2009 Microsoft SMB Insight Report by zpm19843

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									                                                     2009
          2009 Microsoft SMB Insight
                             Report




“Because they can respond so quickly as business
conditions change, small and midsize companies
have an advantage in a volatile and uncertain
economic climate. The right information technology
tools and solutions lets them build on this
advantage by helping them cut costs and improve
productivity today, while enabling them to stay
focused on innovation so they will be poised for
growth when the economy begins to turn around.”      3/25/2009

                    Steve Ballmer, CEO, Microsoft
Introduction: Technology-Savvy SMBs Are
Key to Catalyzing the Economic Recovery
Small and midsize businesses (SMBs) have long been the backbone of nearly every regional economy in
terms of gross domestic product (GDP) and employment. According to Access Markets International (AMI)-
Partners research, SMBs employ 90 percent of the world’s work force and account for more than 50 percent
of GDP worldwide. Furthermore, the U.S. Small Business Administration and others have noted that smaller
business are most likely to lead us out of bad economic times because they are nimble, innovative and
connected with end customer values.

Though not a panacea, we believe that IT will play a significant role in shaping how soon and how
aggressively the small and midsize business community reclaims financial stability and becomes a catalyst
to help lead us out of a global recession. The soft economy is impacting almost every market and
demographic, but smaller businesses are expected to maintain a stronger-than-average commitment to IT
as a strategic investment during the recession. Market research firm IDC expects the overall IT market to
grow by just 0.5 percent worldwide, while the SMB packaged software market is expected to grow by 6.7
percent, more than 10 times the rate of the overall IT market.

Local IT partners play an important role in helping SMBs create efficiencies and maximize profitability using
technology. According to AMI Partners, only about one-third of small businesses have dedicated IT staff,
while the rest rely upon retailers, manufacturers and local IT partners such as Microsoft Small Business
Specialists. To better understand exactly what expectations smaller businesses have of IT given the unique
market pressures they face in 2009, we turned to our SMB customer experts, our partners.

Microsoft Corp. invests an average of roughly $6.5 billion in the SMB market each year, and we rely heavily
on a global partner ecosystem of 640,000 partners to represent our solutions and offer local expertise to our
customers around the world. Among those 640,000 partners are nearly 20,000 small and midsize business
experts that carry the Microsoft Small Business Specialist designation. To get a read on how smaller
companies view the role of technology in the year ahead, we gathered input from Small Business Specialists
in the U.S., Canada, the U.K., France and Brazil.



                                                        Microsoft Corporation | 2009 SMB Insight Report   2
The results of our engagement with the Small Business Specialists Community inform the bulk of this first
annual report on SMB attitudes and expectations for the year ahead. The data in this report supports several
key trends that we expect to unfold throughout the year:

   1. Strategic IT Investments Bolster the Bottom Line. Smaller businesses will continue to view IT as
      a strategic asset, a cost cutter and a means of increasing employee productivity. Lower spending
      does not imply lower value or reliance.

   2. Lower Budgets Mean Less Has to Be More. Streamlining IT through virtualization or server
      consolidation will increasingly be viewed as reliable means of adding business capabilities while
      reducing management and overhead costs.

   3. Service and Responsiveness Are Key to Customer Retention. The parallel objectives of
      improving employee productivity and delivering a better customer experience will drive SMBs to look
      at how they can better leverage the collaboration, mobility and business insight tools they already
      have, followed by strategic investments in these areas as incremental return on investment is
      achieved.

   4. Smaller Companies Will Increasingly Adopt Cloud Computing. More smaller businesses will
      adopt cloud-based solutions as the economic climate drives demand for solutions that are affordable
      and flexible and offer financially backed service-level agreements. Smaller businesses will remain
      cautious, however, and will closely evaluate the security, reliability and interoperability of cloud-
      based offerings. On-premise solutions continue to offer familiarity and a predictable return on
      investment and will therefore increasingly be complemented with hosted and online services
      offerings to create hybrid solutions that bring together the best of both delivery models.

   5. Better Together: SMBs Rely on Trusted Partners. Small and midsize customers will turn more to
      vendors and value-added resellers (VARs) to help improve their bottom lines. Expect VARs to work
      harder to show that they understand SMBs and deliver more personalized communication and
      greater depth of expertise as they compete for business.

It’s clear that 2009 will present unprecedented challenges for many SMBs, but very few are in a position to
simply wait out the storm. History suggests that smaller businesses will adapt and find new ways of gaining
advantage in the competition over fewer and more demanding customers. IT is firmly entrenched as a
strategic asset among SMBs, and these businesses are leaning heavily upon technology to help shore up
the bottom line.

Businesses should ensure they are getting the most out of their current IT investment, and need to
understand how technology can help them remain relevant and achieve future goals. This report offers
insight into areas where IT can improve business functions. The relative good news is that the price of
technology has remained stable or has dropped, access to credit and lease-like models is becoming more
prevalent, and the level of expertise among local retailers and VARs is steadily increasing. It is truly a
buyer’s market for SMBs, and they should take full advantage by establishing a relationship with a trusted
advisor such as a Microsoft Small Business Specialist or other local consultant to ensure that they have a
strategy in place to preserve the resiliency and independence that makes them the backbone of the global
economy.




