The mid-market conundrum

7/27/2019 The mid-market conundrum

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Copyright Quocirca 2013

Bob TarzeyQuocirca LtdTel : +44 7900 275517Email: [email protected]

Bob BrownQuocirca LtdTel: +44 7940 526801Email: [email protected]

The mid -market conundrum

How to achieve best -in- class IT application delivery with limited resources

June 2013

Mid-market organisations live or die by the quality of the applications that drivetheir business operations; from sales generation through supply chainmanagement to post-sales services. Similar IT complexity to that in largeenterprises has to be managed to support these, but with more limitedresources. Somehow, the aspiring mid-market CIO needs to achieve peace of

mind, confident that these applications are consistently delivering the desiredbusiness outcomes.

Most acknowledge that they cannot achieve best-in-class applicationperformance, availability and security, at an affordable cost, based purely ontheir own resources. To deliver a given application effectively requires the helpof an IT service provider (ITSP). The conundrum is finding the right partner withboth an applications focus and flexible access to the necessary resources toadapt as workload and technology change.

The research presented in this report shows the extent to which UK-based mid-market IT leaders recognise these problems and how effectively they areworking with ITSPs to deliver improved services to their business.
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The mid-market conundrum

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The mid -market conundrum How to achieve best -in- class IT application delivery with limited resources

Mid-market organisations live or die by the quality of the applications that drive their business operations; from sales generationthrough supply chain management to post-sales services. Similar IT complexity to that in large enterprises has to be managed tosupport these, but with more limited resources. Somehow, the aspiring mid-market CIO needs to achieve peace of mind,confident that these applications are consistently delivering the desired business outcomes.

Mid-market CIOsrecognise that theymust deliver desiredbusiness outcomes

The majority of mid-market IT directors already have a CIO (chief information officer) mind set.They focus on applications over infrastructure and take a holistic view of both the applicationand the supporting infrastructure to ensure delivery of the only thing that really matters; thedesired business outcome. Only when this is the case will they achieve the peace of mind that agiven application will perform reliably, be available and secure on a day-to-day basis and freeup time to focus on other strategic initiatives.

Best-in-classapplications are a keycompetitive asset forany mid-marketbusiness

97% of mid-market organisations transact directly with users from partners, customerorganisations and/or consumers and 72% of their employees rely on access to applications todo their jobs. On average the number of external users engaged with is 40 times the number of internal users; for some organisations it is considerably higher than this as they run hundredsof thousands or millions of external transactions per year. Any inefficiency or inaccuracy thatresults from poorly implemented or integrated business-critical applications is instantly visibleto key stakeholders and will lead to competitive disadvantage and lost revenue.

Mid-marketbusinesses need thecapability to scalepeople, processesand technology

Most mid-market IT leaders recognise that if they rely on internal resources alone, they will notbe able to deliver best-in-class applications. On average they have 73 users per IT staff member; with smaller organisations being half as efficient as larger ones. So most work withthird party IT service providers (ITSPs) to gain access to scalable resources including people,processes and technology. Mid-market businesses cannot afford the upfront capital and on-going investment that this requires, but ITSPs can as they share the costs across multiplecustomers.

Finding partners withthe right skills whoare willing to engageis a key challenge

Mid-market businesses are typically not of interest to most large system integrators, and they

become less interesting the smaller they are. Companies with just a national focus are also lesslikely to deal with larger providers. The quality of service provided by smaller IT serviceproviders (ITSP) that do focus on the mid-market is variable and inconsistent; all too often theexperience is disappointing and for a better-than-expected service to be delivered is a rarity.This explains why their mid-market IT directors are often serial experimenters.

Help with facing upto current IT trendsmust be part of package

Mid-market organisations accept that new technologies are a key part of the solution to theirchallenges, including support for mobility and cloud-based services that provide an opportunityto enhance operational efficiency. Help is also needed in other areas such as big data andconsumerisation. Mid-market IT directors and their management teams need access topartners with proven skills and capabilities to enable them to harness these technologies withconfidence and in a way that ensures the desired business outcomes are achieved.

Both end user

organisation and ITSPneed a partneringmind set to succeed

A better experience of working with ITSPs is usually reported if both parties see a partnershipas the basis for the relationship. However, many mid-market organisations engage on a tacticalbasis, which leads to fragmented overall delivery. They struggle to find the right balance, withthe number of suppliers going up and down over relatively short timescales. Thoseorganisations that seek to engage in a true partnering fashion, with risk shared between bothparties, are the ones that will achieve real long term benefit from their ITSP engagements.

