The approach for applications delivered from a third party off-premise data center is a growing rapidly. According to one estimate it was an $8.8 Billion market in 2008, growing to $17.6 Billion by 2011. The bulk of this growth will happen in the Small to Medium Business (SMB) segment. According to Gartner, Small Business is defined as 1-99 employees while Medium Business is 100-499 employees. This emerging market for applications delivery and data management is not fulfilled by shrink wrap applications purchased at the local Office Depot.
Recent research points to the fact that the SMB is fed up with trying to maintain these applications and also fed up with having to employ a staff of IT managers just to keep the wheels from falling off their business. These companies have been forced to look very closely at their expenses during this protracted economic recession and high on their list of budget cuts is IT as it represents hard cost and intangible value. A few of the continuing issues that IT has been unable to solve on-premise (in the SMB) is the simplified management/storage of data, office productivity application upgrades, database management and web site enhancements. As a result, these traditional on-site IT functions are rapidly moving off premise.
Some of the small businesses I’ve spoken to recently are trying to set up simple CRM systems, Voice over IP and Business Class email. They are looking to 3rd parties for the implementation of these systems in order to offload the IT function as they are really only interested in the services themselves. They want support of the services but not the burden of employee overhead and the ongoing headache of data center facilities issues. They told me it is becoming more and more difficult to find IT managers who are competent and who understand the complexities of their business. These companies tend to be in the 20-199 employee range which cuts across both Small and Medium business.
So these companies have a real dilemma in that they want to take advantage of all the innovation in information technology but don’t want to pay for a full time staff to implement it. As the notion of off premise applications delivery or Software as a Service has gained more awareness, this becomes at least one option for consideration. But what of the custom applications that a Law firm has developed to search through client files? Or what about the data files that are used to run multi-million dollar CNC machines in a manufacturing shop? How about a 30 employee insurance retailer with home grown software for CRM? Most of these companies are already dealing with the mess created by an IT employee who wrote custom code for their core business and then bailed to take a higher paying job somewhere else.
For the past 5-10 years small outsourcing IT companies called System Builders have been growing their businesses at break neck speeds because of the demand previously mentioned. These nimble firms provide IT expertise jobbed out to the SMB at rates that undercut a full time on-site staff. They have become a viable alternative to high priced IT employees who used to work directly for the SMB.
In some cases, the SMB has his own data center on premise but it is configured and maintained by these System Builders. When we consider the 500 Million end points (SMBs worldwide) who are in need of this type of service it’s not surprising that alternatives approaches are being used. One such alternative is SaaS and service providers who support this segment are also growing at double digit rates. Configuring and maintaining a data center is one thing, but who provides the delivery mechanism and support for software delivered as a service?
At the uber-SaaS level companies like Salesforce.com come to mind. But when it comes to niche applications, business continuity and business customization a support tier must be involved in order for the SMB to get what they need. There are three distinct priorities for the SMB in this regard; Integration and support, working with a few trusted vendors, and tiered service offerings. System Builders and Managed Service Providers (MSP) fill these requirements and are absolutely necessary in order for the eco-system to be balanced. Without these partners, the SMB is left to solve his own problems which is contrary to the current trends.
Just as the SMB has a specific focus for their collective businesses, System Builders and MSPs are also focused on the delivery of applications, data storage and services to support each of these. Therefore, a second tier must be introduced to handle the aggregation of these tens of thousands of System Builders and MSPs for training, license reporting, product fulfillment and marketing. Software and Hardware Distributors fulfill this role. Distributors usually have multiple products at their disposal, work across regional boundaries, move vast amounts of product and can provide better volume discounts as a result. Independent Software Vendors (ISVs) use these distributors as the first tier of the channel in order for them to concentrate on the development of the applications themselves.
ISVs sell to their authorized Distributors who in turn train and support the System Builders and MSPs. Each player in the chain provides a unique value proposition and in the end work together for the benefit of the end user to complete the requirements for software and services. This model is also proving to be the most cost effective way to provide Information Technology/Systems to the SMB space.
So if you are a System Builder, MSP or even an SMB looking to solve your business problems related to IT, Citrix has some pretty interesting solutions that all come through our (you guessed it) Distribution channel. Check out how to get in contact with one through our web site.