2016 SMB Cloud InsightsTM FRANCE
DEFINITIONS Cloud Services Defined This research focuses on the cloud services that matter most to SMBs: IaaS, web presence and web applications, unified communications, and other general business applications. Infrastructure-as-a-service (IaaS): Cloud servers Dedicated servers Virtual private servers (VPS) Managed hosting Add-on applications and services for hosted infrastructure: Control panels Development platforms LAMP stack Security Server backup Web presence and web applications: Third-party web hosting Domain registration Web applications: Content delivery networks (CDN) Content management systems (CMS) E-commerce Health monitoring Mobile optimization tools Search engine optimization (SEO) Site-building tools SSL Web server backup Web server security Unified communications: Communication and collaboration applications: Web and phone conferencing Instant collaboration Mobile device management (MDM) Business-class email services: Email security and archiving Business voice services: Mobility and hosted phone services such as hosted PBX General business applications: Major software applications accessible online: File sharing Online accounting Online backup and storage Online customer relationship management (CRM) Payroll and HR Support and help desk Virtual desktop (VDI) d1 SMBs Defined We define SMBs also known as small and medium enterprises (SMEs) as companies with one to 250 employees. There are 2.1 million SMBs in France today. SMB categories include micro (1-9 employees), small (10-49 employees), and medium (50-250 employees).
Cloud Opportunities Cloud leapers: SMBs that are not currently using an in-house IT solution (no servers, web servers, or PBX systems) and are likely to move straight to the cloud, i.e., leaping over intermediate in-house IT solutions. Cloud converters: SMBs with in-house solutions but moving or planning to move to hosted services. For example, an SMB with in-house servers who is planning to switch to hosted servers when they next upgrade their infrastructure. Overall SMB Cloud Services Market in France 3.0B ($3.4B USD) 2015 Odin SMB Cloud Insights is wrapping up its fifth year of research into the consumption of cloud services by small and medium businesses (SMBs). In this study, we interviewed more than 400 IT decision makers and found that SMBs from a variety of sectors are moving business functions into the cloud. Tools and solutions previously reserved for enterprise-level organizations are being implemented in smaller firms as developers create services specifically for the SMB market. Our research is intended to help cloud service providers take advantage of the trends discussed in this report to meet the evolving needs of their SMB customers. New to this year s research is an exploration of the SMB s journey of researching, purchasing, and using cloud services. This data will help service providers build successful relationships with their customers. Odin last studied France in 2013. Two years later, we have returned to update our research with new data and an updated methodology. 1.3B 577M 555M 613M Infrastructure-asa-service Web presence Unified communications Business applications 2
INFRASTRUCTURE-AS-A-SERVICE (IaaS) The French infrastructure-as-a-service (IaaS) market reached 1.3B ($1.4B USD) in 2015 and represents 1,000,000 SMBs who use a hosted server. This market has seen large growth over the past two years due to the falling costs of IaaS and the development of IaaS tools for SMBs. Pure cloud servers such as Microsoft Azure and Amazon Web Services have captured a proportion of the market due to their unique advantages. The top factors that SMBs use when choosing IaaS solutions are price and ease of management. Service providers offering low-cost, easy-to-manage solutions will be in the best position to capture this market. Looking at server usage, SMBs use in-house and hosted servers very differently. In-house servers see heavy usage of ERP, accounting, and database software while hosted servers are used for a much more varied set of tasks. This demonstrates that SMBs are taking advantage of the diverse capabilities of hosted servers. While a majority of SMBs have a positive opinion of their IaaS service provider, many would still like to see improvements especially in speed, availability, and support. SMBs whose issues are not resolved through support are likely to leave their vendor and either go elsewhere or bring their server in-house. Buying IaaS Top Barriers to Hosted Infrastructure 1 2 3 4 49% 38% 16% 16% Security or privacy concerns Price Specific application(s) Bandwidth / not supported by any connectivity issues provider 3 IaaS Research Methods Web searching for key words Trusted advisor Existing service provider Business industry news Local IT resource 39% 26% 19% 15% 4%
Top Factors in Choosing Service 28% Ease of management 23% Price 20% 16% 11% Existing relationship Security or privacy concerns Ability to expand or contract quickly Using IaaS Top Workloads in Production 28% 32% 32% 23% 46% 29% 25% 38% 24% 19% 31% 22% Content management system Database applications Customer relationship management (CRM) Accounting/ financials 14% 32% 21% 12% 29% 40% 14% 19% 15% 5% 9% 14% E-commerce systems Data mining/ analytics Project management/ productivity tools Payroll, HR admin, and benefit management Micro Small Medium Top Hosted Server Add-ons 48% 72% 37% 66% 23% 47% 14% 41% 3% 10% Security Server backup Control panel Development platform LAMP stack 2015 2018 4
