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POWERING A CONNECTED ASIA
The 2010 Pacnet
Broadband BarometerA study into the state-of-play of the
Australian SME ICT market
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Australian businesses are going into the
cloud. Hosted data backup and archival
solutions top the list of cloud applications that
Australian businesses intend to adopt in 2011. Over
60% of businesses indicated that they were interested
in such solutions, and over 40% are planning to
adopt virtualisation in a hosted environment
in the same period.65% of businesses are leaving the
door wide open to possible business
loss through internet downtime, as they do
not have a back-up internet
connection.
Most businesses now connect at internet
access speeds up to 20 times faster than in
2006. Today, 43% of Australian businesses connect
to the internet at between 2 and 10Mbps, potentially 20
times faster than the most common connection
speed of up to 512kbps reported in a similar
2006 study.
Three out of five SMEs in Australia
currently use or plan to use
collaboration solutions and Unified
Communications, which were one of the
key drivers for the increasing use of
broadband in the office.
Many businesses remain unconvinced of the business
value the National Broadband Network will bring, with 39%
reporting that they do not believe it will reduce their cost of
access. Overall however, a majority of respondents answered Yesor Maybe when probed about their agreement with various
statements of benefit of the National Broadband Network. These
results indicate businesses want to feel positive about the project
but with such an even spread of responses we can see that in
reality they have no strong opinions.
Key Findings
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The 2010 Pacnet Broadband Barometer
Table of Contents
1. Hosted Applications and Business Continuity
Current use of hosted applications
Business continuity and disaster recovery
Virtualisation
2. Back-up internet access
Adoption rates
Reasons for lack of take up
Possible implications
3. Access technology and speeds
Technology adoption
Technology adoption by company size
MPLS adoption rates
Speed comparison with 2006 results
National Broadband Network
Impact on the economy and business
Outlook for the future
4. Business communication and collaboration
Communication and collaboration solutions
Unified Communications which elements are being used?
VoIP
Video conferencing
Instant messaging consumers now drive business
5. The remote worker
Adoption rates
Technology adoption
Drivers and trends in up take of technology and applications
2
4
7
9
10
6
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The 2010 Pacnet Broadband Barometer
The Pacnet Broadband Barometer study aims to assess the
adoption and usage of internet technologies by Small and
Medium Enterprises (companies with 5 to 999 employees)
across the Asia Pacific region. Since its launch in 2003, the
Broadband Barometer (previously also known as the Pacnet
IP Index) has been widely used and referenced by a range of
decision makers and analysts across businesses, government
agencies and the media.
This latest Broadband Barometer study is jointly developed by
Pacnet and AMI-Partners, a leading consulting firm
specialising in IT and telecom sectors. More than 2,000
technology decision-makers across 5 countries (Australia,
China, Hong Kong, India, and Singapore) were interviewed to
provide a deep and comprehensive view of the Asia Pacific
market.
Strategically, by comprehensively and continuously tracking
SME market dynamics and opportunities, the Pacnet
Broadband Barometer confirms Pacnets position as a
thought leader and a key internet player in the Asia Pacific SME
market. Tactically, the study is designed to gain insights in the
internet usage patterns of SMEs to help Pacnet formulate
strategies to meet the ever-changing needs of its customer
base.
About The Pacnet Broadband Barometer
3
Geographic Location of Respondents:
Sydney 90
Melbourne 111
Brisbane 45
Adelaide 29
Perth 31
Hobart 17
Newcastle 20 Canberra 12
Darwin 14
Pacnet Broadband Barometer Sample Distribution:
30-minute phone interviews were conducted withthe person responsible for internet and technology
buying decisions 369 samples were distributed across 8
employee-size segments and 19 vertical industries
50+ samples were allocated for eachemployee-size segment in small business space(59, 1019, 2049, 5999); 30+ samples foreach segment in medium space (100249,250499, 500999)
This allocation gives us a margin of error around13-16% with a confidence level of 95% for eachemployee-size segment
For each distribution cell (industry xemployee-size), the target interviews were 3 orgreater to ensure we do not rely on a singlesample
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The 2010 Pacnet Broadband Barometer
1. Hosted Applications and Business Continuity
The Pacnet Broadband Barometer findings validate the
attention cloud computing has been receiving. 90% of
respondents currently deploy a hosted security application
and 66% use hosted email. These technologies are now
considered standard operating tools, mostly due to the
affordability, ease of deployment and maturity of these types
of applications.
