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TECHNICAL WHITE PAPER SPONSORED BY DELL

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SMB CLOUD APPLICATIONS TRENDS SURVEY

CLOUD ADOPTION LESSONS FOR SUCCESS

SELECTION, DEPLOYMENT, AND INTEGRATION
FEBRUARY 2012

This report is a property of Techaisle LLC and is provided for information purposes only and any unauthorized duplication or distribution is strictly prohibited. Techaisle does not make, and expressly disclaims to the fullest extent under applicable laws, warranties of any kind, either express or implied, including, without limitation, implied warranties of fitness for a particular purpose, with respect to this white paper and the accuracy or completeness of its content. Techaisle LLC shall not be held liable for any direct, indirect, incidental, special, or consequential damages arising out of the use of or inability to use this white paper or any information herein, even if advised of the possibility of such damages.

 CONTENTS
Executive Summary Survey Methodology SMB Cloud Has Reached a Tipping Point CRM at Center of Cloud Application Adoption Benefits Realized From Cloud Applications Right Vendor Selection Helps Avoid Pitfalls Planned Deployment Drives Better Experience Sound Integration Ensures Maximum Productivity Conclusion Figures Figure 1: Average no. of cloud business applications 4 Figure 2: Importance of CRM for SMBs Figure 3: Current cloud business application usage Figure 4: Benefits From using cloud applications Figure 5: Successful cloud strategy steps Figure 6: Problems faced by early cloud adopters Figure 7: Cloud deployment issues to avoid Figure 8: Key benefits of application integration 5 5 6 6 7 8 9 3 3 4 4 6 7 8 9

Executive Summary

Early SMB cloud adopters have found that a successful cloud strategy depends upon three key factors: right vendor selection, planned and efficient deployment, and effective integration with existing cloud and on-premise systems.

Cloud Adoption Has Reached a Tipping Point

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In the last two years, the average number of cloud business applications used by SMBs has more than doubled. Companies using cloud business applications state that they have already started to experience tangible benefits as a result.

CRM at Center of Cloud Application Usage

Cloud CRM adoption is the highest among businesses with 50-999 employees at 55 percent, up from 34 percent in 2010.

Benefits Realized From Cloud Applications

The benefits of using cloud adoption closely match the reasons why SMBs chose cloud in the first place. In fact, 87 percent of the adopters stated that cloud business applications provided them a competitive advantage, and 85 percent felt they could now compete with larger enterprises on equal footing.

Right Vendor Selection Helps Avoid Pitfalls

The right vendor selection is the most important step for achieving cloud success. If early cloud adopters were to do it all over again, nearly 70 percent would prefer to purchase best-in-class cloud applications from a single trusted IT vendor.

Planned Deployment Drives Better Experience

Early cloud adopters concur that adequate planning and preparation would have made their implementation efforts easier and more successful.

Sound Integration Ensures Maximum Productivity

Cloud adopters experienced real tangible benefits as a result of integration, including improved operational efficiency and improved productivity.

 SMB Cloud Computing - Key Lessons from Early Adopters

EXECUTIVE SUMMARY
Cloud computing has progressed well beyond the hype stage as small and medium businesses (SMBs) have begun adopting cloud applications in far greater numbers than ever before. Today- cloud computing is transforming the IT industry. Vendors large and small are developing new products and services designed to enable delivery of computing capabilities via the cloud. Early SMB cloud business application adopters have found that a successful cloud strategy depends upon three key factors: vendor selection, planned and efficient deployment, and effective integration with existing cloud and on-premise systems. This white paper discusses the lessons learned from SMBs that have already embraced cloud applications. It also provides valuable insights to SMBs currently looking to adopt cloud applications for the first time, or that plan to expand the number of cloud business applications they have.

SURVEY METHDOLOGY
The data in this paper is based on an online study of 400 small and mid-market businesses that currently use cloud business applications. Survey respondents included 200 business decision makers and 200 IT decision makers in U.S. SMBs that range in size from 50 to 999 employees. The objectives of the survey were to understand: Which cloud business applications are being used by SMBs? What are the benefits realized by adopting cloud business applications? What did SMBs learn during their cloud implementations? What are best practices for maximizing the value of cloud applications? Research was conducted by Techaisle on behalf of Dell based on a sample from Techaisles SMB cloud computing technology panel. Dell is making substantial investments in the delivery of cloud business applications to SMB customers. These investments include the acquisition of best-of-breed cloud-technology companies such as Boomi, partnering with market leaders like Salesforce.com, and setting up a software product division dedicated to helping its mid-market customers transition to the cloud efficiently. www.techaisle.com | White Paper 3

 SMB Cloud Computing - Key Lessons from Early Adopters

SMB CLOUD APPLICATION ADOPTION HAS REACHED A TIPPING POINT

SMBs have historically been at a disadvantage FIGURE 1: AVERAGE NO. OF CLOUD BUSINESS when competing with large companies that APPLICATIONS USED BY SMBS have been able to afford sophisticated applications that enable them to improve productivity and bring new products and services to market faster. However, the emergence of cloud applications has leveled the playing field. The data from the survey shows that cloud business applications or software as a service (SaaS) makes up 70 percent of all SMB cloud technology efforts. Companies using cloud business applications state that they have 2010 2011 EXPECTED 2012 already experienced tangible benefits as a result, Source: Techaisle, 2012 including cost reduction, improved cash flow, and enhanced employee productivity. In the last two years, the average number of cloud business applications used by SMBs has more than doubled. Techaisle expects this trend to continue in the coming years and that SMBs reliance on cloud business applications will expand at an even faster pace.