The mid-market conundrum summarised:The problem for mid-market IT directors is to find ITSPs that focus on applications and business outcomes rather than technologyalone and that have access to scalable resources; this is as much about values as it is about capability and competence. The enduser organisation and its ITSP need to share the risk involved and when this is the case both should benefit from the success thatfollows.


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Introduction the mid -market CIO

Mid-market businesses come in all shapes and sizes and are found in all industry sectors. Each one faces its owncompetitive challenges and has its own goals and aspirations. There is no strict definition of what a mid-marketbusiness actually is; typically they have hundreds or a few thousands of employees, several millions in revenue andthey are usually not household names.

From an IT perspective mid-market businesses generally have limited resources, overseen by someone who is likelyto have the title of IT director, rather than a chief information officer (CIO). Attitudes matter more than names, butmany consider that the ideal CIO in a large enterprise should be thinking about how IT delivers business outcomes,including everything from sales generation through supply chain management to post-sales support. Successrequires a focus on application delivery rather than IT infrastructure.

The good news is that most mid-market IT directorsalready understand this. They accept that theirresponsibility is to deliver the applications to the

business, seeing the platform as subservient. Thisattitude goes hand-in-hand with the way the platformto run a given application is selected (Figure 1). Thechallenge is to ensure these applications performconsistently, with high availability, are secure and, of course, that the desired business outcomes are beingmet. In short, just like large enterprises, mid-marketorganisations need best-in-class applications deliveryto operate effectively.

Few IT directors believe they can achieve this byrelying purely on in-house resources, so the need to

engage with IT service providers (ITSPs) is widelyrecognised. The majority of mid-market businesses aremore likely to outsource a given application than theywere two years ago (Figure 2).

To fulfil their CIO aspirations, mid-market IT directorsshould be looking for more comprehensive ITSPrelationships, with contracts focussed on howapplications deliver the desired business outcomes,rather than caring about the technology per se. Bydoing so, time and resources can be freed up to look atstrategic initiatives, focussing on what their business

does rather than just keeping the lights on . Forexample an IT director responsible for an online retailapplication should be ensuring excellent customerservice not checking bandwidth allocation to webservers.

Many large enterprises have benefited from IT outsourcing, reducing operating costs and improving responsiveness,but, historically, this has been less likely to be the case with mid-market companies. In designing the researchpresented in this report, a key objective was to understand why this has been the case; to identify some of theobstacles and attitudes that have impeded progress and how some mid-market IT directors have overcome these toachieve peace of mind through effective engagements with ITSPs.


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Why IT is business -critical for the mid -market

For any business, IT now offers much more than theopportunity to drive efficiency in any given area. It hasthe potential to enable completely new businessprocesses through the delivery of innovative applicationsand, as such, has become one of the most importantlevers for competitive advantage. Any company, of anysize, has the ability to take advantage of the possibilitieson offer size is no longer a constraint.

However, size is relevant to mid-market organisations, asthey have historically been the least agile. Smallbusinesses have relatively simple needs and less legacysystems to worry about, whilst large enterprises sharecomplexity with mid-market organisations but can throw

resources and/or investment at their problem.Nevertheless, the average mid-market organisationaspires to acquire the same quality of IT services that areavailable to its enterprise counterparts (Figure 3); secondbest is no longer good enough. The needs that drive thisare very real.

First there are the internal needs; 72% of an averagemid-market organisations employ ees now rely on ITapplications to do their jobs (Figure 4). Second, and evenmore importantly, for most mid-market businesses,constantly available IT applications are now critical for

interaction with external users. Whilst employees willaccept an application being unavailable for a period of time, external users can often just go elsewhere. 97% of mid-market organisations rely on some sort of interaction with users from partners and/or customerorganisations and, in many cases, consumers. Thenumber of external users ranges from tens to millions,with the average mid-market organisation interactingwith forty times as many external users as internal ones(Figure 5).

It is little wonder that mid-market IT directors feel the

pressure to make sure that the mission-criticalapplications driving all these transactions performconsistently. Furthermore, there is a constant need forinnovation to stay ahead of competitors and react todemand, which can rise and fall sharply (especially withexternal users). Few mid-market IT directors canmaintain all the infrastructure and skills they need in-house and therefore have to turn to ITSPs for help inorder to scale people, processes and technology, anddeliver best-in-class IT services.


