Finding the large enterprise market saturated, vendors have been trying to go “down market.” Microsoft, Sun Microsystems and Oracle, for example, have come out with stripped-down versions of some of their enterprise products. Theyve also been productizing their service offerings in such a way that smaller companies are seeing certain capabilities for the first time.
But does simplicity come at the price of effectiveness? eWEEK Executive Editor Stan Gibson and Labs Director Jim Rapoza recently spoke with members of the eWEEK Corporate Partner Advisory Board to find out if these products are meeting the needs of midmarket companies.
Participating in the roundtable conversation were Kevin Baradet, chief technology officer of Johnson Graduate School of Management at Cornell University, in Ithaca, N.Y.; Randy Dugger, president of Dugger & Associates, in San Jose, Calif.; Tom Miller, senior director of IT for FoxHollow Technologies, in Redwood City, Calif.; Fran Rabuck, president of Rabuck Associates, in Philadelphia; Robert Rosen, CIO of the National Institute of Arthritis and Musculoskeletal and Skin Diseases, in Bethesda, Md.; and Kevin Wilson, product line manager, desktop and mobile, for Duke Energy, in Charlotte, N.C.
Typically, small enterprises dont have very big IT staffs, and to tailor products for that market, vendors have tried to simplify things—to take a complex product and get rid of many of the features that arent needed to make it easy for perhaps a nontrained person to use. Vendors say theyre doing that with their new offerings. The question is, Are they?
Miller: First of all, what is the definition used by the industry to denote what a small to midsize business really is? If I look at some of the needs of some startup companies that are maybe 20 to 50 employees in size, versus a company, say, of our size, which is 600, versus a company with a half-billion dollars in revenue—there are very different needs.
Yes, there are very different needs, and were talking about a company that may be dealing with channel partners, but in this day and age, may also be dealing directly with vendors. Theres no perfect definition.
Miller: Taking it to the next level, then, the offerings that vendors are providing—whether theyre infrastructure- or application-oriented—are they just repackaged offerings, or are they tailored for the SMB market? Thats one of the first places I like to start with.
Rabuck: When you talk about vendors supplying or refocusing on small business, it varies. There is a whole new crop of companies that are doing this. Theyre offering bread-and-butter products—e-mail infrastructure, database-type applications, calendar, scheduling. These are things that, from a collaboration aspect, can get a small company off and running.
How about simplicity? Are you seeing real simplicity that makes life easier for you?
Dugger: The biggest thing I see with the startups I consult with is that they just want everything up and running quickly. It really comes down to whether they want to outsource everything or bring it in-house. If they want to bring it in-house, it tends to be a small-business server—its an all-in-one solution, and it comes up quickly with very little hands-on. [These kinds of products] have a lot of wizards for taking care of the administration of the tools.
Rabuck: I think big companies, the Microsofts and such, are trying to recruit the services companies to service SMBs, providing products such as Microsoft Dynamics that are hosted either through the vendors themselves or installed in-house. Its important to have the option because many small companies want to bring this stuff in-house and have some control.
So, youd start with software as a service and then move it in-house?
Rabuck: Yes, thats correct. At least, thats the long-term plan. The result may be that these companies find that [SAAS] gains momentum after a while. It becomes harder to move things off if theyre working well on the software-as-a-service model. Coupled with this, many things that are Web-based more and more are creating sort of an on-site backup, so if something does disappear tomorrow, youre not totally lost. You still have the most important, critical parts of your information.
Theres a wave of new storage products coming out that are aimed at SMBs. Simplicity is one of the hallmarks of these products, and storage over IP is another. Has anyone been deploying any new storage products for smaller enterprises?
Miller: Weve been deploying the NetApp iSCSI environment—the 3020 system—and its more for the midsize enterprise space. [We went with it because it meant] not having to implement a costly, complex Fibre Channel environment.
But, if you look at the storage resource management or ILM [information lifecycle management] capabilities, youre still using the applications that were meant for the big boys. So, even if you provide products that are scaled down from a hardware perspective, the software isnt always appropriate for an SMB business.
So, its not a totally effective scale-down effort on NetApps part?
Miller: Well, from a hardware perspective it is, but if you look at the tools for managing the environment, theyre still complex for what the requirements and the capacity are for an SMB.