While business continuity and disaster recovery are
hotly-discussed topics, of the businesses surveyed only 8%
have hosted data backup, storage and archival solutions inplace. This area is set for rapid growth in the next 12 months,
with 60% of businesses indicating they will adopt hosted data
backup and archival applications in 2011. With modern
Australian businesses generating such large volumes of data,
there needs to be options for storage archival and backup and
Australian businesses are embracing hosted solutions as the
most efficient way of achieving this goal.
Hosted solutions also provide great protection for businesses
in the unfortunate event that a head office link is affected by an
incident, such as a natural disaster. In situations like these,
secondary business sites or teleworkers can enjoyuninterrupted access to corporate data and daily operations
need not be interrupted. This set up protects the intellectual
property of company data as well as ensuring efficiency of the
business. These benefits, along with the flexibility, scalability
and minimal upfront investments make hosted solutions very
appealing for SMEs.
The next predicted area to experience an explosion in growth
is hosted server virtualisation. Only a tiny 1% of our SME
respondents currently use this leading-edge technology, but
with over 40% planning to adopt in the next 12 months there
is a clear trend that the industry must start makingpreparations for the next wave of technology implementation.
Historically, medium and larger-sized businesses
have virtualised with the implementation of
software solutions to consolidate a number oflarger server boxes into a compact blade server.
For enhanced protection, they would typically
co-locate these servers in an offsite data centre.
The Pacnet Broadband Barometer findings show
that SMEs are embracing the benefits of managed
virtualised environments. Through virtualisation,
SMEs can now co-locate their data and
applications onto a shared server that is not owned
or maintained by them at all, but managed by a
service provider.
4
Top 5 reasons to use hosted applications
No upfront investment
Pay by usage
Cost saving
Access from anywhere anytime
Scalability
Top 5 hosted applications
1. Hosted security 90%
2. Hosted email 66%
3. Hosted business applications 40%
4. Web hosting 21%
5. Business continuity 8%
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The 2010 Pacnet Broadband Barometer
5
90%
66%
40%
21%
8%
1%
1%
71%
2%
23%
23%
60%
41%
28%
Hosted security-Firewall, Intrusion Detection,
Application Firewall, Unified Threat Management,
Denial of Service Prevention, Content Filtering
Hosted email
Hosted business applications (e.g., Saleforce.com,
ERP, CRM, Payroll, Accounting, HR)
Web hosting
Business continuity Regular data backup
(e.g., external network backup or pay per
use hosted and storage), long-term data archival
Server Virtualisation
Co-location (servers located at
an offsite 3rd party data centre)
2010
2011
Hosted Applications
This begs the question: Why invest in expensive hardware and
time consuming application roll outs and upgrades, when a
virtualised environment eliminates the pressure on IT resources
and the bottom line budget? When a business expands, their
growth is catered for seamlessly and almost instantly from the
cloud.
The tradition of having consumer premise equipment
consisting of racks and servers which expand over time as the
business and applications grow is definitely being challenged
with the emergence of cloud computing. Over a third of
respondents (39%) opted for a pay-per-use model as their
preferred way of setting up a hosted application framework.
Commenting on these findings Deborah Homewood, Chief
Executive Officer of Pacnet, Australia and New Zealand says:
SMEs are seeing the advantages of hosted services as they
allow them to outsource the management of their
mission-critical data and applications and free up valuable
resources to spend time on activities that contribute to their
core business.
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The 2010 Pacnet Broadband Barometer
6
An alarming discovery from the Pacnet Broadband
Barometer is that despite the growing reliance upon internet
access for their business, few companies have a back-up
internet connection. The study revealed only 35% of
surveyed businesses had a back-up internet service and
just an additional 23% considering obtaining one in 2011.
This leaves the remaining 43% of
businesses indicating that they
have no plans to obtain a
connection for redundancy in the
next 12 months.
