to the point: midmarket perspective for technology providers · why would you be willing to invest...

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Summit 2017

Mike Cisek

To the Point: Midmarket Perspective for Technology Providers

Midsize Enterprise Summit Fall

17 – 19 September 2017 / San Antonio, TX

1 © 2017 Gartner, Inc. and/or its affiliates. All rights reserved.

▪ Engage

▪ Keep slides to an absolute

minimum

▪ Keep it pithy:

– Who you are?

– What you do?

– How can you help? (Differentiation)

– What does it cost?

Start With the End in Mind — Success in the Boardroom

Midsize Enterprise Summit Boardrooms

With Midmarket IT Leaders


Key Issues

1. Defining and Segmenting the Midmarket

2. Midmarket Buying Behaviors

3. The Trends Driving Change in the Midmarket Enterprises


How Gartner Defines the Midmarket

100 Employees

$50 Million $1 Billion

1000 Employees

Lower Midmarket Upper Midmarket

500 Employees

$500 Million

Storage

Servers and

Virtualization

End Users

Cloud Services

IT Budget

IT Budget % of Rev. WAN Topology

IT Resources

Applications


Revenue and Budget

Less Than $1 Million

22%

$1-5 Million52%

$5-10 Million17%

$10-50 Million

9%

IT Budget

>$1B3.4%

$750M-$1B4.2%

$500M-$750M9.3%

$250M-$500M11.0%

$100M-$250M29.7%

$50M-$100M28.8%

<$50M13.6%

Revenue DistributionAverage

Revenue

$279M

2017 Budget Estimates:

▪ Increase = 45%

▪ Decrease 17%

▪ Flat 31%

▪ No Formal IT Budget = 7%

The actions taken in the past two years that have resulted in the greatest cost savings in IT?

Consolidation and optimization across all IT/business disciplines

Source: Midsize Enterprise Summit Spring 2017; n = 126


The MSE IT Leader

CORE Tenants

Respondents, n = 607

Economic

Discipline

Dyadic

Communication

Right-Sized

Approaches


19▪ $279M in Revenue

▪ Budget $5.5-$11M

▪ Opex (74%) $4-$8M


▪ Budget — $1.5-3M

▪ Opex (74%) $1-2.2M

Staffing and Budgets


▪ Budget $9.5-19M

▪ Opex (74%) $7-14M

Staff is 56% versatilist — Someone who can be a specialist for a particular discipline, while at the

same time being able to change to another role with the same ease. Unlike specialists, who possess

depth in one area, and generalists who have breadth but no depth, versatilists exhibit both.


Percentage of IT FTE That Are Versatilists

77%

55%

NA (n = 199) Europe (n = 376)

79%

68%

58%60% 60%

1 to 4 employees(n = 77)




101 to 200employees(n = 127)

Number of FTE in IT Dept.

= Significantly greater than comparison groups

IT in

tern

al s

taff th

at a

re v

ers

atilis

ts o

n a

ve

rag

e


16%▪ Average number of total

desktops virtualized

▪ % of MSEs with ZERO virtual

desktops = 46%

136▪ Average # of Physical + Virtual

Servers

▪ 78% (36% Prod/42 Test) —

Windows Server 2016

▪ 44% (19 Prod/25 Test) — HCIS

Infrastructure

84%▪ Average number of

MSE IT leaders who will

NEVER outsource 100% of

their data center

Specifically, what has been the most overhyped technology over the past two years?

Cloud (49%), Hyperconvergence (10%), Big Data (8%), IoT (7%), Office 365 (5%)


Key Issues



3. The Trends Driving Change in the Midmarket Enterprises


The Midsize Enterprise Operational Environment

MSE vendor definitions and market data are highly inconsistent and fragmented and should have limited influence on messaging.


Top 3 Challenges Leading a Midsize Enterprise

Source: Gartner; n = 490

12%

12%

1%

2%

3%

3%

3%

4%

5%

6%

9%

13%

15%

17%

31%

No challenges

Other

Safety

Attention from and dealing with vendors

Less open to innovation

Attrition

Inertia/Resistance to change

Pressure to reduce costs

Lack of necessary training

Finding affordable solutions/settling for alternative solutions

Keeping up with new technologies

Larger security risk

Limitations due to having a smaller IT staff

Lacking required IT skills

Smaller IT budget


Other:

▪ We are a blend of all three categories. For

commodity items that we can purchase from a

variety of vendors, we focus on ease of

procurement and cost. When working with

emerging or mission-critical systems,

innovation and performance is key.

▪ All 3 apply at different times. Thus, our

approach is highly project-dependent.

▪ We are looking for reliability, value and

usability. Most of the time in that order. Cost is

a driving factor in all organizations, but if the

item is unreliable, you will have to buy it again.

The best way to put it — We are not rich

enough to buy cheap stuff.

IT Buying Behaviors Are Project-Dependent

Save Money12%

Value64%

Seek Tech Breakthrough

15%

Other9%

What classification best describes your IT buying behavior ?

Source: Midsize Enterprise Summit West 2016; n = 106


Plans for Public Cloud

None24%

Email20%

CRM9%

ERP11%

SharePoint5%

BI/Analytics2%

Voice7%

DR5%

Office Apps11%

Security6%

What are the next applications/workloads you plan to move to the pubic cloud in the next two years?

