Tag: Business

Valley of Discontent


If you will allow me to pontificate and tell my tale about the valley of discontent and how understanding leverage is the key to business success these days.

I see a technology world polarized between very small, laser focused businesses on one hand and on the other very large businesses that can take advantage of volume. Unfortunately, the in between area (the valley of discontent) is not a place that you really want your business to be. Why? Because if you are not working to be as lean and focused as possible or growing to a large size then sooner or later you just won’t be able to compete with those that do. As the water in the valley rises, unless you are on either side you are going to get swept away.

Many technology resellers believe in the managed services (MSP) model. However, the days of good revenue there are fast waning. It is a race to bottom where price is the most important ingredient for customers. To survive you really need the advantage of size and I am not talking about a handful of good clients I am talking about hundreds, if not thousands. With those sorts of numbers you can leverage low cost items and still survive but without the volume you won’t.

Most resellers are now not only directly competing with large wholesale technology stores but also with direct Internet sales. Again, if there is not the volume then there is decreasing advantage. Most resellers are ‘jack of all trades’ which was very successful for many years but not any more. Unless you can afford to establish a help desk service, provide contracted supported (with almost round the clock support and Service Level Agreements (SLAs)) you are going to lose out to those larger businesses that can. In short, if you want to maintain the ‘jack of all trades’ model then the path out of the valley of discontent is to get bigger, much bigger. This comes with its own set of challenges.

The other pathway out of the valley of discontent is to do less, pick a niche and stick with it. This comes with its own set of dangers and challenges but essentially is probably going to mean abandoning stuff that your business now does and potentially that it does well. Only the items that generate the most profit are the ones a smaller business can maintain if they are to succeed. There is little room for stuff that isn’t profitable on this side of the valley, whatever you do you have to do better than everyone else and charge accordingly.

Those that don’t understand the fact that they need to make either of these choices are the ones who will pay the greatest price. Why? Because others are going to force it upon them. Let’s take this whole ‘move’ to the cloud paradigm we are currently experiencing. One of the selling points of Office 365 for example is the ability to earn recurring revenue through being the ‘partner of record’ for an account. This is means that the ‘partner of record’ receives 12% for sign up and 6% recurring for the Office 365 licenses sold. To make these kind of fees worthwhile, again you have to have volume in many hundreds if not thousands. There are other revenue opportunities around the Office 365 products but at this point in time most clients simply want hosted email and not much else. That will change over time but at this point in time most resellers aren’t skilled and experienced with products like SharePoint and Lync to generate revenue opportunities. Is that their fault? In some ways yes but again they are generally in the valley of discontent without enough leverage to cope to make change. Many vendors are now billing clients directly and only paying a ‘commission’ to the traditional reseller. There is certainly money to be made here and many businesses do it successfully but it requires volume pure and simple.

Another example is the recent announcement from Microsoft about their new small business competency. You can read more about here:

http://blogs.msdn.com/b/mssmallbiz/archive/2012/04/26/what-are-the-requirements-to-earn-the-microsoft-partner-network-small-business-competency.aspx

To me it is again aimed at the ‘bigger’ resellers. Why? Firstly, the fees for the competency are USD$ 1,850 for Silver and USD$ 3,800. That is big hike from previous small business programs. I also note with interest that the two Office 365 exams, 70-321 Deploying Office 365 and 70-323 Administering Office 365 are pretty much mandatory for both Silver and Gold levels. From my experience with these exams I would struggle to think of one other person I know in the small business technology community that would pass these. That isn’t to say they couldn’t but the expectation in the small business community is that you can more or less pass an exam if you work with the product every day. If these Office 365 exams remain unchanged from when I saw them then small business resellers are going to have to put in a lot of work coming up to speed with enterprise features they may never see in the real world. That is not really going to encourage them to invest the time. Like it or not, if they want to achieve the competency they are going to have to make that investment. They question is, are the majority in a location in which they can? If they are in the valley of discontent, probably not.

