Dell and IDC on SMBs

The price of networking equipment keeps dropping. So why aren’t small- and medium-sized businesses racing toward deploying new networks and improving existing systems? Dell turned to IDC for some answers about SMB networking trends before it hit the drawing board to design easy-to-use network management software.

Frank Muehleman, senior vice president and general manager for Dell’s Small and Medium Business Division, said the company is experiencing increased demand from small-and medium-sized business (SMBs) for networking equipment, but that the average small business still finds the entire process pretty intimidating.

“One-third of Small businesses with little — if any — dedicated IT staff have already deployed file or print sharing networks,” Muehleman said. “We asked ourselves why aren’t more small companies past the LAN [local area network] barrier? In the past, it was the price of networking technology that stopped them in their tracks, but we’re seeing prices come down as networking standards emerge.”

Muehleman said SMBs want to know how they can take advantage of new technologies to manage their businesses and their networks more efficiently. The SMB market is also seeing prices drop on attached storage systems, desktops PCs and gigabit switches. Revised pricing schemes by major IT equipment makers has forced IDC to revise its forecast for the third and fourth quarters of 2003 — especially where SMBs are concerned.

Stephen Elliot, IDC network and service management senior analyst, explained why SMBs are rethinking their IT priorities.

“When it comes to networking, SMBs think about planning for growth,” Elliot said. “SMBs are actively implementing new networks or redesigning existing networks to make sure there’s room for expansion, whether it’s adding employees or adding applications, small businesses want flexibility.

And then there’s the matter of network functionality. Elliot said that as new technologies become more affordable SMBs are capitalizing on the trends.

“More and more mid-sized businesses are building networks that can support remote access for geographically dispersed employees,” Elliot said. “Whether wired or wireless functionality is important to small businesses, one way to plan for growth is to have network switches in place that can handle extra bandwidth, which is spurring interest in gigabit switches.”

Another trend Elliot says SMBs have picked up on is centralized storage systems.

“SMBs are also transitioning to centralized storage systems away from individual client hard drives,” Elliot said. “Centralized storage is less costly per megabit than local storage on the hard drive of a PC. Network attached storage systems connect to existing networks, so file sharing is easier. This is especially important for SMBs where collaboration is a key business function.”

Growth Path for Network Management
Down-market pricing, flexible network expansion capabilities and functionality are critical factors for small businesses that are considering deploying new networks or upgrading existing systems. But these factors do not overcome a key barrier to networking deployments for small businesses — having the personnel available to manage new systems.

Elliot said small businesses have the most to gain from new and improved network management systems available on the market today.

“A lot of large enterprises use sophisticated network management systems. SMBs are thinking more seriously about adopting network technologies, but they are also thinking about managing the systems and how will impact their businesses,” Elliot said. “For vendors, a lot of these opportunities are greenfield. SMBs are thinking about their business processes — how they interact with suppliers, customers, and employees — among other concerns.”

Tantamount among these concerns is network security. Elliot said SMBs understand that network security is a critical issue.

“Network management is a priority among SMBs, the dynamics of network management requirements for SMBs isn’t that different from enterprises,” Elliot said. “Certainly cost is a factor, but network maintenance and ease-of-use are two other areas SMBs are very sensitive about when it comes to purchasing network management systems.”

Elliot said SMBs recognize that if their networks fail, business will suffer.

“Whether e-mail or Web site problems occur, if a network goes down, business stops and revenue dries up,” Elliot said. “SMBs face very competitive landscapes — they recognize that technology decisions they make are extremely important. As SMBs purchase hardware and find efficient software to maintain network performance and operability, scalability, ease-of-use, and formal migration paths to bigger and better functions are important.”

Total Cost of Ownership
More and more SMBs are recognizing that network management systems must be implemented in order to save money, decrease downtime and reduce the total of ownership (TCO) for network maintenance and support. But calculating TCO is difficult for a small business.

Clearly network hardware is a challenge to manage, and network computing is getting more sophisticated all the time — technology is not going to stop and wait for small business to catch up to it. Consequently, underutilizing networking capabilities remains a key concern for a small business, too. After all, overbuying for their business technology needs could have far greater ramifications for SMBs in the short-term.

Elliot said selection of a network management system should not be taken lightly. But there are ways for a small business to get a handle on what new systems will cost over the long- and short-term.

“In order to fully understand implementation and ease-of-use issues, SMBs should go through a pilot program to make sure they’re comfortable with the solution,” Elliot said. “Network configuration management is essential because it can cause a lot of problems. There are SNMP [simple network management protocols] and network-discovery functions to consider. Fortunately, Dell took this into consideration when it retooled its network management systems for SMBs.”

Dell released a series of network management tools early in November. Elliot said one of the things that stuck him about the new systems was that Dell thought a lot about -ease-of-use issues before it started engineering the software.

“Dell network management systems come with Dell power switches,” Elliot said. “They gave a lot of thought to understanding how SMBs think about network management. Dell developed network management software that doesn’t take up a lot of time to understand and deploy — — we think dell did a pretty good job at that.”

The Bottom Line
When purchasing network management technology, Dell and IDC contend that SMBs need to think about the initial cost of implementation of the solution, as well as the impact new functions will have on their infrastructure and key businesses processes. These functions could include e-mail, access to Microsoft Word or updating a Web site. Once you have determined what network functions are critical to your business; then its time to evaluate tools that are available for network management.

Essentially, you must prepare a roadmap in order to arrive at your final destination. And once you’re on the road to computer networking, you need to make sure hardware and software vendors can provide your small business with the necessary fuel to attain your goals.

IT talent is expensive — a networking solution needs to be intuitive. As IT staff grow their understanding of your critical business processes, your goal should be to make network management just another daily checklist item for them. That way, as new technologies become feasible for SMBs to deploy — like network attached storage systems — your IT team already has network management, well … managed.

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