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Istanbul_SMB_ICT_Forum_June_24_2010

VIEWS: 22 PAGES: 24

									                                                   The SMB Landscape
                                     ICT Adoption, Mindset & Changing Dynamics
                                                      SMB ICT Forum
                                                       Istanbul, Turkey
                                                         June 24, 2010




                                                            Andy Bose
                                                        AMI-Partners
                                                         546 Fifth Avenue
                                                            New York


                              New York, Houston, Los Angeles, Seattle, Shanghai, Singapore,
                                     Bangalore, Kolkata, New Delhi, London, Tokyo
                         (ALL CONTENT IN THIS DOCUMENT REPRESENTS AMI-PARTNERS’ INTELLECTUAL PROPERTY AND
                                 CANNOT BE REPRODUCED WITHOUT WRITTEN CONSENT FROM AMI-PARTNERS)

                                                     www.ami-partners.com
Source: AMI-Partners (www.ami-partners.com) 2010           AMI-Partners                                    1
  Agenda




                              AMI Overview

                              WW SMB Market Sizing

                              Economy, Government, Mindset, Business
                              Issues

                              Three Waves of ICT Adoption: Implications

                              Segmenting SMBs: High vs. Low Adopters




Source: AMI-Partners (www.ami-partners.com) 2010     AMI-Partners        2
  AMI: Extensive Global Footprint
  – Unparalleled Depth and Breadth Of Coverage Of Global Markets –
  AMI-Partners’ R&D Investments: Global Primary Research (Surveys) Coverage Map Touches All Major
  Countries Driving over 85% of ICT Spend
                                             Sweden/
                                             Denmark
            Canada                         Benelux                            Russia
                                       U.K.                Poland
                                     Germany
                                                       Czech Rep.
                                      France
            U.S.
                                       Spain
                                                           Turkey                                                         Leader in Actionable Global
                                                                                       China    Korea Japan
                                                       Italy    Israel      Pakistan
                                                                                                                          SMB Market Intelligence and
         Mexico                                                Saudi            Bangladesh      Taiwan
                                                                                                                            GTM Business Strategy
                                                               Arabia UAE     India
                                                                                          Hong Kong
                                                                                                                         Consulting – Extensive Global
                                                                                  Thailand
                                                                                         Vietnam                                   Footprint
                            Venezuela                                    Sri Lanka            Philippines
          Columbia                                                                       Malaysia
                                                                                 Singapore
                                                                                           Indonesia
                            Brazil
                                                                                                                                         • SMB Channel
                                                                                                                          SMB End User
                                                                                                                                           Partner Annual
                                                                                                   Australia              Tracking in
                                                                                                                                           Tracking
                                                                                                                          leading
                                                   South Africa
                   Chile                                                                                                  countries
                               Argentina                                                                                                            Comprehensive
                                                                                                    New Zealand
                                                                                                                  Comprehensive                     Database of
                                                                                                                  Database –                         several
                                                                                                                  000s SMBs                           thousand CPs
     AMI Tracking Surveys




                                               AMI was founded in 1996 with the core belief                                                                 Database
                                               that the IT industry needed to get closer to                                                                 Analytics
                                               the customers and channel partners in the                            Dynamic
                                                                                                                   Global ICT       Assets
                                               SMB space.                                                                                           GTM
                                                                                                                      Market
                                                                                                                                                    Consulting
                                                                                                                       Sizing
                                               We have invested over $40 million in                                    Model                Actionable
                                               syndicated primary research to track End                                                     Segmentation
                                               users and Channel Partners – our R&D!                                                        Models


Source: AMI-Partners (www.ami-partners.com) 2010                                        AMI-Partners                                                            3
AMI Focus- Assessing Changes in the SMB Market
Four key areas that highlight the critical changes in the SMB market




                                1. Economy                                      2. Purchasing
                           SMB’s view of the economy & how                         How SMB’s view of technology is
                           they manage through it, business                        changing – mindset, decision
                           challenges & priorities                                 making, buying behavior