From what I also see the Gold level requires at least 2 qualified employees. Most resellers I know in the SMB space are small and may not even have 2 employees. If they do, retaining two suitably qualified employees is going to be a major challenge. Again, the advantages lie with larger business, those with the funds, those with the employees, those with the resources to get people through the exams.

In a nutshell that’s why I tell people that they need to work out a way to get themselves out of the valley of discontent, from which I can only see the two options (but there maybe more), get big or get small and fast.

A wise person knows they cannot control their environment only their reaction to it. The change in the technology landscape is certainly something many rail against but in the end it really does no good as it simply continues to change underneath you. I applaud those who are making decisions, evaluating the environment and moving their business to places where they will be successful. Likewise, I implore the others to take a serious look at what is happening around you and how little control you have over it and start making the move to either bank. Failing to do so will not end well I fear.

Things you hear

Here is a statement I came across from a reseller recently in reference to Office 365:

When I said “cloud” I meant cloud that works.  I have not yet used O365, I run on hosted exchange with zero problems

It illustrates to me the fact that many so called ‘IT people’ have already formed options about Office 365 without ever having used the product. I wonder on what hearsay the above person bases their opinion? I would suggest that it has probably come from a few ill-informed naysayers but interestingly that has proved to be enough to sway this individual.

I am not saying that Office 365 is perfect, far from it, but really what IT is ever perfect? However, I would contend that Office 365 does work and works very well for many many people. Importantly, Office 365 is more than hosted Exchange it is Lync, SharePoint and Office Professional Plus. Even more importantly, it offers enterprise features such as legal hold, hybrid co-existence and so on that few other providers offer. Their argument is already defunct because they are unable to compare products like for like but yet they continue to scream the failure of products at the top of their lungs. Worst of all they haven’t even taken the time to examine something they are criticising. How can their opinion hold any validity at all in those circumstances? They have criticised a product and in the same breath admitted they haven’t even used it? Am I the only one that see a massive credibility gap where?

It always amazes me how parochial so called ‘IT Professionals’ get about certain technology and not just in relation to cloud computing. Whether they be Apple “fanbois”, Linux devotees or gooey eyed Windows zealots, the common thing about all of them is that they represent a teeny tiny percentage of the technology market. However, they defend their beliefs with such fanaticism that it beggars belief sometimes. Analysis would reveal that these very zealots are afraid, they are afraid to admit they might be wrong. If what you are saying is so good why is there a need to defend it so vigorously? It should speak for itself shouldn’t it?

The more choice we have the better for it spurs competition and creates improved products. There is very little chance that a single product from a single supplier can solve everyone’s needs. So rather than deriding the competition with emotional vitriol examine the products rationally and professionally and guess what? You may even learn something about the competition that can help you. You may even find there is a business opportunity for their implementation that could, shock horror, even generate revenue! Such individuals are far more interested in being ‘right’ than running a business. They are entitled to their delusion I suppose.

Such statements unfortunately remind me that we still live in a world with small frightened technology ‘unprofessionals’ who are too scared to admit that they might not know something and more so, might be struggling with the change that is transpiring in the market place. What’s the saying? Empty vessels make the ….. 

SMBs and Cloud Services

I was browsing through my RSS reader recently and found the following interesting article from Box Free IT:

http://www.boxfreeit.com.au/Productivity/small-businesses-using-cloud-to-triple-in-next-three-years.html

Now all of this comes from a Microsoft funded survey of influencers at 3,000 SMB’s including some here in Australia. Now because it comes from Microsoft you do have to take the figures with a grain of salt, however the trends are still very interesting.

If you dig into the article you’ll find the actual Microsoft article at:

http://www.microsoft.com/en-us/news/press/2012/mar12/03-28SMBCloudPR.aspx

Which too contains a graphic:


 This one aimed at the opportunity for the SMB reseller. Now, as I have mentioned many time here before I certainly believe there are plenty of opportunities for resellers BUT they are going come without some pain and re-alignment for these resellers.