    We believe that IT will play a significant role in shaping how soon and
       how aggressively the small and midsize business community
                           reclaims financial stability.

                                                       Microsoft Corporation | 2009 SMB Insight Report   3
Key Findings
Trends and Attitudes Among SMBs
   SMB IT Spending: 55% of Microsoft Small Business Specialists forecast the same or higher spending
    among SMBs. However, 45% indicate lower spending levels in 2009.
   Reducing Costs: Reducing staff and IT costs are most often indicated as the ways SMB customers are
    surviving the economic downturn. Only 6% indicate no change in behavior.
   Cost-Saving Technologies: Virtualization and IT consolidation via small or midsize servers lead the list
    of the best cost-saving technologies, but investments in these areas lag their importance. Interest in
    SaaS generally matches its current investment level, while some over-investment is indicated for mobile
    solutions, unified communications and especially CRM.
   Green IT: Only about one-third of Small Business Specialists anticipate more green IT investment
    among SMBs in 2009.
   Business Intelligence: Small Business Specialists believe that SMBs will continue to have an interest
    in business intelligence, with 39% anticipating an increase.
   Software as a Service (SaaS): Small Business Specialists indicate a growth of 20% in SMB customers’
    use of SaaS in 2009, from 66% in early 2009 to 86% by the end of the year.
   Productivity: Unified communications solutions have the highest level of demand among productivity
    tools.
   Security: Demand is greatest for IT security policy enforcement and data storage among SMBs
    considering security and preparedness.
   Software Plus Services: Microsoft Silverlight receives the highest rating for interest level among
    Microsoft software-plus-services offerings.
   Remote Workers: A majority of Small Business Specialists believe their SMB customers will increase
    their remote worker base and will expand the role/job function of remote employees in 2009.
        o Reflecting this trend, over two-thirds of specialists anticipate an increase in demand for mobile
            solutions.
        o The highest levels of growth from investment in mobile solutions/remote workers will come from
            server platforms and Microsoft Exchange.


Trends for Companies Serving the SMB IT Market
   Business Opportunity: Backup, IT consolidation, virtualization, mobile solutions and security lead the
    areas of opportunity identified for 2009.
   Business Priorities: Top 2009 priorities for Small Business Specialists are new sales and marketing
    materials, specialization (training and certification), and establishing new partnerships.
   Challenges: In addition to economic factors, acquiring and retaining customers is the key challenge for
    Small Business Specialists. Additional concerns are retail competition, direct customer engagement by
    vendors and marketing that has an impact.
   Customer Relationships: Assisting with cost reductions best characterizes the changing role of Small
    Business Specialists with their SMB customers for 2009.




                                                        Microsoft Corporation | 2009 SMB Insight Report   4
Full Study Results
                    55% Forecast Same or Higher Spending Among SMBs

                                                              IT remains important to SMBs despite the economic downturn, with a
                2009 IT Purchase Levels                       majority indicating same or higher levels of spending in 2009.
                                                              However, not surprisingly, a considerable number of Small Business
                                                              Specialists expect their small and midsize business customers will
                                                              have lower levels of IT purchases in 2009.
       Lower
        45%
                                                              About one-third (30%) report no change in IT purchase levels, while
                                                              only 25% indicate higher levels. However, a full 45% indicate lower
                                                  Same        levels of spending for 2009. Data from the AMI WW SMB Quarterly
                                                   30%        Pulse Tracker (12/08) suggests that telecom cost reduction is similar,
                                                              with 38% indicating a reduction in costs for the next three months.
                                                              Additionally, 58% have had decreased revenue in the past three
                                                              months.


                        Higher
                         25%
  Figure 1                 n = 671




               SMBs Are Cutting Expenses by Reducing Staff and IT Costs

Close to two-thirds of vendors report that their
                                                                                            Ways of Surviving Economic Downturn
customers are reducing staff (67%) and reducing IT
costs (64%) as ways to meet economic challenges.                                Reducing staff                                           67%

Reducing travel (38%) and cutting back staff hours                           Reducing IT costs                                          64%

(34%) are less commonly reported. Close to one-                                Reducing travel                              38%

fourth, however, indicate investing in IT (22%) is a                   Cutting back staff hours                            34%

way to cope with the economic downturn. Although                                Reducing stock                       26%

45% indicate lower levels of spending (Figure 1),                                Investing in IT                   22%

SMB customers are expecting IT to help manage                     Cutting back operating hours                 18%

costs and increase productivity: 40% of SMBs                  Creative marketing or advertising              14%
worldwide indicate an intention to leverage                             No change in behavior           6%
technology to reduce costs/make processes more                                         Other            6%
efficient and improve employee productivity in the
                                                                                                   0%        20%         40%      60%         80%       100%
next three months (AMI WW SMB Q-Pulse, 12/08).                                                                       Respondents = 620
                                                                 Figure 2                                             Responses = 1829
Similarly supportive of the Small Business
Specialists’ findings, data from the AMI WW SMB Q-
Pulse (12/08) indicate that worldwide in the past
three months, 21% have reduced their full-time/part-
time staff.


  Question:    1.   When thinking about your small and midsize business customers, do you expect 2009 IT purchase levels to be…?
               7.   What are your small and midsize customers doing to survive during the economic downturn? Please check all that apply.