                                                                 SMB

                               3. Marketing                                     4. Opportunity
                         Challenges & opportunities related to                  Where & what the IT opportunity is in
                         marketing to SMBs                                     the SMB market, how to segment and
                                                                               target




Source: AMI-Partners (www.ami-partners.com) 2010               AMI-Partners                                            4
   Small-Medium Business (SMB) vs. Large Business (LB) Enterprises

                                  Worldwide Firm Breakout                                                Worldwide IT Spending
                                                                                                             (excludes Telecom)
                             Large
                        Businesses                     • 195 M Empl (18%)                                                       SB (1-99
                                                       • $399B IT Spending                               LB
                     (1,000+ Emp)           52,203                                                                               Empl)
                                                                                                      (1000+
                                             Firms                                                                                35%
                                                                                                       Empl)
                                            (0.1%)
                                                                                                        43%
    Medium Businesses
                                                                • 198 M Empl (18%)                                Total =
                                           726,090              • $198B IT Spending
                                                                                                                  $920B
        (100-999 Emp)                        Firms
                                            (1.0%)
       Small                                                          • 698 M Empl (64%)
  Businesses                                                          • $323B IT Spending
                                                                                                                            MB (100-
                                       70.6 Million
  (1-99 Emp)                                                                                                                  999
                                      Firms (98.9%)
                                                                                                                             Empl)
                                                                                                                              22%




                                                   SMBs drive 60% of                    SMBs account for over      SMBs impact on GDP &
       99.9% of all firms are
                                                   Worldwide SMLB IT                     80% of global SMLB         world economies is
              SMBs
                                                       Spending                              workforce                  paramount



Source: AMI-Partners (www.ami-partners.com) 2010                        AMI-Partners                                                      5
     Worldwide SMB Market ICT Opportunity (includes IT + Telecom)
     EMEA accounts for significant share of SMBs and ICT spending
     Huge gaps between WEU countries Vs EEMEA countries
          2009 - # of SMBs = 70.7M                       2009 - ICT Spending by Region =                     2009 - ICT Spending by Category =
                                                                      $785B                                                $785
                                NA                              LATAM
         LATAM                  11%                               8%                                     Telecom
          21%                                                                                             Eqpt &
                                                                                     NA                    Svcs                                     Infrastruct
                                        WEU                                          33%                   34%                                          ure
                                        16%              APAC
                                                                                                                                                        26%
                                                         27%



         APAC                         EEMEA              EEMEA
                                                                                                              Internet                        IT Svcs &
                                       20%                                       WEU                            12%                              Sftw
         32%                                               5%                                                                                    28%
                                                                                 27%
                                                                                                   *Infrastructure = PC Hdw, Printers, Svrs, Ntwkg, Secur, Stor


                     Avg. ICT Spend Per SB (1-99 Empl)                                     Avg. ICT Spend Per MB (100-999 Empl)
                                                                                                                                      $740,000
                                                     $23,000                                             $570,000
                                    $14,000
                                                                                     $230,000
            $2,400

            EEMEA                     WEU                NA                          EEMEA                  WEU                            NA

         •32% of 1.96M SMBs forming in the next five years will be in Western Europe and EEMEA
         •$128 B incremental ICT spend over the next five years, 25% coming from Western Europe and EEMEA
Source: AMI-Partners (www.ami-partners.com) 2010                     AMI-Partners                                                                           6
   WW SMB Perceptions & Reactions to the Downturn – Q1 ‘10 Vs. Q1 ‘09
   Concern about economy remains high though SMBs feel conditions will get better


                                        Concerned about impact of current economic climate

                   75%          70%                                              64%           65%   65%
                                                   53%    50%                          55%




                          NA                         EMEA                          APAC         LATAM


                                                   Business conditions will improve


                                                                                       50%           55%
                                33%                       33%
                                                                                 20%           25%
                   13%                             7%

                          NA                         EMEA                          APAC         LATAM
                                                         Q1 '09                       Q1 '10


Source: AMI-Partners (www.ami-partners.com) 2010                 AMI-Partners                             7
    WW SMB Government Response to Economic Crisis By Region
    Overall, fewer than 10% of EMEA SMBs believe that Government has responded
    extremely well to current economic crisis


      How well do you think your government has responded to the current economic crises in terms of the impact on your business?


