Odin · 1 Infrastructure-as-a-service Web presence Unified communications Business applications...
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SMB Cloud Insights TM 2015 THE NETHERLANDS Odin
Transcript of Odin · 1 Infrastructure-as-a-service Web presence Unified communications Business applications...
SMB Cloud InsightsTM
2015
THE NETHERLANDS
Odin
DEFINITIONS
Cloud Services DefinedThis research focuses on the cloud services that matter most to SMBs: IaaS, web presence and web applications, unified communications, and other general business applications.
Infrastructure-as-a-service (IaaS): Cloud servers, dedicated servers, virtual private servers (VPS), fully managed hosting, as well as add-on applications and services for hosted infrastructure such as control panels, development platforms, LAMP stack, security, and server backup.
Web presence and web applications: Third-party web hosting, domain registration, and web applications including web server backup, content delivery networks (CDN), content management systems (CMS), e-commerce, site health monitoring, mobile optimization tools, search engine optimization (SEO), site-building tools, SSL, web server backup, and web server security.
Unified communications: Business-class email services including email security, and email archiving, along with mobility and hosted business voice services such as hosted PBX. Includes communication and collaboration applications such as web and phone conferencing, instant collaboration, and mobile device management (MDM).
Business applications (also known as software-as-a-service or SaaS): The major types of software applications that can be accessed online such as file sharing, online accounting, online backup and storage, online customer relationship management (CRM), payroll and human resources (HR), support and help desk, and virtual desktop (VDI).
SMBs DefinedWe define SMBs—also known as small and medium enterprises (SMEs)—as companies with one to 250 employees. There are around 650,000 SMBs in The Netherlands today. SMB categories include micro (1-9 employees), small (10-49 employees), and medium (50-250 employees).
Cloud Opportunities
Cloud leapers: SMBs that are not currently using an in-house IT solution (no servers, web servers, or PBX systems) and are likely to move straight to the cloud, i.e., “leaping over” in-house IT solutions.
Cloud converters: SMBs with in-house solutions but moving or planning to move to hosted services. For example, an SMB with in-house servers who is planning to switch to hosted servers when they next upgrade their infrastructure.
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Infrastructure-as-a-service
Web presence Unified communications
Business applications
€340M €155M €157M €192M
Odin SMB Cloud Insights™ has entered our fifth year of research into the consumption of cloud services by small and medium businesses (SMBs). Globally and locally, we are finding that SMBs from a variety of sectors are moving their business functions into the cloud. Tools and solutions that were previously reserved for enterprise-level organizations are being implemented in smaller firms as developers create services specifically for the SMB market.
Our research is intended to help cloud service providers take advantage of market trends to meet the evolving needs of their SMB customers. New to this year’s research is an exploration of how SMBs research, purchase, and use cloud services. Understanding these trends will help service providers build successful relationships with their customers.
Odin most recently studied The Netherlands in 2013. Two years later, we have returned to update our research with new data and an updated methodology.
2015
€844M ($1.1B USD)
The Netherlands Overall SMB Cloud Services Market
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INFRASTRUCTURE-AS-A-SERVICE (IaaS)
Total Server Add-ons by Industry
Top Reasons to Keep Servers In-House
28% of SMBs use in-house servers
The Dutch infrastructure-as-a-service (IaaS) market reached €340M ($436M USD) in 2015 and represents 250,000 SMBs who use a hosted server. This market has seen growth over the past two years due to the falling costs of IaaS and the development of IaaS tools for SMBs. Pure cloud servers such as Microsoft Azure and Amazon Web Services have begun to capture a proportion of the market due to their unique advantages.
SMBs use VARs (Value Added Reseller) and online research as their main tools to research and purchase IaaS. Service providers should develop marketing for both of these sales channels in order to capture this market.
Looking at server usage, SMBs use in-house and hosted servers very differently. In-house servers see heavy usage of ERP, accounting, and payroll software while hosted servers are used for a much more varied set of tasks. This demonstrates that SMBs are taking advantage of the diverse capabilities of hosted servers.
While almost all SMBs are pleased with their IaaS service provider, many would still like to see performance improvements – especially in support and usability. Service providers should take SMB concerns seriously because SMBs are likely to resolve their issues by leaving their vendor and either going elsewhere or bringing the server in-house.