Take for example the figure that 65% expect to be using cloud based email services in the next 2-3 years. This means that there is going to much less call for a product like Exchange Server on site for SMB’s. It is also going to mean that ancillary services like message hygiene (spam and virus filtering basically) are also going to move into the cloud and away from reseller revenue streams. Conversely to that you also see figures there like 60% don’t have the resources to implement new technologies and applications. That is certainly an opportunity, however it also means that resellers who want to provide that need to get skilled up on these ‘new technologies and applications’. So an investment is required but it would certainly appear to be worth it.

Perhaps what these sort of surveys do is challenge the perception. Take a look at the figure that only 20% believe their data is less secure in the cloud than it is in their on-premise system. That is certainly contrary to what you hear out there generally.

What these survey’s do reinforce is that fact that there is still opportunity in the IT business no matter whether it is cloud based or not. Importantly however, cloud services are going to require some skills education, investment and development to reap the rewards. It is very unlikely that staying with the same old business model and the same old skills is going to provide you with more opportunity in the coming years.

In the end you can take away from these surveys what you want but to me the important thing is to look at the trends that all these surveys point to. If you are not paying attention, chances are you’ll get left behind and have to struggle. Don’t say that you haven’t been warned!

Tri-focal

If like me you have read the Daniel Suarez novel Daemon you will have heard of the concept of augmented reality. Basically it allows you to project an image in front of your vision (like a heads up display) and that show you information pulled from the Internet.

Google now has a prototype called ‘project glass’ which is basically a set of glasses to provide this augmented reality. They have created the following video to demonstrate the concept:

http://www.youtube.com/watch?v=9c6W4CCU9M4

Now of course this video is the ‘rose coloured glasses’ through which Google would like us to believe it will be like. If it is from Google then it is probably going to look more like this video:

CIAOPS podcast listeners grow

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Here are the stats from my podcast over the past few month. Firstly, I have no idea why April 2012 is showing the same level as March 2012 (April fool’s joke maybe?). But aside from that you can see the recent strong growth in listeners which is very pleasing to see. There was almost 600 episode downloads in March 2012. I would certainly attribute that to firstly the highly quality of people that have graced the microphone, to whom I’d like to say thanks. Secondly, the success of these numbers is obviously around the number of people who have taken the time to listen to the broadcasts. To them as well I also say thanks.

 

When I started doing the podcasts last year I never figured that one the most difficult challenges I would face would actually getting people to appear. Even to this day I really have to beg people to come on with me. There are so many very clever people out there with a huge amount of knowledge to share and I would have thought this podcast a perfect medium for them to share that. All shows are pre-recorded over Skype and done at a time that suits the guest. I really try and make it as painless as I can for people to come on the show but still I struggle to obtain guests.

 

As always I’d love to hear feedback from listeners as whom or what they’d like to hear on the show. I’d especially love to hear from people who’d be interested in being a guest but any feedback is also greatly appreciated. Remember, I’m happy to cover any topic that you’d like to discuss so don’t be shy.

 

I once again thank all those who have been guests and all those who have listened to an episode. I look forward to providing more episodes as soon as I can find more guests! All previous episodes can be found at:

 

http://ciaops.podbean.com

It’s a dev world


In technology we all constantly hear that world is changing. However, what I’d like to focus on here is what I believe to be an even more subtle change in the demand for IT.

A while ago it was all about services. Many resellers went down the managed services route and provided their customers with a fixed fee for service. The customer could more easily budget and the IT provider received a known income every month. This was all great but it hastened the process of consumerization of theses services. It was a bit like an insurance policy in that the IT provider worked to ensure as little disruption to the customer as they could. For most consumers this now meant they saw very few issues and sadly became lulled into this becoming the norm. Any IT provider worth their salt had raised the bar when it came to service.