                                                                        Microsoft Corporation | 2009 SMB Insight Report                             5
         Virtualization and IT Consolidation Top Cost-Saving Technologies

                             Best Cost-Saving Technology /                         Virtualization (25%) and IT consolidation via small or
                     Best Technical Investment for Business Growth                 midsize server (25%) are the highest-rated technologies.
                                                                                   However, investments in these two cost-saving
              Virtualization                                      25%              technologies (21% and 20%, respectively) fall short of
                                                            21%
           IT Consolidation                                       25%              interest levels, indicating future growth in these areas.
                                                        20%
      Software as a Service                  10%
                                              11%
                                                                                   Some over-investment is indicated for mobile solutions
           Mobile Solutions           7%                                           (7% vs. 9%), unified communications (3% vs. 5%) and
                                        9%
  Financing and Incentives          5%                                             especially customer relationship management (4% vs.
                                   4%
                                   4%                                              13%).
  Cust. Relationship Mgmt                       13%
  Office Productivity Suites       3%
                                  3%                                               Interest in other areas generally matches investment
                    Security      3%
                                   3%                                              levels, including SaaS (10% vs. 11%).
                     Backup       3%
                                  3%
  Unified Communications          3%
                                     5%
               Hosted Email      2%
                                1%
                    Storage     1%
                                 2%
                      Other               8%
                                    5%

                           0%         10%             20%           30%   40%
                                      Cost-saving      Tech investment
    Figure 3                              n = 619             n = 613




            Only One-Third of SMBs to Increase Green IT Spending in 2009

Only 34% of Small Business Specialists indicate that their
SMB customers will invest in green IT in 2009. This is likely
due to SMB customers having to prioritize other investments                                  Expect More Investment in “Green” IT?
in light of economic factors they must face.

Considering firms’ next three-month plans, 30% indicate
switching to a more energy-efficient technology (AMI WW
SMB Q-Pulse, 12/08).                                                                  Yes
                                                                                      34%


                                                                                                                                      No
                                                                                                                                     66%




                                                                                                            n = 612

                                                                                  Figure 4




  Question:       9. Which of the following do you see as the best cost-saving technology? Please select only one answer.
                  10. What do you see as the best technical investment for business growth given the current economic situation? Please
                      select only one answer.
                  11. Do you expect your customers to be investing in more green IT in 2009?




                                                                                Microsoft Corporation | 2009 SMB Insight Report      6
              Almost 40% Anticipate an Increase in Business Intelligence

                                                                   Small Business Specialists believe small and midsize
              Increase/Decrease Business Intelligence              businesses will continue to have interest in business
                                                                   intelligence (acquiring and managing pertinent market and
                                        Decrease                   customer information through Microsoft Office or server
                                          9%                       software), with only 9% having a declining interest. Such
      Increase                                                     capabilities are central to both productivity and ensuring that
        39%                                                        customers have a positive experience, two top priorities of
                                                                   SMBs.




                                                   Stay about
                                                    the same
                                                      52%

                              n = 606

   Figure 5




                                Use of SaaS Is Expected to Grow in 2009

Small Business Specialists indicate a growth of 20% in the                                    Customers Using SaaS Today /
number of their SMB customers using some form of                                        Customers Expect to Use SaaS by end of 2009
software as a service.
                                                                                                                                            34%
                                                                                      0%                          14%
AMI WW SMB Q-Pulse (12/08) notes than when asked                                                                                      28%
where their company would focus one significant                                     1-5%                                        23%
                                                                                                                   16%
technology investment in the next six months, 26% of WW                            6-10%                                  19%
SMBs identified the need to make their employees more                                            5%
                                                                                   11-15%                   11%
productive. In addition, the top five reasons why small                            16-20%
                                                                                                4%
                                                                                                      8%
businesses use hosted services were the following: ease of                                        4%
                                                                                   21-25%          6%
setting up (no installation required), connecting to the
                                                                                              2%
software from anywhere, not taking up storage space,                               26-30%        4%
allowing access to files and email from anywhere, and ease                         31-35%    1%
                                                                                              2%
of maintenance and updates, maximizing IT investment.                              36-40%    1%
                                                                                               2%
                                                                                   41-45%    1%
                                                                                              2%
                                                                                   46-50%     2%
                                                                                                3%
                                                                       Greater than 50%           4%
                                                                                                     8%

                                                                                        0%            10%               20%           30%         40%
                                                                                              Use SaaS Today            Use SaaS by end of 2009
                                                                        Figure 6                 n = 600                          n = 600




  Question:      13. Do you anticipate the need for business intelligence will increase or decrease in 2009 for small and midsize business?
                     By business intelligence, we are referring to acquiring and managing pertinent market and customer information to
                     maintain current customer relationships and extend new opportunities.
                 15. What percentage of your customer base is using SaaS/hosted applications today?
                 16. What percentage do you expect will be using SaaS/hosted applications by the end of 2009?




