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By Steve Burke

A Big Data Partner Revolution: Maritz On Vertical Expertise, Education

April 22, 2013

Pivotal CEO Paul Maritz has some good advice for solution providers interested in establishing a beachhead in the big data market.

First and foremost, Maritz says solution providers must understand a specific vertical market segment. That business knowledge, in fact, is at the heart of building the big data services that will drive businesses in the future. It's a natural evolution of the solution provider model in an era where IT decisions and budgets increasingly are being driven by business units rather than IT departments. "You can't just go in and sell raw data capabilities," said Maritz in an exclusive interview with CRN in advance of the formal launch of Pivotal. "It doesn't help to go in and say, 'I can give you some of this big data.' You have to go in and say, 'Here is how you can transform your business by understanding larger and more diverse data sets.' So I would either try to partner with or acquire or develop that [business] expertise and then say, 'OK, how do I use that to pull through [these] underlying [big data] capabilities?' "

Maritz is advising solution providers to get educated on big data. EMC, to its credit, is offering courses on data science and big data analytics for business transformation, available at education.emc.com, to do just that.

Solution providers would be wise to heed Maritz's advice on getting business- and big-data-savvy—that is, if they want to succeed in the future. Big data services and applications are destined to determine new winners and losers in every single business.

What is exciting about the Pivotal initiative is Maritz is driving a big data platform that solution providers will be able to leverage to deliver game-changing business services. It's a far different play than any of the current Web services players, including Amazon, which is far more focused on driving a low-priced commodity platform than building a services platform that effectively becomes the operating system for a new era of big data services.

Amazon may have a strong Web services foothold right now. But my money is on Maritz and company to deliver a big data application services ecosystem that makes Amazon look like small potatoes.

If you want a sign of just what kind of big money there is in big data, look no further than solution provider Think Big Analytics, which has scored $3 million in funding from angel investor and former Cisco executive Daniel Scheinman and venture capital firm WI Harper Group. Not bad for a 50-employee company that is only three years old.

Ron Bodkin, founder and CEO of Think Big Analytics, which is advising companies on how to build and deploy big data applications, says sales have more than doubled each year since he started the business. "It's definitely an exciting time to be in this business," he said. "There is so much to be done. We are really enthusiastic about building our business and being a catalyst for tremendous value creation."

Business value creation is what big data is all about. Those solution providers that get it will thrive. Those that don't will die.

BackTalk: Steve Burke writes a monthly opinion column on CRN.com. You can reach him via email at steve.burke@ubm.com.

PUBLISHED APRIL 22, 2013

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Amazon's Blind Side: The Impact Of Service Outages

April 08, 2013

Verizon vice president Janet Schijns doesn't mince words when it comes to the service interruptions or security issues plaguing Amazon Web Services.

Schijns said she has seen first-hand how service outages and security issues have affected Amazon Web Services. It's an issue she's passionate about given the big bets solution providers are now making on telecom service providers such as Verizon that are crafting public/private hybrid cloud strategies and solutions. "Public cloud doesn't mean it has to go down and it doesn't have security," she said, noting Verizon Terremark's 100 percent uptime record. "I owned my own business for 15 years. I would not have put my business data on an Amazon cloud."

Schijn's comments came during a CRN Channel Chief Roundtable held at this month's XChange Solution Provider, which marked a turning point of sorts for telecom service providers such as Verizon, Comcast, AT&T and Time Warner Cable Business Class that have invested heavily in channel-savvy leaders and robust channel programs. Comcast, whose channel charge is being driven by channel veteran Craig Schlagbaum, walked away with the CRN Channel Champions award for network connectivity services with high scores in both technical and financial satisfaction from a survey of 4,000 solution providers.

With telecom providers upping their game, it is a good time to look critically at Amazon, whose Web services business is expected by one analyst to double to $3.8 billion this year. Up until now, at least in the commercial IT market, it has been mostly developers and lines of business that have sought out Amazon Web Services because IT was just too slow in responding to their business needs. Price was not as much an issue as responsiveness. Amazon Web Services, in fact, got a free pass because IT was asleep at the wheel. But that window is shutting as IT organizations have moved quickly to meet the needs of business units and customers operating in a consumer-driven IT world.

A new wave of cloud computing business-results-driven telecom service providers and technology solution providers are now preying on Amazon Web Services' shortcomings, specifically highly publicized cloud outages, security issues or Amazon's low channel partner IQ.