CRM IS AT THE CENTER OF CLOUD BUSINESS APPLICATION ADOPTION

The Techaisle survey shows that while SMBs have adopted various cloud business applications, Customer Relationship Management (CRM) has the highest penetration at 55 percent among surveyed businesses with 50- 999 employees.. This figure has gone up from 34 percent in 2010. CRM, which includes sales and service automation capabilities, is a strong catalyst for improving revenue and customer satisfaction. While SMBs have historically not been able to take advantage of CRM systems due to the high cost and complexity of on-site installations, the cloud has put CRM within reach and budget of SMBs. According to the survey data, one in two cloud business application users considers CRM to be their mission- critical application. Of those that use CRM, one in four is likely to add cloud-based business intelligence and marketing automation applications within the next year. www.techaisle.com | White Paper 4


FIGURE 2: IMPORTANCE OF CRM FOR SMBS

SMB Cloud Computing - Key Lessons from Early Adopters

55% 50% 26% 26%

CRM has highest consider CRM to be Mission of CRM users will add
Source: Techaisle, 2012

of CRM users will add business intelligence

Other cloud business applications that SMBs have adopted include project management, business analytics/intelligence, marketing automation, payroll, and HR.
FIGURE 3: CURRENT CLOUD BUSINESS APPLICATIONS USAGE CLOUD APPLICATION ADOPTION
CRM Project Management

% SMBs
55% 54% 49% 48%

Payroll

48% 43%

While CRM consistently shows high adoption across all business sizes, the usage of other cloud applications varies by employee size, vertical industry, and business maturity. The survey found that accounting and project management show higher adoption by smaller businesses (50-99 employees), whereas cloud-based business intelligence is predominant among businesses with 250-999 employees.

www.techaisle.com | White Paper

 SMB Cloud Computing - Key Lessons from Early Adopters

BENEFITS REALIZED FROM CLOUD BUSINESS APPLICATIONS

Early SMB cloud adopters have greatly benefited from cloud applications. In fact, 87 percent stated that cloud business applications provided them a competitive advantage, and 85 percent felt they could now compete with larger enterprises on equal footing. Similarly, 85 percent agreed that cloud applications had made their employees and business more productive. These advantages are especially critical in the current economic climate when SMBs are concerned about growing their top-line revenues as well as improving profitability.
FIGURE 4: BENEFITS REALIZED BY ADOPTING CLOUD BUSINESS APPLICATIONS (Percentage that responded Strongly Agree + Agree) CLOUD APPLICATION BENEFITS
87% 85% 85% 83% 81% 74%
Source: Techaisle, 2012

Unencumbered by legacy IT infrastructures, forward-thinking SMBs have moved swiftly to the cloud. Other SMBs can learn from the experiences of these early adopters and approach cloud application adoption strategically. Selecting the right vendor, planning for proper deployment, and integrating their cloud and on- premise applications are important considerations for deriving maximum benefits from the cloud.
FIGURE 5: SUCCESSFUL CLOUD STRATEGY DEPENDS UPON THREE KEY FACTORS

RIGHT VENDOR SELECTION AVOIDS PITFALLS

PLANNED DEPLOYMENT DRIVES BETTER EXPERIENCE

SOUND INTEGRATION ENSURES MAX PRODUCTIVITY

CLOUD SUCCESS

www.techaisle.com | White Paper

 SMB Cloud Computing - Key Lessons from Early Adopters

RIGHT VENDOR SELECTION HELPS AVOID PITFALLS

The right vendor selection is the first and probably the most important step in putting SMBs on the correct path for achieving cloud success. With the rapid growth in cloud computing, many vendors have entered the market, each with different functional expertise and capabilities. As a result, SMBs not only have a difficult time selecting who to work with, but also face challenges in dealing with and managing multiple cloud providers. These challenges range from keeping track of multiple service level agreements (SLAs) to coordinating timelines for application deployments and managing payments across providers. IT departments have become stretched for resources based on the active role they play in managing cloud projects and integrating new applications with existing on-premise systems.
FIGURE 6: PROBLEMS FACED BY EARLY ADOPTERS IN DEALING WITH MULTIPLE CLOUD VENDORS CHALLENGES MANAGING MULTIPLE CLOUD VENDORS
58% 50% 47% 44% 43% 42% 38% 19% 10% Source: Techaisle, 2012