                                                                        Microsoft Corporation | 2009 SMB Insight Report                           7
         Unified Communications Are Most Demanded Productivity Tools

                                                                                Having unified communications is the highest-rated
                                      Productivity Tools                        productivity tool (5.5) for the future, followed by CRM or
                                                                                ERP solutions and Web hosting (5.0 each). Content
   Unified Communications                                  5.5                  management systems (4.7) and productivity suites (4.1)
                                                                                are the lowest-rated productivity tools. Although unified
      CRM or ERP Solutions                            5.0                       communications is rated low as an opportunity in 2009
                                                                                (Figure 14), it is still highly rated as the current most
               Web Hosting                            5.0
                                                                                demanded productivity tool. Backup, IT consolidation, and
                                                                                virtualization have greater potential as opportunities in
     Content Management                                                         2009 compared with unified communications, possibly
                                                     4.7                        due to market saturation of unified communications
                 Systems
                                                                                applications.
        Productivity Suites                    4.1


                              1   2   3    4      5         6    7   8   9
    Figure 7                                   n = 596




  IT Security Policy Enforcement and Data Storage Top Security Concerns

IT security policy enforcement (4.2) and data storage
(3.8) are the highest-rated areas concerning SMB                                                       Security and Preparedness
customers’ security and preparedness in 2009. Security                            IT Security policy
threat management (3.2), support (3.1) and data backup                                                                        4.2
                                                                                      enforcement
(2.9) are lower-rated security concerns. Although backup
is a top opportunity (Figure 14), Small Business                                     Data Storage                         3.8
Specialists may be thinking of data backup in terms of
more storage and business intelligence applications than                            Security threat                 3.2
security and preparedness.                                                           management

                                                                                           Support                 3.1


                                                                                      Data Backup                  2.9


                                                                                                       1   2   3         4      5      6   7       8   9
                                                                         Figure 8                                            n = 595




 Question:      18. In 2009, what do you anticipate will be the level of demand among your small and midsize business customers for the
                    following productivity tools? Please use the following scale of 9 to 1, where 9 is a very high demand and 1 is no
                    demand at all.
                19. In 2009, what do you anticipate will be the level of demand among your small and midsize business customers for
                    security and preparedness in the following areas? Please use the following scale of 9 to 1, where 9 is a very high
                    demand and 1 is no demand at all.




                                                                             Microsoft Corporation | 2009 SMB Insight Report                   8
               Silverlight Leads the List of Microsoft Software Plus Services

                                                                                                     At a mean rating of 6.6, interest in Microsoft
                                              Software Plus Services                                 Silverlight is greatest among Microsoft’s software-
                  Microsoft Silverlight                                          6.6                 plus-services offerings. Office Communications
                                                                                                     Online (5.9) and Microsoft Office Live Small
     Office Communications Online                                          5.9                       Business or Live Workspaces (5.8) are second-
        Microsoft Office Live Small                                                                  and third-rated.
                                                                           5.8
       Business or Live Workspaces
      Microsoft Office Live Meeting                                       5.7

                          CRM Online                                   5.6

                    SharePoint Online                                  5.5

              Exchange Online/Hosted                                5.2

                                          1     2   3    4      5      6         7      8    9
   Figure 9
                                                             n = 590




   Majority of SMBs Expected to Increase Remote Worker Support in 2009

At 54%, a majority of Small Business Specialists believe that
their customers will increase their remote worker base, with
37% indicating no change and only 9% believing it will                                              Increase/Decrease Number of 2009
decrease.                                                                                                    Remote Workers
Globally, simplifying the infrastructure to reduce energy costs
                                                                                                 Increase
and enabling greater mobility among workers are cited as
                                                                                                   54%
their most desired future IT investments by 13% and 6% of
SMBs, respectively (AMI WW SMB Q-Pulse, 12/08).                                                                                           Decrease
                                                                                                                                             9%




                                                                                                                                 Stay
                                                                                                                                 about
                                                                                                                 n = 590       the same
                                                                                                                                  37%
                                                                                         Figure 10




  Question:       20. In 2009, what do you anticipate is the level of interest among your small and midsize business customers in exploring
                      the following software-plus-services offerings? Please use a scale of 9 to 1, where 9 is a high level of interest and 1
                      is no interest at all.
                  21. Do you anticipate your small and midsize business customers will increase or decrease the number of remote
                      workers in 2009?




                                                                                       Microsoft Corporation | 2009 SMB Insight Report         9
               Remote Workers to Play Expanded Role for SMBs in 2009

                                                             As with the increase in remote workers, a majority (58%) of
                                                             specialists believe SMBs will expect an expansion of job-related
        Expand/Reduce Role/Job Function of                   responsibilities for those workers in 2009. About one-third (35%)
              2009 Remote Workers                            believe there will be no change, and only 7% expect a reduction of
      Expand                                                 job-related responsibilities for their remote workers. Greater
       58%                                                   productivity and responsibility among remote workers will increase
                                                             the demands placed on networks with regard to security, access to
                                                             core business applications, collaboration tools and the timely
                                                             exchange of data and/or large files.
                                              Reduce
                                                7%




                                Stay the
                                  same
                        n = 589   35%

  Figure 11



                             SMBs to Increase Use of Mobile Solutions

To meet the increasing demand for more remote workers
as well as their expanded job responsibilities, over two-
thirds (67%) of specialists believe that there will be an
                                                                                            Increase/Decrease
increase in mobile solution offerings in 2009. Far fewer                                     Mobile Solutions
believe there will be no change (27%), and only 6% believe
there will be a decrease in mobile solutions in 2009.
                                                                           Increase
                                                                             67%                                            Decrease
                                                                                                                               6%




                                                                                                                       Stay about
                                                                                                                        the same
                                                                                                                          27%

                                                                                                   n = 589
                                                                       Figure 12




 Question:   23. Do you anticipate your small and midsize business customers will expand or reduce the role/job function of remote
                 workers in 2009? By expanding/reducing the role/job function of remote workers, we are referring to remote workers
                 having to assume more job-related responsibilities.
             24. Do you anticipate an increase or decrease in mobile solution offerings in 2009?




