SMBs should outsource everything and vendors must adjust

Yesterday was EMC day for me. I spent a pretty good chunk of the day in Bedford, MA at RSA Security (recently acquired by EMC) and then, by pure coincidence, last night, I attended an EMC-hosted dinner at Sauciety: a restaurant in the lobby of Boston's Waterfront Westin Hotel. The RSA visit was divided into two chunks. The first involved a demonstration of the company's usability lab and the second chunk was a candid conversation with RSA senior vp of consumer solutions Chris Young and one of RSA's banking industry customers regarding the evolving state of security when it comes to online banking (one of RSA's sweet spots ever since the company acquired Cyota and Passmark).  I'll be posting that conversation as a podcast later today. But for now, I've posted some pictures I took of RSA's usability lab as well as a usability test in progress as an image gallery here on ZDNet (along with some long captions to explain what's going on). 

The dinner was an opportunity for a few members of the Boston--based press (me, the Boston Globe's Hiawatha Bray, eWeek's Eric Lundquist,  ComputerWorld's Lucas Mearian and others) to catch up with EMC's top technical brass: executive vp/chief development officer Mark Lewis (who just launched EMC's first executive blog) and CTO Jeff Nick (who, if you ask me, really gets it). As is usually the case at dinners like this, the people at the ends of the table break off into separate conversations and the people in the middle swing back and forth, trying to figure out which conversation to tune into.  Lewis was on one end and Nick was on the other and I was sitting on Nick's end. We talked about a lot of industry and non-industry stuff (and strangely, never got to talk about EMC's acquisition of Network Intelligence, announced earlier this week). But eventually, our conversation found its way to the hotly contested small/medium business (SMB) infrastructure market -- a market in which EMC is very active. So too are EMC's competitors like HP which, just two days ago, claimed to "dramatically simplify network storage" for SMBs.

Call me crazy. But, it seems to me that the industry has finally evolved to a point where selling infrastructure (including storage) to SMBs should be like selling regular gasoline to the driver of a truck that runs on diesel fuel.  Whether you're at an existing SMB or about to start one up, it makes almost no sense to insource any IT. Especially IT infrastucture like servers and storage.  Right now, some of you are saying "David, you're just an armchair quarterback. What do you know?" But I'm practicing what I preach. Recently, Doug Gold and I started migrating the infrastructure for Mashup Camp to Appsite's hosting center in Atlanta.  For all intents and purposes, running Mashup Camp isn't much different from running a small business. But for the life of me, I can't imagine having to make decisions about low-level stuff like servers and storage. 

Not only don't I know what manufacturer's storage Mashup Camp's data is residing on, I don't care. I happen to know that the servers we're using are Dell's. But, quite frankly, I don't care about that either. Nor should I have to. What I care about is that it (the data) is there when I need it, delivered by the application of my choosing (eg: a Web server, a wiki, etc). In fact, most things that SMBs care about when it comes to their technology infrastructure can be codified in to a service level agreement (SLA) in a way that completely abstracts the underlying infrastructure issues from the managers of an SMB, once they decide to outsource their IT. 

Think about it. Salesforce.com is growing like gangbusters. Salesforce automation, like storage and servers, is undoubtedly mission critical.  But from one SMB to the next (and for a great many enterprises), SFA, storage, and servers are not differentiators in terms of the products and services they deliver.  I'm willing to bet that most of salesforce.com's customers haven't a clue as to what's running under the hood at Salesforce.  They don't know what servers Salesforce runs on.  They don't know what storage all the data is residing in.  They don't know what the operating system is.  All they need to know is that when they launch their browsers, the data they need is there, in the legible format they expect it in. And that's the way it should be. 

This was the subject of my conversation with EMC's Nick who triggered the discussion with a comment about how most all IT functionality should be delivered as a service.  By the end of the conversation, Nick was talking about how EMC's long term focus (in terms of selling infrastructure) should not be to push storage on SMBs themselves, but rather, to help make the service providers to which those SMBs should be outsourcing their IT more successful at providing those services.  To me, that's what a true partner to SMBs should do.  Sure, HP, EMC and the whole lot of them that want to sell you SMBs out there storage infrastructure can make a quick buck when you come looking to buy storage (or whatever other infrastructure they need).

But a real IT partner should say "Well, we'd be happy to sell you that storage, but perhaps there's a different way you should be thinking about your IT."  Along the way, outfits like EMC could instead, recommend EMC-outfitted hosting providers instead.  Just like with Salesforce, when a service provider can spread the cost of it's infrastructure across a lot of customers, the customer can actually end up saving money over running their own IT.  Not to mention the headaches that go away. Earlier this summer, Salesforce customers were put through the ringer (I say this jokingly) when it came time to upgrade to the company's Summer 2006 edition.  They had to press the refresh buttons on their browsers.

This doesn't mean that some SMBs won't be the exception to the rule. In other words, there are those businesses that can probably justify insourcing their infrastructure. But those businesses are fewer and farther between and if you ask me, sales in the SMB infrastructure channel are basically surviving on a myth: the myth that SMBs should be insourcing.