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Overcoming resource limitations

The need to have access to best-in-class IT services isone thing; however, achieving this is another. Over 70%of mid-market organisations say they find this hard todo using purely their own resources (Figure 6). Theaverage mid-market organisation supports around 70users per IT staff member. The smaller an organisationis the proportionally fewer resources it will have todeliver IT (Figure 7); the IT operational headcount perinternal user is twice as high in smaller organisations aslarger ones.

Furthermore, these resources are stretched, oftenbeing used simply to keep the lights on rather thandeliver strategic projects (Figure 8). This includes

dealing with unexpected infrastructure issues, worryingabout compliance and, despite the limited numbers, forIT management time to be taken up dealing with staff issues. Mid-market IT directors have a real need to freeup members of their teams from an unending cycle of fire-fighting and mundane maintenance, in order tofocus on innovation and delivering the applications thathelp drive the businesses forward.

The answer is to share the workload with ITSPs. In thefirst instance engagements are often about off-loadingthe management of infrastructure, with service level

agreements simply around availability, performanceand so on. However, such utilitarian arrangementsoften lead to fragmented delivery; the average mid-market organisation currently has more than nineoutsourcing contracts.

Perhaps this is not too bad when you consider thismight include network service providers, software-as-a-service (SaaS) suppliers, co-location data centreagreements and so on. However, whilst the overallnumber of suppliers has not changed that much over atwo year period (Figure 9) the detail shows that there is

more flux than first appears, with the number of suppliers going up and down (Figure 10). Such serialexperimentation is likely to lead to poorly optimisedoutcomes.


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However, some go much further than this and engage at the application level, contracting with partners to achievedefined business outcomes. The challenge here is to find ITSPs with the right skills that are willing to thinkholistically about joining together the complex technologies and delivering integrated services to achieve the agreedgoals. This is the nub of the mid-market conundrum; finding an ITSP that can not only deliver best-in-class IT servicesbut one that can also provide flexible access to the necessary resources as application requirements change, to

ensure that their clients can take advantage of changing technology trends.


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Adapting to changing IT trends

Mid-market organisations need access to ITSPs that have an appropriate skill set to help them benefit from thechanging technology landscape. Embracing the new ways that IT is delivered and supported can help to reduce costsand provide added value. There are also many new opportunities for improved customer engagement. That said, anorganisation should adopt new technology because there are real business benefits, not just because they thinkthey should. There are three major areas where many mid-market organisations recognise they need help: these arethe use of public cloud, big data and the consumerisation of IT.

The use of public cloud Overall, businesses are prepared at some level for the use of public cloud services (Figure 11). Another Quocircaresearch report 1 shows that the blockers to use can be overcome, if the resources and skills can be found. These willoften have to come from the cloud service provider itself. The term cloud is very broad and, generally speaking, it isbetter to talk about specifics such as infrastructure-as-a-service (IaaS), software-as-a-service (SaaS), on-demandsecurity, remote system management and so on.

Regardless of confidence levels around the use of cloud services, security of data remains the top-level concern.Even reasonably well placed is problematic; imagine a board-level conversation about taking up a cloud serviceand an IT director saying, we are reasonably confident about cloud security . This will not be good enough whenthe perceived protection of customer or personal data and intellectual property are involved.

That said, cloud-based services are a big part of the answer to delivering mid-market IT aspirations. Many of theconcerns about security are misplaced; indeed such services can deliver increased levels of security in many cases,and provide the fastest and cheapest route to best-in-class IT. Providing of course, these services are backed byproviders that are qualified for the job.

Dealing with big dataConfidence amongst mid-market organisations to deal with growing volumes of data is not much better; this is moreso the smaller they are (Figure 11). There are two elements to this: First there is dealing with the volume itself, processing it, keeping network traffic at manageable levels, backing

data up and keeping the data with most short-term value readily accessible. Second is the big data opportunity, extracting value from the data itself. This may be for business planning

purposes, providing context-aware security or for compliance reporting.

Big data is a reality to be dealt with and mid-market organisations should seek ITSPs that have experience andresources to guide them through the issues involved, delivering the right requirements for the business.


