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The mid-market conundrum

The mid-market conundrum

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Published by: quocirca on Mar 25, 2014
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03/25/2014

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Copyright Quocirca © 2013 Bob Tarzey Quocirca Ltd Tel : +44 7900 275517 Email: 
Bob Brown Quocirca Ltd Tel: +44 7940 526801
Email: 
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 drive their business operations; from sales generation through supply chain management to post-sales services. Similar IT complexity to that in large enterprises has to be managed to support 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. Most acknowledge that they cannot achieve best-in-class application performance, availability and security, at an affordable cost, based purely on their own resources. To deliver a given application effectively requires the help of an IT service provider (ITSP). The conundrum is finding the right partner with both an applications focus and flexible access to the necessary resources to adapt 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 are working with ITSPs to deliver improved services to their business.
 
 
The mid-market conundrum
© Quocirca 2013 - 2 -
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 generation through supply chain management to post-sales services. Similar IT complexity to that in large enterprises has to be managed to support 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 CIOs recognise that they must deliver desired business 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 application and the supporting infrastructure to ensure delivery of the only thing that really matters; the desired business outcome. Only when this is the case will they achieve the peace of mind that a given application will perform reliably, be available and secure on a day-to-day basis and free up time to focus on other strategic initiatives.
Best-in-class applications are a key competitive asset for any mid-market business
 
97% of mid-market organisations transact directly with users from partners, customer organisations and/or consumers and 72% of their employees rely on access to applications to do 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 hundreds of thousands or millions of external transactions per year. Any inefficiency or inaccuracy that results from poorly implemented or integrated business-critical applications is instantly visible to key stakeholders and will lead to competitive disadvantage and lost revenue.
Mid-market businesses need the capability to scale people, processes and technology
Most mid-market IT leaders recognise that if they rely on internal resources alone, they will not be 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 with third 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 multiple customers.
Finding partners with the right skills who are willing to engage is 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 less likely to deal with larger providers. The quality of service provided by smaller IT service providers (ITSP) that do focus on the mid-market is variable and inconsistent; all too often the experience 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 up to current IT trends must be part of package
 
Mid-market organisations accept that new technologies are a key part of the solution to their challenges, including support for mobility and cloud-based services that provide an opportunity to enhance operational efficiency. Help is also needed in other areas such as big data and consumerisation. Mid-market IT directors and their management teams need access to partners with proven skills and capabilities to enable them to harness these technologies with confidence and in a way that ensures the desired business outcomes are achieved.
Both end user organisation and ITSP need a partnering mind set to succeed
A better experience of working with ITSPs is usually reported if both parties see a partnership as the basis for the relationship. However, many mid-market organisations engage on a tactical basis, which leads to fragmented overall delivery. They struggle to find the right balance, with the number of suppliers going up and down over relatively short timescales. Those organisations that seek to engage in a true partnering fashion, with risk shared between both parties, 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 technology alone and that have access to scalable resources; this is as much about values as it is about capability and competence. The end user organisation and its ITSP need to share the risk involved and when this is the case both should benefit from the success that follows.
 
 
The mid-market conundrum
© Quocirca 2013 - 3 -
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 own competitive challenges and has its own goals and aspirations. There is no strict definition of what a mid-market business actually is; typically they have hundreds or a few thousands of employees, several millions in revenue and they are usually not household names. From an IT perspective mid-market businesses generally have limited resources, overseen by someone who is likely to have the title of IT director, rather than a chief information officer (CIO). Attitudes matter more than names, but many 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. Success requires a focus on application delivery rather than IT infrastructure. The good news is that most mid-market IT directors already understand this. They accept that their responsibility is to deliver the applications to the business, seeing the platform as subservient. This attitude goes hand-in-hand with the way the platform to run a given application is selected (Figure 1). The challenge is to ensure these applications perform consistently, with high availability, are secure and, of course, that the desired business outcomes are being met. In short, just like large enterprises, mid-market organisations need best-in-class applications delivery to operate effectively. Few IT directors believe they can achieve this by relying purely on in-house resources, so the need to engage with IT service providers (ITSPs) is widely recognised. The majority of mid-market businesses are more likely to outsource a given application than they were two years ago (Figure 2). To fulfil their CIO aspirations, mid-market IT directors should be looking for more comprehensive ITSP relationships, with contracts focussed on how applications deliver the desired business outcomes, rather than caring about the technology per se. By doing so, time and resources can be freed up to look at strategic initiatives, focussing on what their business does rather than just
keeping the lights on
. For example an IT director responsible for an online retail application should be ensuring excellent customer service not checking bandwidth allocation to web servers. 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 research presented in this report, a key objective was to understand why this has been the case; to identify some of the obstacles and attitudes that have impeded progress and how some mid-market IT directors have overcome these to achieve peace of mind through effective engagements with ITSPs.

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