Many SMEs are relying on the
internet for critical daily
communications. Increasingly,
their day-to-day activities also
depend on internet-based
business applications. Therefore,
it is very risky to put all your eggs
in one internet basket. Businesses
would be in a much safer position
to have two separate internetconnections connected through a
simple solution like dual WAN
router, says Dr. Vu-Thanh
Nguyen, Research Analyst at
AMI-Parners.
2. Back-up Internet Access: No Back-up Plans, Businesses Putting Themselves At Risk
As application adoption grows
the reliance placed upon a
companys network connection
is much more critical. Data
availability is key for the efficient
operation of a business and an
interruption to a companys
network can be very costly. If
customers and staff cant access
information or business tools,
productivity comes to a standstill
which has an enormous impact
on the bottom line.
For the SME market, one reasonfor the shortfall in back-up
internet is the lack of technology
options. For businesses
accessing the internet using
ADSL, until very recently the only
option for back-up was dial-up. With
the implementation and improvement of 3G networks in
Australia, a mobile broadband connection with comparable
access speeds to ADSL, can be now implemented easily
and with minimal time and investment.
While Australia has yet to experience a hugely disruptive
event that affects its broadband network, businesses here
must not be lulled into a false sense of security or
complacency, especially as internet access has now
become a mission-critical part of their operations. Given the
wide range of cost-effective internet connectivity options
available today, no business should be without a back-up
internet connection.
Back-up Internet Access
Currently in place
35%
Plan to implement
in 2011
23%
No plans
43%
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The 2010 Pacnet Broadband Barometer
7
The internet is ubiquitous among SMEs with 99% of
businesses with 5 to 999 employees having access.
However, the drive for content and applications has
influenced the type of access technology businesses use.
DSL (both ADSL and SHDSL) was the most popular
primary internet access technology accounting for 68% of
the businesses surveyed, with 24% relying on a fixed-line,
point-to-point technology such as Ethernet over fibre or
copper or leased lines. 7% have been reported as
connecting via ISDN and only 1% using wireless.
The marketplace has been continuously evolving and
adopting better, faster and more reliable technologies like
DSL. However, technology adoption differs depending on
the size of the company. 83% of businesses with 5 to 19
3. Access Technology and Speeds
staff connect via DSL, while 58% of businesses with more
than 50 staff had utilised DSL while a comparatively more
significant portion, almost 40%, used point-to-point
technologies.
Traditionally, only larger companies have adopted secure
high-performance Virtual Private Network (VPN) solutions
using technologies such as Multiprotocol Label Switching
(MPLS). However, it is evident this technology has reached
a level of maturity and is now also deployed at a price to
match SME budgets. Among SMEs with Wide Area
Networks (WANs) in place, more than 50% based their
communications infrastructure on a secure MPLS platform.
As cloud computing gathers momentum the 26% of
internet VPN-based businesses are tipped to move from an
unstable platform towards a more to a reliable and secure
MPLS private network.
Not surprisingly, speed has increased dramatically when
compared to 2006 data. The most common connection
speed is now between 2 and 10Mbps which equates to43% of businesses. In a similar study in 2006, 56% of
respondents were running primary connections of
512Kbps or less. Price and availability of content has put
pressure on the industry to increase the speed at which
information is delivered to the end user. ADSL2+ is a prime
example of this phenomenon, the introduction of a
high-speed business-grade access technology has
allowed companies to experience a whole new world of
connectivity at a price they would never have dreamed of
four years ago. This trend is further fuelled by the fact that
newer technologies are making high speed access more
and more affordable.
Again it comes back to businesses doing more with their
network and demanding greater speed and a reliable
connection between offices, other companies and their
customers.
WAN Technology
VPN over
the public Internet
26%
Layer 2 MPLS VPN
38%
Layer 3 MPLS VPN
12%
VPLS (Virtual Private
LAN Service)
14%
IPL (International
Private Line )
9%
EIPL (Metro Ethernet)
1%
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The 2010 Pacnet Broadband Barometer
8
AMI Partners forecasts the spending by Australian SMEs (5 to 999
employees) on broadband to reach AU$618mil in 2010, and grow to $660mil
by 2014. At an annual growth rate of around only 2% it is obvious that
bandwidth is in a mature stage, almost a commodity. The real ICT growth in
the coming years will be in innovative applications and value-added services.