The main regret of early adopters was not spending enough time on selecting the right cloud vendor. Reflecting on their experience, nearly 70 percent of early adopter SMBs said that if they were to do it all over again, they would prefer to purchase best-in-class cloud applications from a single trusted IT vendor.
Comments captured in the survey from cloud applications adopters regarding vendor selection: Research for the best and the most reliable vendors Find a vendor with better customer service Look for vendors with the capacity of delivering on time as promised Research for the right vendor and plan longer Try to select applications from single trusted IT vendor

www.techaisle.com | White Paper

 SMB Cloud Computing - Key Lessons from Early Adopters

PLANNED DEPLOYMENT DRIVES BETTER EXPERIENCE

Not only is the right vendor one that provides best-in-class applications, but also one that can provide turnkey deployment services and support. Early cloud adopters agree that adequate planning and preparation would have made their implementation efforts easier and more successful. As such, these businesses suggest that it is important for SMBs to systematically assess their needs and develop clear plans for implementation. The survey reveals that two-thirds of SMBs worked with a cloud vendor and their partners to deploy their cloud initiatives. They felt that better up-front planning would have helped them avoid such issues as long deployment cycles, limited integration with other applications, and lack of proper training.
FIGURE 7: CLOUD DEPLOYMENT ISSUES FACED BY EARLY ADOPTERS

49%

41%

40%

36% 6%

LONGER THAN ANTICIPATED DEPLOYMENT CYCLE

LIMITED INTEGRATION WITH OTHER APPLICATIONS

LACK OF TRAINING

LACK OF CUSTOMIZATION

OTHER DEPLOYMENT ISSUES

In retrospect, Cloud adopters stated that they should have taken several steps to ensure quicker deployment that better met the expectations of their business. These steps include: Finding vendors and partners that provided implementation packages rather than lengthy and pricey custom engagements Test-driving applications to understand what functionalities were being delivered before committing to a project Working with vendors that provided free trials Identifying applications with intuitive user interfaces to improve adoption and reduced training requirements

www.techaisle.com | White Paper 8

 SMB Cloud Computing - Key Lessons from Early Adopters

SOUND INTEGRATION ENSURES MAXIMUM PRODUCTIVITY

As cloud application adoption FIGURE 8: RANKING OF KEY BENEFITS REALIZED DUE TO accelerates, the issue of data integration APPLICATION INTEGRATION has become more and more important. The majority of SMBs surveyed used % RANK BENEFITS OF APPLICATION INTEGRATION custom software code to integrate their SMBS applications. This resulted in prolonged 1 54% integration project timelines and made reduced manual processes. it difficult to make modifications to the 52% 2 integration later when their companies changed their business processes. 3 52% Integration plans are a critical 4 44% component of application rollout. Cloud adopters experienced real 5 Improved accuracy of orders, billings, and payments. 37% tangible benefits as a result of integration improved operational 6 32% efficiency, improved productivity, and improved connectivity. In addition, Source: Techaisle, 2012 cloud adopters pointed out that integrated cloud applications provided them with better visibility into their companys performance and operations across business functions. The table above shows the rank-ordered benefits realized by SMBs as a result of integration of cloud applications. A deeper dive into the survey data reveals that that 55 percent of SMBs saw an average of 38 percent improvement in operational efficiency and that one in two SMBs experienced a 40 percent improvement in employee productivity. When selecting integration solutions, it is important to consider a number of factors that would allow SMBs to easily adjust the integrations based on business process changes: Ease of use without the need for specialized skills such as coding Centralized management of all integrations and proactive alerts Features that speed the time to develop and implement integrations without having to learn complex APIs www.techaisle.com | White Paper 9

 SMB Cloud Computing - Key Lessons from Early Adopters

CONCLUSION

As it has in the past, technology continues to impact the way SMBs work. The increasing adoption of cloud and growing reliance of SMBs on cloud business applications underscores the tectonic shift in how IT is being consumed today. Nearly all technologies first find their way into the hands of a few businesses that are not afraid to take a leap faith and, in doing so, they successfully separate hype from reality and chisel a path for others to follow. And the early adopters have shown that not only are cloud business applications the new SMB imperative, but also a successful cloud implementation strategy is highly dependent upon selection of right cloud vendor, planned deployment, and sound integration.

ABOUT DELL AND DELL CLOUD BUSINESS APPLICATIONS

Dell Cloud Business Applications offers a family of integrated cloud applications and services that enable new business processes while leveraging existing software and technology investments. Dell Integrated CRM is a cloud service uniquely packaged to meet the needs of growing companies, delivering Salesforce CRM integrated to existing infrastructure along with reporting, analytics, turnkey Dell services, and support. For more information, visit www.dellcloudapplications.com.

ABOUT TECHAISLE
Techaisle is a global SMB ICT market research and industry analyst organization dedicated to tracking the Future of SMBs and Channels. Techaisle conducts surveys with SMBs and Channels to understand market trends, opportunities, buying behavior, purchase intent, and IT priorities. Besides delivering forward looking analysis on emerging technologies like SMB cloud computing, managed services, and mobility, the companys channel reseller research tracking provides an in-depth understanding of resellers and distribution channels. Techaisle is consciously focused on bringing reliable data and accurate analysis to its clients. Techaisle is committed in providing major services for IT market sizing, channel research, reseller partner sizing, syndicated research, custom consulting, segmentation, and predictive modeling. For more information, visit www.techaisle.com.

www.techaisle.com | White Paper

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