Keep in mind the opportunities for both new revenue from new services and additional pull-through revenue for current network services. Strategy becomes tangible in the form of a go-to-market playbook that lays out measurable objectives, the major components of a revised business model, and an implementation plan. The playbook s goal is to describe a realistic and innovative new operating model for the SMB market. But it s not to specify that model in complete or locked-in detail. As with any business initiative of broad scope and high business importance, implementation involves experiments, pilots, and learning as you go. A playbook contains some alternative plays and, ideally, anticipation of the conditions that may trigger pursuing an alternative. Implementation then puts the new pieces in place process changes, technology and automation, staff training under the guidance of a clear governance and management structure. It also includes the key activities of tracking progress and performance, adjusting the playbook as needed, and capturing what s learned along the way. Strategy Playbook Execution 1. Marketing sizing and growth opportunities 2. Segmentation and industry vertical targeting 3. Customer needs and buying behavior 4. Competition and threat assessment 5. Customer experience analysis 6. Business model requirements 7. Sales/support cababilities assessment 8. Operational gaps assessment 9. Pro-forma financials and investment requirements 1. Segment-level stategiey, goals, and objectives 2. Target customer profiles 3. Positioning and messaging 4. Product/service offerings and pricing 5. Sales and distribution strategy 6. Operational processes and procedures 7. Systems and tools requirements 8. Performance and knowledge management 9. Implementation plan, key milestones, and success factors 1. Establish program governance and management 2. Develop and rollout sales/support training 3. Operationalize process improvements 4. Develop and deploy technology, systems, and tools automation 5. Track progress and performance, revise the playbook as needed 6. Capture and reuse knowledge and key learnings THE INSIDE ADVANTAGE The inside perspective should also include anticipation of how the CSPs themselves can capitalize on their cloud infrastructures and services. Cloud services are not only the best way to serve the SMB market, but also to execute flexible processes, improve information flow and collaboration, and contain costs within the CSP s own operations. The initial and potentially large customers of cloudbased services should be the CSP as they grow their capabilities to serve the SMB market. In formulating strategy and developing a playbook, be sure to combine perspectives. Begin with an outside-in view: What will the desired future state look like to SMB customers, and how will it serve their businesses? Then take the inside-out view: What new underlying people skills and technology capabilities will be needed in order to deliver the new cloud services? Finally, pay due attention to the who of implementation many playbooks concentrate too exclusively on the what. Who needs to be on board and supporting the cloud services initiative? Who needs to be directly involved to make it succeed? Who needs to provide help and supplemental expertise? In all cases, the necessary whos are not only within the CSP, but also in its ecosystem of strategic partners. The SMB opportunity in IT services is hardly a secret. The market is varied and fragmented, but cumulatively very large and potentially lucrative. Yet few providers are looking at it holistically, choosing instead to continue to push product into a fragmented market. Those who can put the pieces together quickly, who can deliver both efficient automation and customer experience, will capitalize by expanding their SMB market penetration with both new and traditional services. The rest will find themselves increasingly marginalized as SMBs seize the opportunity to get out of the IT business and focus on their own work. 10

11 EMC AFTERWORD Many leading communications service providers look to EMC and its product families VMware, RSA, and Mozy to deliver cloud services to their customers today. EMC hardware and software provides a key set of CSP-ready features including integrated and highly scalable compute, storage and network platforms (VCE), scale-out storage (EMC Atmos ), and software to provide policy management, multi-tenancy allocation and control, self-service management consoles, and security features. EMC is also working with CSPs across the globe, via EMC Consulting, to provide services for CSPs that enable the development of cloud monetization strategies and the plans that drive them to execution. EMC Consulting communications industry experts are working with our CSP clients to develop business strategies, technology blueprints, operational processes and tools, and organizational models to enable the delivery of cloud-based services. EMC Consulting is also working with clients to segment their business markets and identify the appropriate cloud service/product mix, to design new processes and platforms for the discovery and automated provisioning of SaaS, and to develop new customer care and ISV partner relationship management models processes. 1 USAToday.com, Business apps give small firms cloud cover, Byron Acohido, May 10, Forrester Research, The State of SMB Software: 2009, Heidi Lo, R Ray Wang, Jean-Pierre Garbani, June 5, Research and Markets, Demand Trend Analysis of the U.S. SMB SaaS/Hosted Service Market 2009, AMI Partners, September Forrester Research, Case Study: BT Business Drives New Revenues in the SMB Segment, Mike Cansfield, December 8, TM Forum Insight Report, App Stores: A Model for Future Service Provider Partnerships, Rob Rich, May CONTACT US To learn more about how EMC products, services, and solutions help solve your business and IT challenges, contact your local representative or authorized reseller, or visit us at EMC 2, EMC, Atmos, RSA, the EMC logo, and where information lives are registered trademarks or trademarks of EMC Corporation in the United States and other countries. Mozy is a trademark of Mozy, Inc. VMware is a registered trademark of VMware, Inc., in the United States and other jurisdictions. All other trademarks used herein are the property of their respective owners. Copyright 2010 EMC Corporation. All rights reserved. Published in the USA. 09/10 EMC Perspective H7379 EMC Corporation Hopkinton, Massachusetts In North America