              North America                        Western Europe                          APAC                               LATAM




                                                                                                                               15%
                                                                                           12%
                                                        9%

                      4%




Source: AMI-Partners (www.ami-partners.com) 2010                      AMI-Partners                                                   8
   WW SMBs Awareness/Impact of Economic Stimulus Programs
   Despite the hype about stimulus aid, only 5% of SMBs benefitting from the stimulus
   package




                                                                                                5%
                                                                                                Aware of
                                                                              27%               stimulus &
                                                                                                already
                                                                            Aware of            receiving benefit
                                                                            stimulus, but not
                                                                            yet receiving
                                                    19%                     benefit
                                                   Aware of stimulus,
                                                   but not sure how
                                                   to obtain for my
                                                   company
                        49%
                      Unaware of
                      any stimulus
                      that is
                      available to my
                      company

Source: AMI-Partners (www.ami-partners.com) 2010                  AMI-Partners                                     9
   WW SMBs Awareness of Economic Stimulus Programs By Regions
   Despite massive injections of economic stimulus US SMBs are most unaware/impacted


                                                                                  NA – 3%
                                                                                  EU – 8%
                                                        NA – 17%                  AP – 8%
                                                        EU – 30%                  LA – 6%
                                                        AP – 33%
                                                        LA – 29%
                              NA – 19%
                              EU – 16%                                                      Aware of
                                                                                            stimulus &
                              AP – 20%                                                      already
                              LA – 20%                                  Aware of            receiving
                                                                        stimulus, but not   benefit
                                                                        yet receiving
NA – 61%                                                                benefit
EU – 47%                                           Aware of
                                                   stimulus, but
AP – 38%                                           not sure how to
LA – 44%                                           obtain for my
                                                   company

                    Unaware of any
                    stimulus that is
                    available to my
                    company
Source: AMI-Partners (www.ami-partners.com) 2010                 AMI-Partners                           10
   WW SMBs continue to face business challenges


                                                    Impact of economic downturn – Q1’09 vs Q1’10



                                                                                    WW SMBs Q1'09     WW SMBs Q1'10




                       64%                          67%
                                              58%                                                              58%
              54%

                                                                          41%                            44%
                                                                                              39%

                                                                  27%
                                                                                        24%




       Decreased revenue               Restricted cash flow    Cancelled orders     Slower payments     Tight credit




Source: AMI-Partners (www.ami-partners.com) 2010                    AMI-Partners                                      11
   EMEA SMBs Use of Various Financing Options for funding ICT purchases
   Vast majority have to rely on internal financing

                                                           TOTAL EMEA SMBs




                                                       Internally (cash)                          65%



                                              Vendor financing programs                     32%



                                                             Bank loans                     30%



                                                    Vendor/mfgr leasing               11%



                                            Third party leasing company              7%




Source: AMI-Partners (www.ami-partners.com) 2010                     AMI-Partners                      12
   Cost cutting mindset is pervasive across a wide range of items but the
   good news is that leveraging IT investments for greater operational
   impact is top of mind
                                         WW SMBs PLANNING TO CONSIDER ACTIONS

        Leverage tech. company owns to reduce costs/ make
   processes more efficient & improve employee productivity
                                                            Reduce Travel

                                                     Reduce Printing Costs

                                                    Reduce Office Supplies

                                                    Reduce Telecom Costs

                         Switch to more energy efficient technology

                                                         Reduce Inventory

                                                      Reduce Payroll costs

                                                   Reduce Operating hours

                                               Reduce Company Locations

                                                                             0% 10% 20% 30% 40% 50% 60%

Source: AMI-Partners (www.ami-partners.com) 2010                      AMI-Partners                       13
  WW SMB Actions Being Considered to Increase Revenues
  Improving customer relationship management is paramount

                                                   TOTAL WORLDWIDE SMBs


                    Improve existing customer
                                                                                63%
                    experiences and retention

         Invest in new customer acquisition
                                                                        48%           SMBs are devoting
                 activities & methods
                                                                                      their energies on
                           Expand into other                                          customer retention &
                                                                       45%
                          markets/opportunities
                                                                                      acquisition along with
                Improve processes or invest in
                                                                                      increasing employee
                training to increase employee                         43%
                          productivity                                                productivity and
                                                                                      seeking ICT solutions
                Launch new products/services                     34%
                                                                                      for impact.