                                                                     Microsoft Corporation | 2009 SMB Insight Report         10
              Small Business Server Platform and Microsoft Exchange Top
                            SMB Mobile Solutions for 2009

                                                                                                Specialists believe that investments in mobile
                              Product Growth from Investment in Mobile
                                                                                                solutions and remote workers will produce the
                                     Solutions/Remote Workers                                   highest levels of product growth in the Small
     Platform: Small Business Server                                       67%
                                                                                                Business Server Platform (67%) and in
                                                                                                Microsoft Exchange Server (57%). At 50%,
                Microsoft Exchange                                   57%
                                                                                                Windows Mobile 6.0 places third.
                Windows Mobile 6.0                                 50%
     Platform: Windows Server 2008                           36%                                The lowest level of growth is expected for
            Microsoft Office Systems                   28%                                      Microsoft SQL Server (20%), Microsoft
  Platform: Essential Business Server                25%                                        Dynamics CRM (20%) and Windows Vista
                                                                                                (19%).
              Windows Live Meeting                   22%
                Microsoft SQL Server             20%
                       Dynamics CRM              20%
                      Windows Vista              19%
                  None of the above      3%
                               Other      7%

                                    0%         20%         40%     60%       80%      100%
                                                       Respondents = 587
    Figure 13                                           Responses = 2073




              Key SMB Technologies in 2009 Are Backup, IT Consolidation,
                     Virtualization, Mobile Solutions and Security

At 61%, backup leads the list of areas of opportunity. IT
consolidation (55%), virtualization (51%), mobile solutions                                                     2009 Opportunities
(50%) and security (48%) are close secondary areas. All                                       Backup                               61%
five areas correlate to the value that specialists ascribe to                        IT Consolidation                            55%
small and midsize servers.                                                              Virtualization                         51%
                                                                                    Mobile Solutions                           50%
Consolidation is key to reducing costs with direct savings                                   Security                         48%
in management, hardware, power, insurance, and other                                          Storage                   34%
areas. Standardization will lead to less complex                                         Hosted Email                  32%
administration, enabling increased security, lowering                       Cust. Relationship Mgmt                    32%
maintenance costs, and simplifying deployment and                           Office Productivity Suites                32%
planning. Virtualization will provide additional opportunities                  Software as a Service                 31%
for more consolidation.                                                     Financing and Incentives               24%
                                                                            Unified Communications                22%
                                                                                   None of the above     2%
Interestingly, financing and incentives rated among the                                         Other      7%
lower opportunities (24%), suggesting that SMBs are not
simply bargain-hunting.                                                                             0%      20%       40%      60%       80%    100%
                                                                             Figure 14                             Respondents = 671
                                                                                                                   Responses = 3216




  Question:      26. Which of the following products do you see growing as a result of small and midsize businesses investing in mobile or
                     remote workers? Please check all that apply.
                 2. Thinking about the small and midsize business community, do you see opportunity in 2009 in any of the following
                     areas? Please check all that apply.



                                                                                 Microsoft Corporation | 2009 SMB Insight Report           11
                                        IT Partners Work to Demonstrate Value

                                                                                                       At 57%, generating new sales and marketing
                                                     2009 Priorities
                                                                                                       materials is the highest priority among Small
        Generate new sales/mktg mtls                                   57%                             Business Specialists working to demonstrate
                                                                                                       the value of IT in a down economy to SMB
  Specialize (training and certification)                       47%
                                                                                                       customers, followed by training and
            Establish new partnerships                          45%                                    certification leading to specialization (47%).
              New methods and forums                      37%                                          Establishing new partnerships (45%) is on a
                                                                                                       par with training and certification. Expanding
     Expand busns model around SaaS                 27%
                                                                                                       a business model around SaaS is a mid-
         Align w/ key HW/SW vendors                24%                                                 ranked priority at 27%, indicating that this
  Help navigate licensing and financing            23%                                                 area is currently a lower-level concern.
                                                                                                       Improving the customer online experience is
       Improve cust. online experience       15%
                                                                                                       rated lowest (15%), suggesting that
                                  Other             27%                                                specialists are not relying on self-serve Web
                                                                                                       sites to manage SMB customers.
                                        0%   20%         40%          60%    80%   100%
                                                    Respondents = 671
     Figure 15                                       Responses = 2013