Customer Experience 59% of SMBs have a positive opinion of their hosted service provider Areas for Improvement 1 2 3 32% 26% 17% Performance (speed, availability) Support experience Usability 4 5 17% 7% Security vulnerabilities Self-service administration How SMBs are Resolving Issues Exploring other options Escalating with their existing vendor Moving their service in-house Cancelling their service 43% 41% 11% 2% 5
Likelihood of Entering the Cloud Market 48% 31% Cloud adopters (Switching from in-house) Cloud leapers (New adoption) IaaS Opportunities through 2018 9% CAGR 487M 1.3B 706M 1.7B $1.4B USD $1.8B USD 2015 2018 The French IaaS market is expected to grow at a CAGR of 9.0% and reach 1.7B ($1.8B USD) by 2018. Although the market is maturing, growth will come from SMBs with in-house servers switching to hosted servers. Service providers offering migration tools will be able to benefit most from this trend. 6
WEB PRESENCE The French web presence market is valued at 577M ($644M USD). Since 2013, the number of SMBs with websites has grown from 62% to 68%. This is a result of the falling costs of web hosting and the explosion of user-friendly tools for website development and management. SMBs demand quality service and low prices, and they have several other needs that must be answered by service providers. One key need is to have a mobile optimized website, as only 44% of SMB websites are mobile optimized and those without this functionality are unable to connect with the large base of mobile customers. Another need is the requirement for site building tools. Fifty-five percent of SMBs currently use a third-party web designer but many would move to a quality website builder software if the price was right. Website Hosting Location 22% of websites are hosted in-house. Of those SMBs with in-house websites, 41% plan to add a third-party hosted website in three years. 78% of websites are hosted by a third party. 7
Buying a Website Key Factors in Choosing a Web Hoster 61% Price 37% 29% 28% 15% 9% Customer experience/ support Existing relationship Security Brand recognition Ability to scale resources Preferred Purchase Method 65% 50% 55% 27% 23% 31% 6% 22% 4% 2% 13% 0% Online Face-to-face (in office) Over-the-phone Other Micro Small Medium 88
Website Add-ons and Management Top Website Add-ons 20% 39% 20% 42% 18% 51% 17% 37% Content management Backup SEO SSL 16% 31% 12% 37% 9% 34% 7% 11% E-commerce capabilities Security and health monitoring Mobile optimization Site-building tools 2015 2018 Mobile-Optimized Websites 19% Only displays properly on a computer 37% Displays on mobile without optimization 44% Mobileoptimized 9
Customer Experience 84% of SMBs have a positive opinion of their web hoster Total Server Add-ons by Industry Areas for Improvement Performance (speed, availability) Support experience Usability Security vulnerabilities Self-service administration 30% 29% 28% 21% 15% How SMBs Are Resolving Issues Exploring alternative options Escalating with the vendor Moving in-house Cancelling the service 43% 43% 8% 2% 10
Web Presence Opportunities through 2018 Likelihood of Entering the Cloud Market 57% 52% Cloud converters (Switch from in-house) Cloud leapers (New adoption) 577M $646M USD 837M $933M USD 13% CAGR 2015 2018 Looking toward 2018, the French web presence market will continue its growth at a CAGR of 13% and reach 837M ($933M USD). This growth will be driven by SMBs who are developing a more complex website or using a hosted website for the first time. Service providers can capture both of these markets by offering low-cost entry-level hosting packages, as well as more premium offerings featuring indemand add-ons such as SEO, SSL, and e-commerce. 11
UNIFIED COMMUNICATIONS The unified communications market including hosted email, hosted business voice services, and collaboration applications is valued at 555M ($619M USD). Most SMBs view communication tools as critical components of their business and many have taken the leap to move these tools to the cloud. Forty-seven percent of SMBs use paid hosted email and 7% use hosted business voice services. Security and price are major concerns for SMBs switching to these services. As a result, service providers have the opportunity to compete on multiple fronts to win customers. Top-tier services, such as Office 365, can capture SMBs seeking a professional look and feel with enhanced capabilities, while second-tier solutions can capture price-oriented SMBs. Email Type of Business Email Hosted by a service provider Free service Hosted on an in-house server No email 47% 24% 20% 9% 12
Top Purchase Triggers for Premium Hosted Email 1 2 3 44% 16% 14% Security Archiving Shared calendar 4 5 13% 9% Outlook integration Calendar alerts/notifications 49% of premium hosted email is bundled with a website 51% of premium hosted email is purchased separately 75% of SMBs have a positive opinion of their hosted email provider Total Server Add-ons by Industry 13