Deborah Homewood,
Chief Executive Officer of Pacnet,
Australia and New Zealand
2010 Speed
Top 3 reasons to increase speed
1. Plan to buy a bundled solution with higher
bandwidth and offers greater value
2. To take advantage of faster speeds now available
3. Price of bandwidth is more affordable
The National Broadband Network
When questioned about the effects of the NBN, 39% of
businesses surveyed did not feel that it would decrease
the cost of access. Respondents felt that the top three
benefits provided by the NBN would relate to access to
public information, global competitiveness and business
productivity.
Overall however, a majority of respondents answered
Yes or Maybe when probed about their agreement with
various statements of benefit of the NBN. These results
indicate businesses want to feel positive about the project
but with such an even spread of responses we can see
that in reality they have no strong opinions. Its clear that
businesses need greater information and transparency
about the network and how it will impact their business
before the true benefits can be appreciated.
The Government is projecting large investments of tax
payer funds so there remains considerable education and
communications about the real impacts of the NBN to
truly inform all consumers and businesses of the benefits.
37%
35%
34%
33%
31%
30%
30%
30%
30%
31%
38%
28%
37%
36%
32%
35%
33%
34%
28%
39%
32%
34%
39%
36%
Provide better access topublic information
Business Increase global competitivenessof businesses in Australia
Business Increase businessproductivity
Improve education services
Business Minimal impact
Improving healthcare services
Business Lower cost ofInternet access for businesses
Business Enable businesses todeploy more applications
Yes Maybe No
2006 Speed
0 0.512 Mbps
0.513 Mbps 2 Mbps
2.1 Mbps 10 Mbps
10.1 Mbps 25 Mbps
25.1 Mbps 100 Mbps
Above 100 Mbps
0.3%
4.0%
5.0%
43.0%
8.0%
30.0%
Less than 64 Kbps
256 Kbps
512 Kbps
1.5 Mbps
2 Mbps
4 Mbps
8 Mbps
More than 12 Mbps
23.0%
8.0%
2.0% 2.0%
17.0%
8.0%
31.0%
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The 2010 Pacnet Broadband Barometer
9
A total of 61% of SMEs in Australia currently use, or plan to use in
2011, collaboration solutions which could all be grouped under
the Unified Communications (UC) banner. 34% of respondents are
currently using this type of collaborative technology but this is set
to skyrocket, almost doubling with a further 27% planning to
adopt these technologies in the next 12 months.
This makes technologies like unified messaging, presence,
integrated directories and a single communications client some of
the most common communication and collaboration tools used
by the respondents in the Pacnet Broadband Barometer. These
developments are driven in two ways. Firstly major software
vendors are launching updates to their existing communication
suites and including UC elements, so businesses are increasingly
familiar with these technologies. From the PBX and hardware
vendors, we are seeing traditional communications products
developed with inbuilt UC features that come as a standard
plug-and-play offering, ready to be deployed as the business
requires. These options have facilitated businesses to easily make
UC part of their technology solution.
Interestingly VoIP or IP telephony is commonly linked with a UC
suite, but in the Pacnet Broadband Barometer it is not showing
the growth curve of the other UC tools. With all the hype about
VoIP over the past five-plus years the industry predicted an
avalanche that would have gained momentum. However, thereport shows that in reality the take up rate is only 17%, predicted
to grow by just 9% more by 2011, commented Ms Homewood,
The majority of SMEs surveyed (74%) have no plans to adopt this
often widely publicised technology.
4. Business Applications Drivers For Increasing The Use Of Broadband
A similar question was posed in the 2006 Pacnet Broadband
Barometer, which found that 19% of respondents were using
some type of VoIP solution for business purposes including free
services like Skype. Clearly, since then businesses have not
perceived the value of VoIP and hence have not adopted the
technology.
On the other hand, Video Conferencing (VC) has an adoption rate
of just 9%, with a further 22% of surveyed SMEs planning to begin
using it in 2011. VC take up was strongest amongst SMEs with
100-199 employees, with 27% planning to adopt this technology
in 2011. This communication platform allows for greater
communication between offices and has the potential to
significantly reduce the corporate travel budget.
Traditionally the flow of technology adoption has been from large
corporations, down through to mid-sized and small businesses
and then into the home. This is usually due to the expense and
resource required to implement emerging technologies. However,
with internet technologies transforming traditional
communications, we are seeing this trend reversed.