Security and privacy
Legacy systems and other tech concerns
Bandwidth
Price 36%32%15%7%
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Total Server Add-ons by Industry
IaaS Research Methods
SMBs Start Using Hosted Servers When:
Buying IaaS
38% of SMBs use hosted servers
6% of SMBs have both hosted and in-house servers.
In-house servers did not do enough
Company changed size quickly
In-house servers had too many issues
Business model changed 38%
36%
Trusted advisor or VAR
50%Online research
41%Existing service
provider
9%
15%11%
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Common Purchase Methods
Most Important Factor in Choosing a Service Provider
Top IaaS Purchase Locations
Web hoster
Local IT resource (VAR)
Pure cloud provider
Telco/cable co
41%21%10%
5%
Online
Price
Phone
Existing relationship
Security or privacy concerns
Service provider’s
physical location
Ability to expand or contract
quickly
VAR
Ease of management
50%
32%
33%
24%
12%
19% 13% 6% 6%
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Top Workloads in Production
Using IaaS
Top Hosted Server Add-ons
Security Server backup Control panel
37% 43% 20% 10%3%
42% 40% 27% 19% 14%60% 48% 28% 15%4%
Development platform
LAMP stack
Hosted In-house
Micro Small Medium
31%
15%
25%
22%
Content management
system
Project management/
productivity tools
27%
14%
64%
17%
E-commerce systems
ERP
11% 19%
32%
41% 19%
25% 20%Database
applications
Business intelligence/analytics
Payroll/ HR admin
20%
CRM
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Areas for Improvement
How SMBs are Resolving Issues
Customer Experience
Performance
Exploring alternative options
Usability
Escalating with the vendor
Security vulnerabilities
Moving in-house
Support experience
Self-service administration
of SMBs would pay an additional €10 per month for high availability
of SMBs would pay an additional €10 per month for unlimited storage
Total Server Add-ons by Industry83% of SMBs have a positive opinion of their IaaS provider
30%
60%
14%
21%
19%
19%
19%
18%
44%51%
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The Dutch IaaS market is expected to grow at a CAGR of 11.7% and reach €475M ($608M USD) by 2018. Most of this growth will come from SMBs with in-house servers switching to hosted servers. Service providers offering migration tools will be able to benefit most from this trend.
IaaS Opportunities through 2018
Estimated Probability of Entering the Cloud Market
11.7%CAGR
€340M ($436M USD)
€475M ($608M USD)
2015 2018
25% 53%Cloud leapers (New adoption)
Cloud converters(Switch from in-house)
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WEB PRESENCE
Key Factors in Choosing a Service Provider
Website Service Provider
Price Existing relationship
Brand recognition
Ability to scale resources
SecurityCustomer experience
Buying a Website
63%
Web hoster
Local IT resource (VAR)
Telco
Pure cloud provider
32% 10%15% 9%49%
77%
9%
8%2%
82% of SMBs have a website hosted by a third-party.
18% of SMBs have websites hosted in-house. Of those, 62% plan to add a third-party hosted website within three years.
18%
82%
Most SMBs take several factors into consideration when choosing a service provider.
Total Server Add-ons by Industry19% of SMBs bundle their web hosting with their hosted server
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Mobile Optimized Website
Top Purchase Method
Building a Website
Only displays properly on a computer 30%
Displays on mobile without optimization 32%
Mobile optimized 38%
10%3
Phone
2
28%VAR
1
58%Online
of in-house used a third-party web designer
37%of SMBs build their website
in-house
63%of in-house used a
paid site
24%
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Add-on Purchase Location
Top Website Add-ons
Website Management
Web hoster: bundles with website purchase
Third-party provider
Directly from the application developer
Web hoster: returned after website purchase
45%22%
15%18%
SEO Security SSLBackup Content management
E-commerce
24% 33% 20% 18%22% 13%15%26% 26%28% 18%19%
2015 2018
(63% purchase from web hoster.)
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Type of Management
Areas for Improvement
Customer Experience
Total Server Add-ons by Industry83% of SMBs have a positive opinion of their web hoster
Performance34%
Support experience16%
Security vulnerabilities
13%Usability25%
Self-service administration
18%
18% of SMBs plan to move to third-party management within the next three years.
In-house80%
Web hoster8%
12%Third-party
The web presence market is valued at €155M ($198M USD). Since 2013, the number of SMBs with websites has grown from 74% to 80%. This is a result of the falling costs of web hosting and the explosion of user-friendly tools for website development and management.