                           Hiring new employees          17%


                                Opening new sites       11%


Source: AMI-Partners (www.ami-partners.com) 2010                AMI-Partners                                  14
  Business pain points and environmental pressures drive IT
  objectives


                                                                                                   WW SMBs
                       Keep
                    Customers
                                                                              Improve      64% - Formalized
                     Satisfied
                                                                            Productivity   purchase decision
                                            Pricing/Competitive
                                                  Pressures                                making process
                                                                                           57% - Longer decision
                                                                                           making cycle
                                               Manage Cash Flow
                       Savvier                      HR/Talent       Supply Chain           54% - IT solutions
                      Customers                                      Influences            providers must
                                                   Sales Growth                            understand business
                                                   Manage Time
                                                                                           52% - IT solutions
                                                                                           part of overall
                                             Speed of Business/                            business strategy
                                              Response Times
                  Collapse                                                                 52% - TCOD &
                  Response                                            Easy/Simple to       scalability of ICT
                    Time                                                 Manage



Source: AMI-Partners (www.ami-partners.com) 2010                   AMI-Partners                                 15
   WW SMB Importance of Strategic IT Issues

                                                   TOTAL WORLDWIDE SMBs

          Enterprise (ERP/SCM/CRM)                                              65%
                                                                                      Applications
                             Collaboration                               54%


                    Upgrade bandwidth                                          62%
                                                                                      Connectivity/
                                          VoIP                     49%                 Networking
             Video to enhance comms                           42%


                     Enhance IT security                                   60%
    Data back-up/disaster recovery                                        58%           Storage/
                                                                                        Security
                      Increase IT storage                                56%


     Use social ntwkg for marketing                              46%                     Other
                                                                                        Services




     % of PC SMBs
Source: AMI-Partners (www.ami-partners.com) 2010         AMI-Partners                                16
   Globally interest in Cloud Based Services (SaaS, ITaaS, etc.) have
   jumped significantly across all regions: Flexible payments, perceived
   ease of use, less internal IT management and scalability are key drivers

    SMBs WILLINGNESS TO INVEST IN SOFTWARE SOLUTIONS BASED ON FLEXIBLE,
                MONTHLY PAYMENT STRUCTURE (% OF PC SMBS)


                                                                                         Q1 '09   Q1 '10



                                                                                      70%
                                                                                                           65%
                           60%                           60%
                                                                                55%
                                                                                                  45%

                                                   33%
                 25%




                       NA                           EMEA                          APAC             LATAM



Source: AMI-Partners (www.ami-partners.com) 2010                AMI-Partners                                    17
   EMEA SMBs Types of Social Media Usage
   Rapid increase in use of Social Media and Networking in the last 2 years – across all
   regions

              EMEA SMBs Types of Social Media Used                                         EMEA SMBs Business Activities Using Social Media

 Professional social networking                                           73%         Keeping in touch with customers                                 60%

General social networking sites                                         63%                Creating & maintaining profile                   43%

                                                                                                        Sales/marketing                    39%
                           Job Sites                            45%
                                                                                                  Advertising/promotion                    37%
  Forums/ Product focused-site                            31%
                                                                                       Keeping in touch with bus assoc.                    37%
               Blogs/ Microblogs                         27%
                                                                                                   Reference/education                 34%
          Niche/Industry specific
                                                      24%
              communities                                                                                      Blogging                34%
                               Wikis               17%                                             Messaging/tweeting                27%

       Social Bookmarking sites                    16%                                        Recruiting new employees              26%
                                                   % of Internet SMBs                                                       % of Social Media SMBs


                                                          EMEA SMBs Social Media Sites Used
                                 81%
                                                            66%
                                                                                   55%                      47%
      % of Social                                                                                                              41%
      Media SMBs