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The consumerisation of IT Broadly speaking, there are two overlapping aspects to consumerisation: use of social media and so-called bring-your-own-device (BYOD). Few mid-market organisations feel very well prepared for either (Figure 12). As with bigdata, both are realities to be dealt with and opportunities to be embraced.

Employee use of social media at work may often be seen as a distraction affecting productivity, until it is realisedthat LinkedIn is being used for lead generation, and YouTube is a good way to distribute training videos.Furthermore, another recent Quocirca report 2 has shown that social media is proving an effective way to engagewith all of those external users talked about earlier, whether it is using Facebook as a source of identity, or miningTwitter to understand the views held about a given organisation and/or its products and services.

BYOD is a reality that must be dealt with. A few organisations have adopted a formal policy where employees aregiven an allowance to buy their own device for work. However, the real issue here is that every employee and guestnow walks through the door of any premises with one or more of their own computers about their person. Manywill try and connect these to the network with good or bad intent. Any business must at least decide what its policyis and deal with it. However, forward thinking organisations recognise the benefit of embracing this de facto use of personally owned devices. If giving users access to certain applications in a controlled way means they answer a

customer email in the evening and update their sales figures or timesheet over breakfast, then this is surely a goodthing.

Almost any application will touch these three issues (cloud services, big data and consumerisation) at some level. So,recognising a good ITSP requires not just establishing their ability to deliver applications, but also ensuring they arewell positioned to do this flexibly within the constant flux in the technology landscape.


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Evaluating prospective IT service providers

WHAT SORT OF ITSP IS IT?

Does the ITSP talk about applications or technology? A business-focussed ITSP should start the dialogue

by asking what applications need implementing or changing to ensure that your organisationcan achieve desired business outcomes.

Is the ITSP prepared to share the risk and commit to service levels that are focussed onachieving those business outcomes?

Does the ITSP have a mid-market focus and reputation? A given sales rep in a large SI may cometouting for business but will the required commitment to an organisation of your sizestill be there when it comes to service delivery and continual service improvement?

LEVEL OF ENGAGEMENT

Does the team that you engage with at the ITSP have the ability to speak to your organisation s businessmanagers as confidently as they can with your IT managers? Do they ask for access to the business stakeholders?

At what stage can you meet the service delivery team? An early introduction should inspire confidence.Are they people that you can work with in the long term?

Are you confident that the ITSP can help you overcome barriers within your organisationabout the business value of cloud-based services and other emergent technologies?

DELIVERY CAPABILTY

Does the ITSP demonstrate an understanding of hybrid delivery? i.e. the ability to make best useof your organisation s existing in-house IT resources, supplemented by its own and

other third party resources, and delivery models, as required?

Does the ITSP offer a broad portfolio of services to help reduce the number of

overall contracts that your organisation has to manage?Can the ITSP integrate and work with other partners with whom your organisation is already committed?

Can the ITSP help your organisation to benefit from, and cope with, the changing trends in ITsuch as public cloud, big data and consumerisation?

Is the contract offered flexible enough to cope with changes to your business requirements over time?

WHAT RESOURCES DOES THE ITSP HAVE?

Does the ITSP have access to best-in-class infrastructure services? Does it have access tothe services that you require today and those you might need in the future? For example, co-location

data centre facilities, shared cloud platforms, software-as-a-service applications etc.

Are those infrastructure services the right ones to easily enable you to offload your busi nesss utility IT services?

Have you visited the ITSP and seen its infrastructure platform(s)?Does this inspire the necessary confidence?

Who does the ITSP partner with to broaden its portfolio of IT services?Are these trusted partners acceptable to your organisation?

PROOF POINTS

Can the ITSP demonstrate that it has delivered best-in-class IT services?Have you spoken to any of its existing customers as a reference?


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However, there is plenty more that mid-market buyers expect from ITSPs. They find it hard to differentiate offeringswith too many saying the same things, whilst not demonstrating they can actually meet the needs of aligningbusiness and technology (Figure 19). This is not easy for either side; it is difficult for an ITSP to stand out through thedilution of proven quality providers, with so many new entrants all jumping on one or more of the various ITbandwagons: cloud, big data and consumerisation.