What % of app investments

in the last two years have been

cloud-based? = 30%

14% responded "ZERO"



Emerging Technologies

Hyperconvergence18%

SD-WAN9%

UCaaS8%

Machine Learning5%

IoT4%SIEM

6%

BI/Analytics9%

Cloud DR3%

Office 3654%

Enhanced Security24%

VDI5%

AI5%

Cite the emerging or leading edge technologies that you are most interested in deploying over the next 12 months:



Why would you be willing to invest in technology products or services from small or emerging providers?

Emerging Providers Are on Equal Footing

Source: Gartner SMB Buying preferences Survey

71%

80%

77%

84%

82%

86%

74%

75%

79%

82%

85%

83%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Don't offer the sales channels I prefer to procure from

Resellers and partners are inadequately trained or are slow to adoptnew technologies we seek to use

Lack the innovation edge we require to maintaincompetitive advantage

Solutions are too complicated or improperly scaled to our needsand support capabilities

Lack the intimacy we seek in both sales and support relationships

Pricing is too high for the same quality solutions

Upper MM (n = 234) Low MM (n = 251)


Distribution of IT Spending (Direct vs. Channel)

Trying to market by yourself without partnering to achieve the "right mix" of channel limits you to a

little more than half the existing market opportunity

44.2%

55.8%42.0%

58.0%

Hardware

Directly to an IT Vendor Through IT vendors' channel partners


45.4%

54.6%42.1%

57.9%

Software

45.7%

54.3% 42.8%

57.2%

NetworkingUpper-end midmarket

n = 340

Low-end midmarket

n = 380


IT Requirements:

▪ Minimal IT Dependency

▪ Easy Integration; Complement Investments

They've Made

▪ Proven Technology Foundation

▪ Solution Versus Product Focus to Eliminate Silos,

Multiple Vendors

Provisioning:

▪ Straightforward Pricing, Flexible Deployment Options

▪ Affordable and Flexible to Pay and Implement Only

What Is Needed Now

▪ Local Partner If "Backed" by Strong Vendor

▪ References of Similar Size

and Requirements

Functional Requirements:

▪ Modular, With Relevant, Scalable Functionality

▪ Minimal Customization or Configuration in Order to

Differentiate and Support Unique Processes

▪ Willing to Accept "Good Enough"

in Commodity Processes

Implementation and Support:

▪ Easy to Install, Configure, Manage, Train,

Use and Maintain

▪ Reliable, Service and Support by

Responsive Providers

▪ Supports Ability to Grow Organically as Well as by

Mergers and Acquisitions

▪ Shows Empathy, Provides Intimacy

Midmarket Vendor Selection Criteria



Key Issues



3. The Trends Driving Change in the Midsize Enterprises


Five Trends Impacting Midsize Enterprises

Adoption of Agile, Cloud-Inspired Hybrid Infrastructure

Optimal and Advantageous Use of "Anything as a Service" (XaaS)

Use of Enhanced Security Detection and Response Capabilities

Embracing of Platforms that Optimize Operations and Customer Experience

Exploitation of Data and Analytics to Improve Insight and Decision Making and Deliver

Competitive Differentiation, Market Intelligence and User Context


Hype Cycle

for Midsize

Enterprises,

2017

Innovation Trigger

Peak of

Inflated Expectations

Trough of Disillusionment

Slope of EnlightenmentPlateau of

Productivity

time

expectations

Years to mainstream adoption:

less than 2 years 2 to 5 years 5 to 10 years more than 10 years

obsolete

before plateau

As of July 2017

Firewall as a Service

Cloud Data Backup

Third-Party Support for ERP

IoT for Customer Service

Self-Service Data Preparation

Micro Data CentersPredictive Analytics

API Management PaaS

Integrated Systems: Hyperconvergence

Analytics for Customer Intelligence

Cloud-Based IT PPM Services

Knowledge Management for Customer Service

Cloud OfficeHybrid Cloud Computing

Integrated IaaSand PaaS

Customer Self-Service Suites

Cloud Access Security Brokers

Cloud-Managed LANsDisaster Recovery as a Service (DRaaS)

Cloud UC (UCaaS)

IAM Managed Services

Managed WLAN

Application Performance Monitoring Suites

Public Cloud SaaS Administrative ERP

Enterprise Mobility Management Suites

IT Event Correlation and Analysis Tools

Visual Data Discovery

Content Services

Develop Your Own App

IDaaS

Application Security as a Service

From "Hype Cycle for Midsize Enterprises, 2017," 19 July 2017 (G00313408)

https://www.gartner.com/document/3764369?ref=solrAll&refval=188839497&qid=6d1b77fca31305874d72d8c0bb6a8670


▪ Engage

▪ Keep slides to an

absolute minimum

▪ Keep it pithy:

– Who you are?

– What you do?

– How can you help? (Differentiation)

– What does it cost?

Sell the Problem You Are Solving, Not the Technology

Midsize Enterprise Summit Boardrooms


Recommended Gartner Research

Inside the Five Trends Cited in the Hype Cycle for Small and

Midsize Businesses, 2016

Mike Cisek, James A. Browning and Others (G00313345)

Hype Cycle for Midsize Enterprises, 2017

Mike Cisek, James A. Browning and Others (G00313408)

Four Trends That Impact How Midsize Enterprises Deal With

IT Vendors

James A. Browning and Mike Cisek (G00320947)

https://www.gartner.com/document/3394317

https://www.gartner.com/document/3764369?ref=solrAll&refval=188839497&qid=6d1b77fca31305874d72d8c0bb6a8670

https://www.gartner.com/document/3698951

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