In a 41-minute fireside chat last November, Amazon CEO Jeff Bezos did not address any of the outage, security or channel issues affecting Amazon Web Services. Ironically, Bezos claimed that Netflix need not be worried that it is competing with Amazon Prime video with both using the same Amazon Web Services platform. Just 26 days later, though, Netflix customers were hit by a Christmas Eve outage. Amazon's own video service, however, was not affected. That Netflix outage came on top of highly publicized Oct. 22 and June 14 Amazon outages last year.

Solution providers would be wise to look closely at service uptime, security holes and channel partnership when choosing a Web services partner. If they do, they will find strong choices from telecom vendors with high technical and channel IQs.

BackTalk: Steve Burke writes a monthly opinion column on CRN.com. You can reach him via email at steve.burke@ubm.com.

PUBLISHED APRIL 8, 2013

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GE Capital Ushers In A New Era Of IT Financing For The Cloud

March 11, 2013

The IT financing game has changed a lot over the years. The risks are greater as solution providers have moved from providing PCs to complex business solutions and now cloud services. But so are the rewards.

It's no longer about "dealer floor plan" financing of hard goods such as PCs. The IT financing game, in fact, has moved from a variable-based on-premise IT product model to a fixed-cost, annuity services model. It requires a major technology and business model makeover that has solution providers acting as the central nervous system of American businesses. In the banking business, there's an old maxim that "change requires capital."

That's why it's heartening to see GE Capital, with 30 years of experience in commercial distribution IT financing, stepping up with working capital financing solutions for vendors, distributors and solution providers in the cloud services era.

As part of its push, GE Capital has connected solution providers with its leasing arm, opening the door for them to get the much-needed financing to build data centers to host cloud services. Given the intensely competitive nature of the cloud marketplace, that kind of financing is an amazing vote of confidence in the channel.

"I think this is probably one of the most exciting times to be a channel partner," said GE Capital Managing Director Michael Marcolina, who has been in the IT services financing business for 25 years and has watched solution providers tackle business and technology challenges time and time again. "It's a great place to be because companies are looking for independent voices that can assess, inform and educate them on technology choices. That is where the channel has huge value."

It also speaks volumes about the state of the market that GE Capital financed $12 billion in the IT commercial distribution finance segment in 2012, an 11 percent jump from $10.8 billion in 2011. What's more, its credit line commitments hit $3 billion in 2012, up 20 percent from $2.5 billion in 2009.

Through its financing arm, GE Capital now touches 40 percent of CRN's Solution Provider 500, in addition to 1,400 resellers and 250 vendor OEMs or distributors. Its customer base is a who's who of the channel. But it's still only a drop in the bucket when you look at the need for financing among SMB solution providers, which are always looking for support from vendors, distributors and financial firms.

GE Capital, for its part, estimates that the inventory extended finance terms it offers to solution providers versus a typical open account equates to a whopping 21 percent impact on profitability. Think about that. Like a consumer with a great home mortgage, it makes all the difference in the world. It's particularly crucial for the next generation of cloud services startups, which often are financing their businesses with home equity or loans from family or friends.

"They start small and grow fast," said Marcolina, noting the remarkable entrepreneurial spirit of the solution provider channel. GE Capital has seen more than a few startups—and even established solution providers—through difficult times. That's good news for the entire channel ecosystem.

BackTalk: Steve Burke writes a monthly opinion column on CRN.com. You can reach him via email at steve.burke@ubm.com.

PUBLISHED MARCH 11, 2013

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Retail Folly: Why Microsoft Surface Losses Will Result In A New Channel Strategy

February 11, 2013

The BYOD (bring your own device) to work phenomenon has caused a lot of irrational behavior in the channel. The biggest and most costly mistake with Microsoft leading the charge is to step up consumer sales, marketing and product efforts at the expense of the commercial or business-to-business (B2B) channels.

What vendors should be doing is some good old-fashioned return on investment (ROI) comparisons on both their consumer sales channels and their commercial sales channels. Highly profitable commercial channels have through the years funded many foolhardy retail channel efforts. But with the BYOD phenomenon, the short shrift being given commercial channels has hit a historic high.

The madness that is Microsoft regarding consumer vs. commercial channels was front and center during the holiday season blitz around Surface. We called Microsoft's decision to refuse to let solution providers carry Surface the worst channel decision of 2012. And now the Surface sales numbers along with retail traffic spot checks are coming to light that show just how damaging that decision has been to Microsoft.

Microsoft has spent by some accounts as much as $1.5 billion marketing Surface and Windows 8, including hundreds of millions of dollars building brick-and-mortar stores. Several Wall Street analysts have pointed to the lack of distribution as a saleskiller even with the big retail buildout. Investment firm UBS recently reported that Microsoft sold only 1 million units of Surface RT in the fourth quarter, down from an initial UBS forecast of 2 million units. During the same period, Apple is expected to sell an estimated 26 million units.