SMBs are extremely sensitive to web hosting price, meaning that niche service providers should look toward higher touch services to grow their revenue. These services can include site building, mobile optimization, social media integration and monitoring, and website management.
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Web Presence Opportunities through 2018
7%CAGR
€155M ($198M USD)
€189M ($242M USD)
2015 2018
Exploring alternative
options
Moving in-house
Escalating with the vendor
68% 16% 16%
How SMBs are Resolving Issues
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Estimated Probability of Entering the Cloud Market
Cloud leapers (New adoption)
Cloud converters (Switch from in-house)
Website management, in particular, holds significant potential as 18% of SMBs plan to switch to a fully-managed website within three years.
Website add-ons also offer opportunities to service providers. SEO and security will remain the most popular add-ons through 2018. Over the next three years, these services and the growth of add-on usage will cause the web presence market to grow at a CAGR of 7% and reach €189M ($242M USD) by 2018.
42% 58%
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UNIFIED COMMUNICATIONS
Hosted by a service provider
Free service Hosted on an in-house server
49%
78%
of third-party hosted email is bundled with website hosting or a hosted server
of SMBs have a positive opinion of their email service provider
65% 23% 7%
Top Features of Paid Hosted Email
Type of Business Email
Calendar alerts
Outlook integration
Security
Archiving
27%19%9%7%
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Top Purchase Triggers for Premium Hosted Email
Areas for Improvement
Performance
Self-service administration
Security
Usability
25%22%18%15%
1Need
professional look and feel
2Increased need for security
3Company adds more employees
How SMBs are Resolving Issues
Exploring alternative
options
60%
Escalating with the vendor
26%
Moving service
in-house
13%
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Top Purchase Triggers for Hosted Business Voice Service
1Significant growth to business
HOSTED BUSINESS VOICE SERVICES
66%26%
8%
of SMBs do not have business voice
of SMBs have in-house business voice services
of SMBs have hosted business voice services
Main Barriers to Hosted Business Voice Services
Concerns about complexity
Technical concerns
Lack of knowledge about hosted business
voice services
Price41% 28% 10% 9%
3Current
phone system becomes outdated
2Good price point
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Purchase Location
Telco or cable company
Email service provider
Web hoster
33%27%26%
Top Features that Improve Customer Satisfaction
Top Features that Improve Productivity
1
Single number reach
2
Smartphone integration
2
Instant messaging presence
1
Integration with employer’s mobile devices
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How SMBs are Resolving Issues
Exploring alternative
options
Escalating with the vendor
Moving service
in-house
1 2 3
Top Areas for Improvement
Security
Usability
Performance
Self-service administration
Support experience
36%27%
8%25%
4%
79% of SMBs are satisfied with their hosted business voice service provider
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The unified communications market – including hosted email, hosted business voice services, and collaboration applications – is valued at €157M ($201M USD). Most SMBs view communication tools as critical components of their business and many have taken the leap to move these tools to the cloud. Sixty-five percent of SMBs use paid hosted email and 8% use hosted business voice services.
Security and price are major concerns for SMBs switching to these services. As a result, service providers have the opportunity to compete on multiple fronts to win customers. Top-tier services, such as Office 365, can capture SMBs seeking a professional look and feel from their hosted services while second-tier solutions can capture price-oriented SMBs.
Collaboration Applications in 2015
2015 2018
Mobile device management
Web conferencingInstant collaboration22% 12% 2%33% 23% 15%
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Unified Communications Opportunity through 2018
Probability of Entering the Cloud Market
6.5%CAGR
2015 2018
Cloud leapers(New adoptions)
Cloud converters (Switch from in-house)
29%37% 40%23%
Email Business voice services
€157M ($201M USD)
€190M ($243M USD)
Collaboration applications represent a smaller amount of the overall market, but will see strong growth in the near future. Mobile device management is a new opportunity as the number of paying customers will expand by 62% over the next three years. Overall, the unified communications market will reach €190M ($243M USD) by 2018. Steady growth will come from SMBs adopting hosted email and hosted business voice services while the most explosive growth will come from collaboration application adoption.
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BUSINESS APPLICATIONS
Researching Options
Online research
Trusted advisor
Industry news
Local IT resource
Existing service provider
37% 24% 17% 12% 10%
Most Important Factors in Choosing Business Applications
Business Application Research Methods
Business need
Customer experience
Price
Features and capabilities34%
29%
26%
11%
Free Trial Usage49%Purchased without a free trial
51%Purchased after
a free trial
The business applications market has grown considerably over the past two years. In 2013, the market was valued at €137M ($175M USD), and now it has reached €192M ($250M USD). This has been driven by a proliferation of small business-focused software and SMBs increasing comfort with using hosted tools.