In the Pacnet Broadband Barometer we can see business
communication technologies being driven from consumer
behaviour and technology 33% of businesses surveyed use, or
plan to use in the next 12 months, instant messaging as a
business tool.
34%
17%
17%
21%
9%
27%
9%
13%
12%
22%
39%
74%
70%
67%
68%
Unified communication (presence, integrated directory, unifiedmessaging, single communications client)
VoIP (e.g., Skype), IP telephony (IP soft/desk phones,full IP PABX system)
Online collaboration sharing slides,presentations, documents
Instant messaging (public, secure/corporate)
Video conferencing (standard desktop/high definitiondesktop/high definition conference room)
2010 2011 No plan
Communications & Collaboration Solutions
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The 2010 Pacnet Broadband Barometer
10
With 71% of surveyed SMEs supporting or planning to
support remote internet access for their staff, it is clear the
employee is demanding connectivity to the office
environment beyond the workplace. Access to the virtual
work place gives employees the freedom to be in contact
with the office but yet not be tied to the office desk.
With the huge growth in the adoption of cloud applications
and technology we have seen in the Pacnet Broadband
Barometer so far, its really no surprise that the support of
businesses for remote workers is so high. Enabling remote
access has also become an integral part of many SMEs
business continuity plans.
Among the countries that the Pacnet Broadband
Barometer survey was conducted in, Australia recorded
one of the highest percentages of SMEs supporting, or
planning to support, remote access.
We think that Australian SMEs have recognised the
benefits of teleworking and the benefits that it brings to
businesses. Many working parents today might need to
remain at home to tend to their families and through the
provisioning of remote access, they are still more thancapable of working and business productivity need not be
lost, said Ms Homewood
5. The Remote Worker
Top 2 methods of accessing data from outside
the office
1. ADSL 63%
2. Wireless 33%
Supporting in
2010, 33%
Plan to support in
2011, 38%
Not supporting
and no plan in
2011, 29%
Remote Access
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The 2010 Pacnet Broadband Barometer
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About Pacnet
Named Company of the Year for Excellence in Growth by Frost & Sullivan in 2009 and Best Wholesale Carrier at the
Telecom Asia Awards 2009, Pacnet is Asias leading independent telecommunications service provider, formed from the
operational merger of Asia Netcom and Pacific Internet. Pacnet owns and operates EAC-C2C, the regions largest
privately-owned submarine cable network at 36,800 km, with a design capacity of 10.24 Tbps, as well as EAC Pacific,
which spans 9,620 km across the Pacific Ocean and delivers up to 1.92 Tbps of capacity between Asia and North
America. The company offers a comprehensive portfolio of industry leading IP-based solutions for carriers, large
enterprises and SMEs. Pacnet is headquartered in Hong Kong and Singapore, with offices in all key markets in Asia and
North America.
In Australia, Pacnets core network and premium telecommunications solutions are backed by a range of infrastructure
options which provide services customised to the specific needs of individual customers. Pacnet specialises in multi-site
connections and enables hosted solutions with a dedicated local team to connect manage and support business
communication requirements. For more information, please visit: au.pacnet.com.
About AMI-Partners
AMI-Partners specialises in IT, internet, telecommunications and business services strategy, venture capital, and actionable
market intelligence - with a strong focus on global Small and Medium Enterprises (SMEs), and extending into largeenterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest
quality data, business strategy perspectives and go-to-market solutions. Led by Andy Bose, the firm has built a
world-class management team with deep experience cutting across IT, telecommunications and business services sectors
in established and emerging markets.
AMI-Partners has helped shape the go-to-market SME strategies of more than 150 leading IT, internet,
telecommunications and business services companies. The firm is well known for its IT and internet adoption-based
segmentation of the SME markets; its annual retainership services based on global SME tracking surveys in more than 25
countries; and its proprietary database of SMEs and SME channel partners in the Americas, Europe and Asia-Pacific. The
firm invests significantly in collecting survey based information from several thousand SMEs annually, and is considered the
premier source for global SME trends and analysis.
For more information, please contact:
Elissa Ryan
National Marketing Manager
Pacnet
Phone: +61 3 9674 7539
E-mail: [email protected]
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