     Customer Acquisition and Retention Is the Leading Partner Challenge

Overwhelmingly, acquiring and retaining
                                                                                   Other Challenges in Addition to Economic Factors
customers (43%) is the key challenge for
specialists outside of current economic                           Customer acquisition and retention                                     43%
factors that they face. This finding “fits” the
similar top priority (Figure 15) of generating                                 Competition from retail                       28%

new sales and marketing materials (57%).                         Direct cust. engagement by vendors                          27%
Additional concerns are retail competition                                        Impactful marketing                       27%
(28%), direct customer engagement by                                  Sales / svc revenue lost to SaaS                      25%
vendors (27%) and marketing that has an
impact (27%). Having sales/service revenue                                  Shortage of skilled IT staff                    25%

lost to SaaS (25%) is similar to the rating for                     Lack of compelling new offerings                      25%
expanding a business model around SaaS                                              Market saturation                    23%
(27%, Figure 15). At 20%, having a shrinking                        Shrinking cust. base local market                 20%
customer base in a local market is the
                                                                                                  None        7%
lowest-rated concern.
                                                                                                  Other      6%

                                                                                                       0%    10%   20%      30%    40%    50%    60%
                                                                                                                      Respondents = 620
                                                                      Figure 16                                       Responses = 1593




  Question:        3. What are the top three priorities for your company in 2009? Please check three.
                   6. In addition to economic factors, what are the other challenges you are facing in the future? Please check all that apply.




                                                                                   Microsoft Corporation | 2009 SMB Insight Report              12
                SMBs Relying on Partners to Assist With Cost Reductions

                                                                                           Not surprisingly, assisting with cost
                Best Characterizes Changing Role with Customer                             reductions (27%) most frequently
                                  "One-stop"                                               characterizes Small Business Specialists’
                                  experience           More remote                         changing role with their SMB customers.
             Greater need            15%               management                          Helping SMB customers to provide more
            for integrated                                15%                              value-added services to their customers
              consulting
                  13%                                           Demand for                 with a reduced staff and lower levels of IT
                                                                hosted busns               spending (Figure 2) will be important to
                                                                      apps
                                                                                           enable them to be a catalyst for economic
                                                                       3%
                                                                     Need for              recovery and to be well positioned to take
                                                                    financing /            advantage of a future upturn in the
       Assist w/cost                                             licensing deals           economy.
        reduction                                                       5%
            27%                                                    Less on
                                                                                           Additional ways that Small Business
                                                               premise work
                                                                                           Specialists’ roles are changing are as
                                                        No change 9%
                                           Use for Other 5%
                                                                                           follows: providing a one stop experience
                                          strategic                                        for hardware, software and services (15%),
                                                    2%
                                          planning                                         providing more remote management (15%)
                                             6%                                            and providing customers with greater
Figure 17                              n = 620                                             integrated consulting services (13%).
                                                                                           Findings reflect the growing interest in
                                                                                           virtualization, integration and the move to
                                                                                           remote technologies (Figure 14).




Question:        8. Which of the following best characterizes your changing role with your customers in 2009? Please select only one
                    answer.




                                                                       Microsoft Corporation | 2009 SMB Insight Report          13
Regional Trends

      Backup Is Strong in the U.S.; IT Consolidation Is Significant in Brazil

       2009 Opportunity                               Overall         US         Canada          UK         France        Brazil
                                            Backup    60.5%         70.3%        66.7%         58.9%        58.4%         48.7%
                                  IT consolidation    54.8%         57.8%        50.0%         57.5%        36.5%         72.6%
                                     Virtualization   50.7%         52.6%        57.4%         50.7%        46.0%         54.0%
                                  Mobile solutions    50.1%         49.0%        50.0%         67.1%        52.6%         35.4%
                                           Security   48.0%         50.0%        51.9%         38.4%        43.8%         50.4%
                                           Storage    33.8%         38.0%        27.8%         27.4%        38.7%         22.1%
                                     Hosted email     32.3%         38.0%        33.3%         52.1%        26.3%         25.7%
              Customer Relationship Management        32.2%         23.4%        33.3%         48.0%        29.2%         34.5%
                         Office Productivity Suites   31.6%         33.3%        29.6%         30.1%        27.0%         31.0%
                      Software as a Service (SaaS)    31.3%         35.4%        25.9%         43.8%        19.0%         37.2%
                         Financing and incentives     23.6%         34.4%        25.9%         34.3%         6.6%         23.0%
                         Unified Communications       21.9%         24.0%        14.8%         24.7%        16.8%         19.5%
                                None of the above      1.9%          1.6%           –          2.7%          3.7%         0.9%
                                             Other     6.6%          7.8%         7.4%         9.6%          5.1%         5.3%
                 No. of Respondents = ( )              (671)        (192)         (54)          (73)         (137)        (113)


The U.S. posts a significantly higher than average percent for opportunities in backup, while IT consolidation (small/midsize
servers) for SMBs is stronger than average in Brazil. Virtualization is comparable across the country segmentations.
Areas that are particularly strong in the U.K. are mobile solutions, hosted email, CRM, SaaS and financing/incentives. The
U.S. is also stronger than average in financing/incentives.




  Question:       2.   Thinking about the small and midsize business community, do you see opportunity in 2009 in any of the following
                       areas? Please check all that apply.