Mid-market organisations have to see through this fog to identify those ITSPs that not just say they can meet theirneeds, but can also help to facilitate the right choices and then actually deliver them. Those ITSPs that differentiatethemselves clearly will be at an advantage. Through this research (summarised by Figure 20) mid-market IT leadershave made their needs clear. The fact that IT innovation comes low on their list should not mislead. Once the basicissues are under control, then the mid-market organisation and its chosen ITSP partner can focus on the long-game;exploiting IT to get ahead in their market, truly embracing IT as a business enabler, and not just a technologyplatform.


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References

1 Quocirca 2013; The adoption of cloud based services July 2013 freely available on request from Quocirca, tobe published on the Quocirca web site later in 2013.

2 Quocirca 2013; Digital identities and the open business freely available at the link below:http://www.quocirca.com/reports/855/digital-identities-and-the-open-business
http://www.quocirca.com/reports/855/digital-identities-and-the-open-businesshttp://www.quocirca.com/reports/855/digital-identities-and-the-open-businesshttp://www.quocirca.com/reports/855/digital-identities-and-the-open-business


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Demographics

100 UK-based mid-market organisations were interviewed in this survey. The demographic breakdown of thesample was as follows.


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About Attenda

We (www.attenda.net ), are the UKs leading managed service and cloud platform provider, specialising in runningbusiness-critical applications. Our Business Critical IT approach combines business outcome focus with a structuredengagement methodology and supporting services and infrastructure.

Through building enduring relationships, and by harnessing technology to drive successful business outcomes, wedeliver complete Peace of Mind ; enabling our clients to focus on strategy and their business making them morecompetitive.

We have built up a commanding market reputation, with the industry's leading accreditations, and an unrivalledportfolio of UK enterprise clients who share our passion for application availability.

We are ISO 9001, ISO 27001 and ISO 20000 accredited, a Microsoft Gold Hosting Partner, VMware Premier ServiceProvider, a SAP Partner, SAP Certified in Cloud Services and a G-Cloud iii certified service provider. We are alsopositioned 35 th in the Sunday Times 100 Best Companies to Work for 2013.
http://www.attenda.net/http://www.attenda.net/http://www.attenda.net/http://www.attenda.net/


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About Quocirca

Quocirca is a primary research and analysis company specialising in thebusiness impact of information technology and communications (ITC).With world-wide, native language reach, Quocirca provides in-depthinsights into the views of buyers and influencers in large, mid-sized andsmall organisations. Its analyst team is made up of real-worldpractitioners with first-hand experience of ITC delivery who continuouslyresearch and track the industry and its real usage in the markets.

Through researching perceptions, Quocirca uncovers the real hurdles totechnology adoption the personal and political aspects of anorganisations environment and the pressures of the need fordemonstrable business value in any implementation. This capability touncover and report back on the end-user perceptions in the marketenables Quocirca to provide advice on the realities of technologyadoption, not the promises.

Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITChas the ability to transform businesses and the processes that drive them, but often fails to do so. Quocircasmission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time.

Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITCproducts and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community.

Quocirca works with global and local providers of ITC products and services to help them deliver on the promise thatITC holds for business. Quocircas clients include Oracle, IBM, CA, O2, T -Mobile, HP, Xerox, Ricoh and Symantec,along with other large and medium sized vendors, service providers and more specialist firms.

Details of Quocircas work and the services it offers can be found at http://www.quocirca.com

Disclaimer:This report has been written independently by Quocirca Ltd. During the preparation of this report, Quocirca mayhave used a number of sources for the information and views provided. Although Quocirca has attempted whereverpossible to validate the information received from each vendor, Quocirca cannot be held responsible for any errorsin information received in this manner.

Although Quocirca has taken what steps it can to ensure that the information provided in this report is true andreflects real market conditions, Quocirca cannot take any responsibility for the ultimate reliability of the detailspresented. Therefore, Quocirca expressly disclaims all warranties and claims as to the validity of the data presentedhere, including any and all consequential losses incurred by any organisation or individual taking any action basedon such data and advice.

All brand and product names are recognised and acknowledged as trademarks or service marks of their respectiveholders.

REPORT NOTE:This report has been writtenindependently by Quocirca Ltdto provide an overview of theissues facing organisationsseeking to maximise theeffectiveness of todaysdynamic workforce.

The report draws on Quocircasextensive knowledge of thetechnology and businessarenas, and provides advice onthe approach that organisationsshould take to create a moreeffective and efficientenvironment for future growth.
http://www.quocirca.com/http://www.quocirca.com/http://www.quocirca.com/http://www.quocirca.com/

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The mid-market conundrum

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