Source: AMI-Partners (www.ami-partners.com) 2010                           AMI-Partners                                                             18
  AMI View of Three Waves of Adoption Framework
  SMBs Typically Adopt ICT Solutions In An Evolutionary & Sequential Manner.
  For Success, It Is Important To Understand What Stage The SMB Is In


                    Wave I                                        Wave II                                  Mega Wave III
            Building The                              Connecting The Enterprise                   Extending the Enterprise
         Basic Infrastructure                       (Building Blocks of Convergence)               (Towards Full Convergence)

      Desktop PCs                                  LAN/Server                                   Intranet
                                                   e-Commerce Web Site                          WAN
      Notebook PCs
                                                   WLAN                                         VPN
      High-Speed/Internet                                                                       SAN
                                                   Network Firewall
      Anti-Virus                                   Intrusion Detection                          CRM
      Basic Web Site                               Document & Content Mgt. Solns                ERP/ SCM
                                                   Business Intelligence Apps                   IP PBX
      Productivity Suites
                                                   Hosted Apps (SaaS)                           Server Virtualization
      Accounting Software                          Hosted IP Telephony/IP Centrex


     As a business entity evolves, it faces increased challenges in the following areas:
        • Customers are more demanding, Higher levels of customization
        • More customer touch-points
        • Employees are more geographically dispersed
        • Increased requirements for accountability & compliance
        • Evolving decision making, organization, business processes, ecosystem partners/channels, & service/support needs

                   Reactive                                 Adaptive                               Systematic/ Proactive
                  Owner Mgr.                            OM/BDM + some TDM                               BDM + TDM
Source: AMI-Partners (www.ami-partners.com) 2010                  AMI-Partners                                                 19
  2009 AMI View of Waves of Adoption By Country Economic Stage
  Significant variance between Mature Markets Vs. Emerging Markets
  (All penetration figures as a % of PC owning SMBs)



                           Wave I                                   Wave II                                   Wave III
                        Building The                                                                    Extending The Enterprise
                                                           Connecting The Enterprise
                     Basic Infrastructure                                                               (Leveraging the Network)
                                    MM         EM                                     MM    EM                            MM       EM
    Notebook PCs                    91%       55%   LAN/Server                        55%   10%   Intranet                33%      2%
    Netbooks                        19%        9%   e-Comm Web Site                   23%   9%    WAN                     9%       2%
    Broadband                       86%       53%   WLAN                              40%   8%    VPN                     25%      6%
    Anti-Virus                      95%       56%   Network Firewall                  27%   7%    SAN                     7%       1%
    Basic Web site                  60%       31%   Intrusion Detection               35%   11%   CRM                     15%      3%
    Productivity Suites             93%       70%   Document & Content Mgt.           20%   8%    ERP/SCM                 19%      6%
    Accounting SW                   75%       60%   Business Intelligence             21%   5%    IP PBX                  4%       1%
                                                    Hosted Apps (SaaS)                23%   6%    Server Virtualization   3%    0.1%
                                                    Hosted IP Telephony/ IP Centrex   10%   3%




                 Evolving Distribution, Ecosystem Partners, Business Processes, Security and Service/Support Needs
                                          (Data Above Shows Penetration Among PC Firms)

% of PC SMBs
Source: AMI-Partners (www.ami-partners.com) 2010                      AMI-Partners                                                     20
Actionable AMI SMB Segmentation Identifies High Vs Low Adopters
Three Driving Factors Define Segmentation “DNA” Or Mindset & Point to Business
Performance/Impact



                                        IT
                                  Sophistication                         Strategic
                                                                        IT Outlook
                                                                                                 Strategic IT
          Tells us how
                                                                                                  Outlook –
      evolved the SMB’s
                                                     Segment                                       affects
      core infrastructure                           membership                                   acquisition
      is, how is IT being
                                                                                                cycle for new
      used for internal &
                                                                                                 adoption to
      external functions
                                                                                                replacements



                                                   Growth
                                                                       Intentions re. hiring,
                                                   Issues                 sites, revenue,
                                                                        business processes,
                                                                       other philosophies &
                                                                              metrics

Source: AMI-Partners (www.ami-partners.com) 2010       AMI-Partners                                            21
AMI has been segmenting the SMBs across all leading countries based on IT needs,
adoption, attitudes, usage & behavior for over 10 years
Higher ICT solution adopters (Tier 1 and 2 SMBs) exhibit higher revenue growth, productivity, hiring plans,
geographic reach, sites, mobile workforce...