                                                                       Microsoft Corporation | 2009 SMB Insight Report          14
    Cost Reductions Outperform the Average in Brazil, While Specialists in
          the U.K. Have Strong Demand for “One-Stop” Experience

        Changing Role                                Overall        US         Canada          UK          France        Brazil
         Customers look to us for assistance with
                                                     27.3%        26.6%         31.5%         23.3%        20.4%         38.1%
                                   cost reduction
          Demand for "one-stop" experience for
                                                     14.8%        13.5%         20.4%         26.0%        12.4%         10.6%
                hardware, software and services
                     More remote management          14.4%        15.1%         20.4%         11.0%        16.8%         12.4%
           Greater need for integrated consulting    13.1%        12.0%          5.6%         5.5%         21.9%         13.3%
        Anticipate less on premise work with our
                                                      8.6%        16.2%          3.7%         12.3%         2.2%         3.5%
                                       customers
               They will use us more for strategic
                                                      6.3%         4.7%          9.3%         4.1%          6.6%         8.9%
                                         planning
          Higher need for financing and licensing
                                                      5.3%         4.7%          5.6%         5.5%          1.5%         9.7%
                                             deals
            Greater demand for hosted business
                                                      2.9%         1.6%          3.7%         4.1%          4.4%           –
                                     applications
                                       No change     5.3%          2.6%           –           5.5%         11.0%         2.7%
                                            Other    2.1%          3.1%           –           2.7%         2.9%          0.9%
                No. of Respondents = ( )             (620)         (192)         (54)         (73)         (137)         (113)

Specialists in France report stronger than average ratings in two areas: more remote management and a greater need for
integrated consulting. Specialists in France also post a significantly higher than average rating for no change in 2009 (11%), at
more than double the overall rating (5.3%). Specialists in the U.S. are stronger than average in their anticipation of less on-
premise work with their customers in 2009.

Specialists in Brazil post a significantly higher than average rating for assisting with cost reductions, while specialists in the
U.K. report a stronger than average rating for a “one-stop” experience.




  Question:     8.   Which of the following best characterizes your changing role with your customers in 2009? Please select only one
                     answer.



                                                                      Microsoft Corporation | 2009 SMB Insight Report             15
   Virtualization in Canada and Mobile Solutions in the U.K. Are Standout
                 Cost-Saving Technologies and Investments

        Cost-Saving                                   Overall        US        Canada          UK         France       Brazil
                                     Virtualization   25.2%        24.5%        38.9%        24.7%        16.8%        26.6%
                                  IT consolidation    24.7%        28.7%        20.4%        19.2%        27.7%        23.9%
                      Software as a Service (SaaS)    10.3%         7.8%         7.4%        13.7%         8.0%        15.9%
                                  Mobile solutions     6.8%         7.3%         5.6%        16.4%         5.8%         0.9%
                         Financing and incentives      5.3%         7.3%         1.9%        5.5%          1.5%         8.0%
             Customer Relationship Management          4.2%         1.6%         7.4%        2.7%          8.8%         3.5%
                         Office Productivity Suites    3.4%         0.5%           –         6.9%          4.4%         6.2%
                                           Security    3.2%         2.1%         1.9%           –          6.6%         3.5%
                                            Backup     2.8%         1.6%         5.6%        1.4%          2.9%         3.5%
                         Unified Communications        2.8%         4.2%         3.7%        1.4%          2.9%         1.8%
                                     Hosted email      2.1%         2.6%         1.9%        1.4%          2.2%         2.7%
                                           Storage     1.0%         0.5%           –            –          2.2%         0.9%
                             Other, please specify:    8.2%        11.5%         5.6%        6.9%         10.2%         2.7%
                 No. of Respondents = ( )              (619)       (192)         (54)         (73)         (137)       (113)


Virtualization as a cost-saving technology (38.9%) as well as investments (37.0%) are significantly higher than
average in Canada. In addition, mobile solutions as a cost-saving technology (16.4%) is stronger than average in
the U.K., while the investment in the U.K. is also stronger than the average (21.9%). Ratings in both countries
result in a balanced profile in terms of investments meeting or exceeding expectations.


    Technical Investment for Growth                   Overall        US         Canada          UK          France           Brazil
                                Virtualization        20.7%        18.8%         37.0%        20.6%         21.2%            17.7%
                             IT consolidation         19.6%        22.4%         20.4%        12.3%         19.0%            25.7%
        Customer Relationship Management              12.6%         9.4%          7.4%        16.4%         13.9%            13.3%
                 Software as a Service (SaaS)         10.9%         7.8%          9.3%        6.9%          13.9%            12.4%
                             Mobile solutions          9.0%         7.3%         13.0%        21.9%          7.3%             2.7%
                    Unified Communications             5.1%         6.3%          5.6%           –           5.1%             5.3%
                    Financing and incentives           4.4%         5.7%          3.7%           –           2.9%             8.0%
                                      Security         3.4%         3.7%          1.9%        2.7%           5.8%             1.8%
                    Office Productivity Suites         3.1%         2.1%            –         5.5%             –              9.7%
                                       Backup          3.1%         6.3%            –            –           4.4%             0.9%
                                      Storage          2.0%         1.6%            –         1.4%           3.7%               –
                                Hosted email           1.1%         1.0%            –         2.7%             –              0.9%
                                        Other          5.1%         7.8%          1.9%        9.6%           2.9%             1.8%
            No. of Respondents = ( )                   (613)       (192)          (54)         (73)          (137)           (113)

Other areas of stronger than average investment are backup technologies in the U.S. and office productivity
suites in Brazil. Cost-saving technology ratings for these investment areas are on a par with the average,
however, indicating some over-investment.