Top Areas for Improvement of Premium Hosted Email Performance (speed, availability) Security vulnerabilities Support experience Usability Self-service administration 38% 32% 15% 10% 5% How SMBs are Resolving Issues 38% 37% 22% Exploring alternative options Escalating with the vendor Moving service in-house 14
Hosted Business Voice Services of SMBs do not have business voice services of SMBs have in-house business voice services of SMBs have hosted business voice services 55% 38% 7% Top Barriers to Hosted Business Voice Services 35% 34% 17% 11% Lack of knowledge about business voice services Price Security and privacy concerns Technical concerns Top Purchase Triggers for Hosted Business Voice Service 1 2 3 Significant growth to business Good price point Current system outdated 15
Collaboration Applications Communications Applications through 2018 18% 36% Web conferencing 31% 48% Instant collaboration 2% 19% Mobile device management 2015 2018 Likelihood of Entering the Cloud Market 38% 33% 32% 55% Cloud leapers (New adoption) Cloud converters (Switch from in-house) Email Hosted PBX 487M 555M $619M USD 911M $1,015M USD 18% CAGR 2015 2018 Over the next three years, the unified communications market will experience steady growth at a CAGR of 18%. Although the current sub-market for collaboration applications is small, it will drive this growth as SMBs add mobile device management and web conferencing applications. Other growth in this market will come from SMBs that move their email and business voice services to the cloud. 16
BUSINESS APPLICATIONS Business applications are becoming more common and useful to SMBs due to their low initial costs and ability to scale. In 2013, the market was valued at 422M ($462M USD), and it has now reached 613M ($683 USD). As SMB-specific applications are developed, service providers have the opportunity to meet the needs of SMBs with quality applications. Top applications include file sharing, online backup, and online accounting. Business Application Research Methods Trusted advisor Web searching for key words Tech industry news Existing service provider Local IT resource 36% 35% 18% 10% 6% Most Important Factors in Choosing Business Applications 1 2 3 4 35% 27% 21% 12% Business need Price Features and capabilities Customer experience 17
Purchasing Trial Software 31% Purchased without a free trial 69% Purchased with a free trial Bundling With bundle Without bundle 26% 74% Bundled with 1 Broadband provider 2 3 With bundle Website With bundle Hosted server 18
Top Business Applications through 2018 40% 55% 31% 49% 13% 30% 14% 25% 11% 24% File sharing Online back-up and storage Online accounting Support and help desk Payroll and HR 9% VDI 24% 10% 23% Online CRM 2015 2018 25% CAGR 613M $683M USD 1,206M $1,345M USD 2015 2018 The business applications market is the fastest growing market in France. With an annual growth rate of 25%, it will reach 1,206M ($1,345M USD) by 2018. SMBs utilize both online and local resources to research their applications, and service providers should market through both of these channels. Overall, there is a strong opportunity in this market as SMBs move toward greater adoption of hosted business applications. 19
Overall Cloud Services Opportunity through 2018 1,658 9% CAGR 1,206 837 911 25% CAGR 13% CAGR 18% CAGR 1,279 577 555 613 IaaS Web presence Unified communications Business applications 2015 2018 20
4.6B ($5.1B USD) 2018 3B ($3.4B USD) 2015 15% CAGR France s cloud market will grow from 3B ($3.4B USD) to 4.6B ($5.1B USD) over the next three years at a CAGR of 15%. Business applications will grow at the fastest rate, while IaaS will remain the largest overall category. Service providers who offer competitively priced and well-featured cloud products will be wellpositioned to capture new business as the cloud service industry moves past early adopters and into the majority. 21
Learn More Odin is committed to helping our partners understand the best opportunities in the SMB cloud market. This report covers only a portion of the extensive data included in Odin SMB Cloud Insights research. Please contact SMB@odin.com with any further questions. About Odin Odin provides software that powers the cloud ecosystem, from small and local hosters to some of the world s largest telecommunications providers. By partnering with Odin, service providers gain access to industry expertise, a catalog of the most in-demand cloud applications, and the most comprehensive selection of software, including web server management, server virtualization, provisioning, and billing automation. With offices in 15 countries, Odin supports more than 10,000 service providers in delivering applications and cloud services to more than 10 million SMBs. For more information, visit www.odin.com, follow us on Twitter, or like us on Facebook. 2016 Ingram Micro Inc. All rights reserved. Odin and the Odin logo are trademarks of Ingram Micro Inc. No part of this publication may be reproduced, photocopied, stored on a retrieval system, or transmitted without the express written consent of Odin. 22
GLOBAL HEADQUARTERS 500 SW 39th Street, Suite 200 Renton, WA 98057 USA main: +1 425 282 6400 HostingSales@odin.com EMEA Willy-Brandt-Platz 3 81829 Munich Germany main: +49 89 450 80 86-0 HostingSales.eu@odin.com APAC 3 Anson Road, #36-01 Springleaf Tower 079909 Singapore main: +65 6645 3290 HostingSales.apac@odin.com For more office locations odin.com/contact