                       WW Small Business                                                              WW Medium Business
             Total PC SBs                   Total SMB IT Spend                                     Total PC MBs         Total SMB IT Spend
               = 33.3M                            = $546 B                                           = 0.70M                  = $253 B
                                                       16%                                                                        13%
                                                                                                          27%
                   42%                                                                                                            22%
                                                       25%
                                                                                  AMI Tier 4              30%
                                                                                  AMI Tier 3                                      27%
                   32%                                 32%
                                                                                  AMI Tier 2              25%
                   18%                                                            AMI Tier 1                                      38%
                                                       28%                                                18%
                   8%
               % of Firms                          % of IT Spend                                      % of Firms            % of IT Spend

                                                      IT Mindset & Purchase Process Implications
                                     Tier 1 SMBs                        Tier 2 SMBs               Tier 3 SMBs             Tier 4 SMBs
                                  Enterprise Adopters              Cutting Edge Adopters         Value Adopters        Needs Help Adopters

    Mindset                      Process                           Experimental                Risk Averse             Get by

                                 Integral to growth &
    View of IT                                                     Enables agility             Can make a difference   Overwhelming
                                 operations

    Decision Making              Structured                        Systematic                  Adaptive                Reactive

    Brands                       Premium                           Premium                     Second tier/generics    Generics

    Marketing                    High touch A/Cs                   Some touch A/Cs             Channel partners        Retail
    Implications                 Channel partners                  Channel partners            Retail                  Channel partners


Source: AMI-Partners (www.ami-partners.com) 2010                            AMI-Partners                                                    22
                     Does business growth drive IT investments?

                                                        or

                         Do IT investments drive business growth?




Source: AMI-Partners (www.ami-partners.com) 2010    AMI-Partners   23
Overall Various IT Themes Will Continue Shaping SMB Markets Globally -
The Impact and Magnitude Will be Tempered by the Current Economic Climate & Gov’t Incentives.
However, SMB Dependence on ICT For Business Process & Success Is Well Established. Migration to Cloud
and Web Will Further Change Business Dynamics.
                                                         • First Time Buyers
                                                         • Upgrades - PCs, Servers, Switches, Routers,
                                                           Bandwidth, Virtualization
                                                         • Backbone Convergence (One network)


                                                                 Infrastructure
• Secure infrastructure-
                                                                                                                 • Remote sites, employees &
  Firewalls, VPN, Intrusion
                                                                                                                   partners
  Detection                             Security &                                            Mobility &         • UC (Unified Comm), UCaaS
• Disaster recovery
• Data back Up                           Storage                                              Telephony          • On premise vs. Hosted IP
                                                                                                                   Services
• Virtualization
• Managed Svc’s                                                    Market                                        • Smart mobile platforms
                                                                                                                 • Wireless apps/networks

                                                                   Drivers
                                           Internet                                              IT Services

      • Business Process Enabler
      • Decision support                                                                                 • Product Support Svcs- Computing,
      • Transaction Platform
                                                                     Software                              Networking, SW
      • Social media                                                                                     • Strategic IT Svcs– Systems,
                                                                                                           Consulting
                                                                                                         • Remote IT Managed Services &
                                                   • OS & Productivity Apps upgrade
                                                                                                           Outsourcing
                                                   • Integrated Front/Back Office (CRM-ERP-SCM)
                                                                                                         • ITaaS, PaaS
                                                   • Collaboration
                                                   • Analytics, Bus Intelligence
                                                   • SaaS – Online Suites
Source: AMI-Partners (www.ami-partners.com) 2010                        AMI-Partners                                                   24

								
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