Problem was that customers now questioned why they were paying ‘so much’ for things to run like this (as they do with insurance policies). All they tended to see now were the dollars going out the door every month and diminished value in return. Thus, they agitated for lower costs and looked to competitors offering the same perceived service but at a cheaper cost. To their minds, there was no difference between company A monitoring a server as there is company B monitoring that same server but at a lower cost.

This consumerization has been accelerated with the growth in online services such as Office 365. Theses products are typically sold around their cost saving benefits and focus the consumers attention at a per month per user cost negating any migration or ongoing support costs. This has been borne out with my own recent experiences with people looking to migrate their email to the cloud. Most are under the mistaken impression that migration costs, planning, support and training are all included in the per month price they pay. Some reseller businesses even pander to this mistaken impression by absorbing such cost upfront in that they can recoup these later down the track. There is no questioning that this is a valid business strategy but it relies on the being able to absorb these upfront costs. This doesn’t make it a suitable model for most smaller resellers who can ill afford such risk.

This is why I contend that the era of services is fast coming to and end for smaller players. You cannot survive in the service business now without volume. The business model that this thriving is development. Look at the exploding world of devices that each have their own application infrastructure around them, the Apple Apps store, Zune Market, Android Marketplace and so on. My understand is that soon even the upcoming releases of Microsoft software, such as Windows 8, will come with an integrated apps store.

Development gives you the advantage of leverage. You can write it once and then sell it many times. The risk is generally all in the upfront with development but it is fast becoming the model that consumers understand and accept. They understand buying a product or a thing but now struggle with buying an intangible like a service.

Let’s look at this in the context of Office 365. What development can you really wrap around email? Probably not a lot and therefore it is doomed to simply become another thing that is consumerized. Where the problem lies for resellers is that if all the customer wants is a hosted email service then the decision is simply going to be about cost, pure and simple. If you can’t do it for the cheapest price then chances are you are going to loose that business to someone else who can absorb more of the upfront costs and offer it cheaper initially to win the business. For the smaller resellers this is very hard to counter.

The opportunity (and there is always one) is to consider products that facilitate development. Products that allow resellers to build in smarts and intelligence that they can then sell multiple times. In the Office 365 space this certainly means SharePoint. Problem is getting people interested enough in SharePoint beyond just the cost savings they make by moving their emails to the cloud. Generating such interest is also no mean feat, and is almost impossible for people not using SharePoint already in the own business.

In summary then, my current thinking tends to lead me to the conclusion that we are fast approaching the end of the service era in IT (at least in the smaller end of the market). I’m not saying that the need for service will disappear, what I am saying is that service opportunities are being commoditized where the only the big players in the market can gain advantage. I’m saying that many resellers will have trouble making money out of products (like email) which don’t offer development opportunity. I’m saying that if you want to flourish and grow then you need to seriously consider applications which support the ability to build and extend, thereby creating a point of differentiation that customers will pay for.

Office 365 workshop early bird expires soon

My upcoming Building an Office 365 Practice workshop early bird discount expires very soon. So if you are interested in the 25% discount I’d urge you to waste no time. Here are the details:

 

Date: Wed 18th of April

Location: North Ryde RSL Club, 33 Magdala Rd North Ryde NSW 2113 + Streaming

Cost = $399 in person $199 streaming

Early bird discount (25%) valid with 18 March 2012 = EARLYBIRD

Registration URL = http://ciaops0412.eventbrite.com/

 

About

If you want to learn about the opportunities around “Cloud” computing, especially with Office 365 then this workshop is for you.

 

You will learn not only about the Microsoft Office 365 product indepth but also how to re-engineer your business for the “Cloud”. You’ll learn business strategies that will help drive you more business and have opportunities knocking on your door. This workshop will provide a balance between technical and business information. It is aimed at IT resellers those who are either considering offering “Cloud” computing or those who have just commenced the process.