Rosen: This is where there is still a breakdown: The SMBs still do not have the IT shops to support some of the things they are doing. When they hit a problem, they go to the vendor, which is not properly staffed to support the less technical users.
Id like to toss out the names of a few vendors that have downsized products lately. SAP has been trying to downsize its products for some time; Oracle has the Express Edition of its Oracle Database 10g; IBM announced the Express series of storage and server products; Sun has its OnDemand service; Microsoft, with its Dynamics line, is bringing ERP [enterprise resource planning] to SMBs. Anyone want to say anything about any of these companies products?
Miller: For me, I need to look at each vendor. I need to look at its enterprise offering, and I need to look at its designated SMB offering—almost like its in a matrix or a table. I need to see what differentiates the SMB offering—not only from a requirements standpoint of hardware and software but also in how the product is implemented through professional services, how its managed and supported in the enterprise—before I can say one offering is good or not good.
Im also wary of the downsized product in terms of what was left out.
Wilson: I spend a lot of time with Verizon, and they have brought several applications to the small business that before were available only to larger businesses with the economies of scale necessary to keep the prices realistic.
Another example that comes to mind is Dell, which can—because of its direct model—provide no-extra-charge asset management and inventory services to small businesses that need IT asset management and inventory but do not want to bring those functions in-house.
What about regulation and compliance demands? The Sarbanes-Oxley Act is aimed at large businesses, of course, but there are a lot of other regulations that have come down, and Im wondering how youre coping with that.
Dugger: Most of the small businesses I deal with are private and privately funded, so thats the least of their concerns. Generally, theyre concerned with getting off the ground and keeping their costs down. The rest of the stuff is side issues, and theyll deal with it later.
Rabuck: I agree—regulations tend to have less of an effect on small businesses, at least at this point in time.
Miller: I can speak to that. Were covered heavily under compliance. As a public company, were covered under Sarbanes-Oxley. As a medical devices company, were covered by the Food and Drug Administration. Were also ISO-certified, and weve recently gone through some litigation exercises where weve had to go through e-mail and document discovery.
I think the way you approach compliance is important: If you look at compliance as a strategic advantage versus just meeting the rules and regulations, you can actually gain some efficiencies.
Dell has been getting into the services business, with its typical commoditylike approach—offering a menu of repeatable services, none of which are very fancy but that apparently people need. IBM similarly has been downsizing its custom services with more packaged services. Are people seeing those out in the marketplace, and are they meeting your needs?
Miller: Im seeing them, but I dont know if their rates are similarly downsized. I think the rate structure isnt always appropriate for an SMB, and the level of business and technical expertise of the person actually providing the technical services isnt always as high as it would be for a larger enterprise customer.
But theyre going to charge you the same?
Miller: Or near it. So, again, they make their real profit off the professional services side. Theyre not going to want to discount much at all.
It sounds like youre getting the short end of the stick.
Miller: Well, particularly being a midsize business, youre in this strange zone where you have a lot of the same complexities as your large enterprise cousins, but you dont have the large IT staff—the depth and breadth—to spread the risk and deal with the issues.
Can you credibly threaten to go with another vendor if one of these vendors isnt getting the job done?
Miller: Frequently, yes. We always look at exit strategies for products we own and as part of a product evaluation. We have a primary and secondary vendor. If the primary doesnt work out, well go with the secondary.
What Id like to see when vendors come in and pitch a product is an understanding of what theyre pitching toward. Weve had occasions when weve worked with vendors and purchased their products, but in our minds and our eyes, they hadnt done due diligence in understanding our environment. This leads to problems when youre going through implementation.
Kevin, where do you stand on all of this?
Baradet: Well, from a numbers perspective, were small, but from a dollar/data perspective, were not.
Weve seen some interesting things happening. A lot of universities and some of the other folks in this space are looking to outsource things like e-mail. A lot of people are having conversations with Google to essentially outsource their entire e-mail infrastructure to Google. The whole thing is shifted off so [IT doesnt] have to run anything.
Miller: I actually went to Google recently and sat through a pitch, and one of the questions that came up was, What are the e-mail services that you provide around anti-virus, anti-spam, archiving—the kinds of things that you would run into in a corporate environment? And they werent able to answer it.
What I would say to the vendors is, think about your customer, the complexities that they have. One size doesnt fit all—deliver us a solution that is business-agile, secure and cost-effective.
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