SMBs rely on both online and local resources to research business applications, which means that service providers should market to both these communities. Just under half of SMBs purchase their applications after using a free trial. This is a substantial change from 2013 when two-thirds of SMBs purchased their applications after a free trial. We believe that the overall maturity of these offers combined with the abundance of online reviews and more accessible information has contributed to this trend.
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Purchasing Bundled SaaS
Bundled with
Purchasing
With bundle14%
Separate from bundle
86%
2 3Other
business applications
1Broadband
providerHosted server
Preferred Purchase Location
No preference
Directly from developer
Local IT consultant
Web hoster
44%23%13%11%
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SaaS Applications in 2015
36%35%
of SMBs would like their cloud services to integrate with single sign-on
of SMBs would like their cloud services to share data with each other
10% 30% 40%20%
Mobile device
manager
VDI
Online CRM
Web conferencing
Support/ help desk
Payroll and HR
Online accounting
Online backup and storage
Instant collaboration
File sharing
30%
60%
10%
40%
20%
50%
0%
Perc
ent o
f use
rs p
ayin
g fo
r app
licat
ion
Percent of SMBs using application
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Communication Applications through 2018
2015
2018
33%
12%
46%
23%
File sharing
VDI
22%
8%
36%
16%
Online backup and storage
Support and help desk
4%
31%
15%
21% 15%Payroll and HR
Online CRM
25%Online accounting
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Business Applications Opportunity through 2018
17.7%CAGR
2015 2018
€192M ($201M USD)
€312M ($243M USD)
The business applications market has grown considerably over the past two years. In 2013, the market was valued at €137M ($175M USD), and now it has reached €192M ($250M USD). This has been driven by a proliferation of small business-focused software and SMBs increasing comfort with using hosted tools.
SMBs rely on both online and local resources to research business applications, which means that service providers should market to both these communities. Just under half of SMBs purchase their applications after using a free trial. This is a substantial change from 2013 when two-thirds of SMBs purchased their applications after a free trial. We believe that the overall maturity of these offers combined with the abundance of online reviews and more accessible information has contributed to this trend.
Looking toward specific applications, the most popular services for SMBs are file sharing (224,000 users), online backup (153,000 users), and online accounting (142,000 users). While certain applications are used heavily, only a small proportion of users actually pay for the service. As a result, online accounting has the largest paying customer base with 84,000 paying customers.
Over the next three years, the market will grow at an impressive 17.7% CAGR and reach €312M ($412M USD). Usage rates will grow quickly for top applications such as file sharing and online backup, while usage rates will double for less popular applications. Overall, there is a strong opportunity in this market as SMBs move toward greater adoption of hosted business applications.
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IaaS Web presence Unified communications
Business applications
€475M
€340M
€189M €192M
€157M €192M
€312M
€155M
20182015
11.7% CAGR
7% CAGR 6.5% CAGR17.7% CAGR
Cloud Market Opportunity through 2018
11.5%CAGR
2015 2018
€844M ($1.1B USD)
€1.2B ($1.5B USD)
OverallThe total Netherlands SMB cloud service market is set to reach €1.2B ($1.5B USD) by 2018. As hosted services become the new normal, growth will no longer be driven primarily by early adopters. This means there is tremendous opportunity for service providers who offer competitively priced and well-featured cloud products.
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Learn MoreThis report covers only a portion of the extensive data included in Odin SMB Cloud Insights™ research.
Please contact [email protected] with any further questions. Odin is committed to helping our partners understand the best opportunities in the SMB cloud market.
About OdinOdin provides the software that powers the cloud ecosystem, from small and local hosters to some of the world’s largest telecommunication companies. By partnering with Odin, service providers gain access to industry expertise, a catalog of the most in-demand cloud applications, and the most comprehensive selection of software including web server management, server virtualization, provisioning, and billing automation. With offices in 15 countries, Odin supports more than 10,000 service providers in delivering applications and cloud services to more than 10 million SMBs.
For more information, visit http://odin.com, follow us on Twitter, or like us on Facebook.
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No part of this publication may be reproduced, photocopied, stored on a retrieval system, or transmitted without the express written consent of Parallels.
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