CRN conducted an informal survey two weeks before Christmas, comparing retail traffic at the Microsoft store with the Apple store over a period of several hours. The Apple store had some 100 customers, many who made purchases, compared with 21 customers for Microsoft, with what looked like few purchases during that time period. If you want a good laugh, check out the video report, "Apple Vs. Microsoft: A Retail Store Comparison" on CRN's YouTube channel. Take the retail traffic numbers, the consumer marketing dollars Microsoft has spent on Windows 8 and Surface, and then tally the ROI. Microsoft's losses in its retail operations are almost unimaginable.

Let's be generous and say Microsoft's total consumer investment around Surface RT is $1 billion. Now let's call the average Surface RT purchase as $600. So Microsoft generates $600 million in sales. Bottom line: Microsoft's losses around Surface are astronomical. My bet is Microsoft will be forced to reveal just how poorly Surface has fared in the wake of a foolhardy direct sales strategy.

With retail losses mounting, look for Microsoft to realize it made a big mistake and do an about-face with the distribution strategy for Surface Pro, which is set to ship at the end of January. Partners will get their chance to sell Microsoft Surface, but only after Microsoft has been bloodied and beaten in the retail channel. Then, Microsoft will finally come to the conclusion that the only way to succeed with Surface is to leverage its tried-and-true commercial sales channel.

BackTalk: Steve Burke writes a monthly opinion column on CRN.com. You can reach him via email at steve.burke@ubm.com.

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The Worst Channel Decision Of 2012

December 14, 2012

Given the blinding pace of change in the tech market, there were many channel blunders this year that have forever altered the indirect channel sales landscape. But none, in my opinion, was more damaging than Microsoft’s decision not to leverage the channel to sell its new Surface Tablet.

The irony here is that Microsoft’s Surface effort has been flummoxed by Apple envy. Microsoft CEO Steve Ballmer admitted as much in an interview with CRN earlier this year when he asserted that Microsoft would leave no “stone unturned” in its innovation battle with Apple. At the same time, Ballmer told CRN that if Microsoft partners want to buy Surface, they can buy it from Microsoft.com.

It’s a classic case of a copy-cat CEO and a company in the midst of an identity crisis. Microsoft is not Apple. I know Apple, Mr. Ballmer, and Microsoft is no Apple. Instead of leading with Microsoft’s top-down advantage in the business market, its monopoly position and huge installed base in the business-productivity software market with Office and Windows, Ballmer decided to take a bottom-up approach, battling Apple on its own high ground -- the consumer market. First off, get real.

No one -- and I do mean no one -- is a better consumer product and marketing company than Apple. The iPad is unassailable in the consumer market. Surface is like a 50-year-old dad trying to be cool with a comb-over hairdo. And, remember, Microsoft is two-and-a-half years late getting into the tablet game. Surface is simply the classic case of a product that needs to be sold. That’s right, it needs someone to sell it. What a concept! Apple stores fulfill demand for a consumer product. Surface is a product that is begging to be sold into the business market where IT professionals are dying to put the lid on the BYOD (bring your own device) to work phenomenon with a business-approved tablet that has all the security of a laptop or a desktop. The ultimate irony: Microsoft has a robust, fully baked channel acting as trusted advisers to millions of businesses who are anxious for a secure business tablet.

Given the right strategy, Surface would have been a monster hit for Microsoft. Instead, Microsoft’s Apple envy is sinking Surface faster than a two-ton anchor. Detwiler Fenton & Co., a Boston-based brokerage, surveyed the damage earlier this month reporting that Microsoft sold just 500,000 to 600,000 Surface tablets in the current quarter. Compare that to Apple, which is expected to ship 24 million to 26 million iPads in the current quarter. “Regarding (Surface) RT, lack of distribution is killing the product,” said the Detwiler Fenton advisory.

Microsoft admitted as much by announcing last week that it was expanding retail distribution for the Surface RT, adding outlets like Staples. My bet is that the beleaguered computer giant will be forced to let partners sell Windows 8-based Surface Pro to make up for its subpar direct-sales performance.

Microsoft needs to be Microsoft and get its partners to bring Surface into businesses. Instead, Microsoft wants to be Apple. That’s why Microsoft’s decision not to sell Surface through its trusted partners is the biggest channel blunder of 2012.

BACKTALK: What are your thoughts on Microsoft and its Surface initiative? Contact Steve Burke at steve.burke@ubm.com.

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