 Question:     9.     Which of the following do you see as the best cost-saving technology? Please select only one answer.
               10. What do you see as the best technical investment for business growth given the current economic situation? Please
                   select only one answer.




                                                                      Microsoft Corporation | 2009 SMB Insight Report            16
      Anticipated Demand for Business Intelligence Consistent Worldwide

       Business Intelligence              Overall          US            Canada            UK           France          Brazil
                          Increase        38.9%           43.2%          50.0%           32.9%          24.8%           46.0%
                         Decrease          8.8%           6.8%            7.4%            6.9%          12.4%           8.0%
             Stay about the same          52.3%           50.0%          42.6%           60.3%          62.8%           46.0%
        No. of Respondents = ( )           (606)          (192)           (54)            (73)           (137)          (113)

Ratings for an increasing and decreasing need for business intelligence are on a par with the overall average across the
country segments. However, in France, specialists are stronger than average for those who believe that the need for BI will
remain about the same in 2009. This somewhat static picture is also evident in France’s stronger than average rating for “no
change” in terms of specialists’ changing role with their SMB customers in 2009.




      U.S. and Canada Forecast Biggest Boost in Remote Workers in 2009

      Remote Workers                     Overall          US             Canada            UK            France          Brazil
                         Increase        53.6%           68.8%           72.2%           63.0%           24.1%           49.6%
                        Decrease          9.2%           3.1%             1.9%            2.7%           18.3%           15.0%
             Stay about the same         37.3%           28.1%           25.9%           34.3%           57.7%           35.4%
        No. of Respondents = ( )          (590)          (192)            (54)            (73)            (137)          (113)

Indications from Small Business Specialists in the U.S. and Canada are significantly higher than average in terms of
anticipating increases in remote workers for 2009, while Small Business Specialists in Brazil are significantly lower in the
anticipation of the number of remote workers. Fitting with France’s somewhat static picture for 2009, results for decreasing and
unchanged levels of remote workers are stronger than the overall average.




 Question:     13   Do you anticipate the need for business intelligence will increase or decrease in 2009 for small and midsize business?
                    By business intelligence, we are referring to acquiring and managing pertinent market and customer information to
                    maintain current customer relationships and extend new opportunities.
               21   Do you anticipate your small and midsize business customers will increase or decrease the number of remote workers
                    in 2009?



                                                                      Microsoft Corporation | 2009 SMB Insight Report            17
               U.S. Anticipates Highest Increase in Role/Job Function of
                                Remote Workers in 2009

      Role of Remote Workers              Overall          US            Canada           UK           France          Brazil
                            Expand        57.7%           65.6%           57.4%         61.6%          40.9%           60.2%
                            Reduce         7.0%           5.7%            1.9%          4.1%           12.4%           8.0%
                     Stay the same        35.3%           28.7%           40.7%         34.3%          46.7%           31.9%
         No. of Respondents = ( )          (589)          (192)            (54)          (73)           (137)          (113)

Reflecting the belief that there will be a significantly higher than average level of anticipation for an increase in the
number of remote workers in the U.S. in 2009, U.S. Small Business Specialists also post a stronger than average
rating for believing in an expansion in remote workers’ roles in 2009. In contrast to their belief of an increase in
remote workers, Small Business Specialists in Canada are comparable to the overall global average regarding an
expansion of their job roles. Again, there is a somewhat decreasing or static profile for France, with significantly
higher than average ratings for remote workers’ job roles either decreasing or staying the same.




             U.K. Anticipates Biggest Increase in Mobile Solution Offerings

    Mobile Solution Offerings               Overall           US           Canada            UK           France         Brazil
                            Increase        67.4%           69.8%           61.1%          82.2%          56.9%          68.1%
                           Decrease          5.8%            6.8%           1.9%           1.4%            8.8%           5.3%
                Stay about the same         26.8%           23.4%           37.0%          16.4%          34.3%          26.6%
       No. of Respondents = ( )              (589)          (192)            (54)           (73)           (137)         (113)

Specialists in the U.K. have a stronger than average anticipation of an increase in mobile solution offerings in
2009. As with their rating for the number of remote workers and for the decrease or same level of remote workers’
job functions, Small Business Specialists in France have a significantly higher than average rating for mobile
solutions staying about the same in 2009.




 Question:     23. Do you anticipate that your small and midsize business customers will expand or reduce the role/job function of
                   remote workers in 2009? By expanding/reducing the role/job function of remote workers, we are referring to remote
                   workers having to assume more job-related responsibilities.
               24. Do you anticipate an increase or decrease in mobile solution offerings in 2009?




                                                                     Microsoft Corporation | 2009 SMB Insight Report         18
Sources
1. Survey of 603 Small Business Specialists in the US, UK, Canada, France, Brazil and India conducted by TNS
   in February 2009

2. Eight-country survey of 1,214 SMBs in the US, UK, France, Brazil, India, Germany, Mexico and China
   conducted by AMI-Partners in December 2008 (AMI's syndicated QPulse market tracker)




                                                       Microsoft Corporation | 2009 SMB Insight Report   19

								
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