The workshop includes all meals (morning tea, lunch and afternoon tea), parking, Internet access, course notes and more. All attendees will also have access to a recording of the day for later use. The workshop will be given by Microsoft Office 365 MVP Robert Crane who is the Principal of the CIAOPS.

 

At the end of this workshop you should have the confidence to know the Office 365 product indepth but also a range of business strategies that can be implemented immediately to not only benefit a “Cloud” practice but any business.

 

Some testimonials from previous events:

“The knowledge I gained at the bootcamp will help me make a more informed decision when I make recommendations to my clients. I recommend this bootcamp to anyone who wants a balanced and fair approach as to the pro’s and con’s of the cloud and the issues it raises for the IT professional.”

 

“After having spent a day on a Telstra Office365 a couple of months ago I felt it was OK information as it was on this new platform but what Robert has delivered today is REALISTIC and real world experience telling nothing but the truth. There is a big opportunity for all SMB IT providers even with the cloud, Office365 should be seen as an additional service to make money from.”

 

“This workshop was absolutely brilliant It was real hands on from a reseller perspective rather than a sales perspective I highly recommend Robert Crane for any workshops / bootcamps after having done several other training sessions.”

Marketing to my mind


I was walking through the local shopping centre recently and stopped to look at the community notice board. On there you typically see a mixture of things like ‘for sale’, garage sales, French lessons, guitar lesson and the like. I was intrigued to also notice an advertisement for a computer support company.

Now most of these ads that are flogging something have small tear away strips at the bottom with the contact details on there making it easy for the interested party to make contact with the advertiser. Interestingly, the only one that didn’t have any strips removed was the one for computer support. Maybe just a new ad I thought?

I continued to monitor the same notice board for a number of weeks and was struck by the fact that all the other advertisement gradually had their strips taken but not technology support company. This got me to thinking about how people go about marketing their business generally.

Of course, the tear away strip ad maybe working wonders elsewhere but let’s work on the evidence at hand here. Firstly, I would assume that whomever stuck that ad up there has never been back to monitor whether any strips have been taken. So how are you going to know whether people are even interested? Secondly, the ad was on plain paper and failed to stand out. I’ll bet that the same ad was printed out a dozen times and stuck in different places. How are you ever going to know what actually attracts people? Wouldn’t it make send to try a slightly different ad at different locations and see if the results vary? Wouldn’t it make sense to return when you have receive no inquiries and try something that looks a bit different?

So there seem to be plenty of reasons why this ad is failing to generate positive referrals but now lets look at the ad from the opposite direction. What does a low quality ad like that in a location like that say about the business in people’s minds? Being what it is and where it is certainly seems to indicate being cheap and perhaps even has a whiff of desperation about it. Again, this may not be the truth but I’ll wager that it is the reaction that most people would have. Importantly, without any hard evidence one can only ASSUME.

If you stop and think about how most business works these days what do you come up with? If you need a plumber, builder, gardener, cleaner, etc what do you normally do? You seek an answer from your immediate social network, from the people you know. You ask the question, ‘Do you know someone who does…”. If you get a positive recommendation then chances are that this referral will almost certainly get the business. Why? Because it was referred to you by someone you know and whose opinion your trust.

The biggest lesson I have learnt over the years is that it is not what you know, it is who you know. Initially I thought this was somehow ‘dirty’ and ‘immoral’ by relying on a friendship rather than the quality of work. However I have learned with time that in most cases nothing is further from truth. People trust people. People work with people. People buy from people. In the end it is all about relationships isn’t it?

Wouldn’t it therefore be a better investment to spend you time cultivating and growing relationship with someone rather than randomly spraying leaflet on local community notice boards? People think marketing is hard and that because they have forgotten the key element in what marketing is. It is the relationship customers have with your business. This means the heart and soul of any marketing is not about flyers, brochures, products, features, etc it is about people. Grow those relationships and business will beat a path to your door.