Marketing to SMEs: trends, opportunities and challenges

Webinar

Marketing to SMEs: trends, opportunities and challenges 19 September 2012 Patrick Rusby and Steve Hilton

© Analysys Mason Limited 2012

Marketing to SMEs: trends, opportunities and challenges

Definitions Recommendations for vendors and operators Key SME business challenges Findings from our SME worldwide forecast About our SME Strategies research programme Conclusions Q&A

© Analysys Mason Limited 2012

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Marketing to SMEs: trends, opportunities and challenges

What is an SME? What is a SoHo?  SME – small and medium-sized enterprise (or small and medium-sized business)

Figure 1: SMEs and employees by SME size segment as a percentage of the total, worldwide, 2012 [Source: Analysys Mason, 2012]

 fewer than 250 employees

 95–99% of the businesses in every country  40–55% of the employees in every country  publicly tracked.

 SoHo – single office, home office  single-office enterprise (home-based or not)  people working from their homes where technology purchasing is not dictated by another enterprise  not publicly tracked. © Analysys Mason Limited 2012

90%

Share of total number of SMEs

 one or more office locations

100%

1.8% 8.7% 39%

80% 70% 60% 50% 89.5% 40%

34%

30% 20% 27%

10% 0% Enterprises Micro

Small

Employees Medium-sized

Marketing to SMEs: trends, opportunities and challenges

Today’s webinar is based on work we have done in our SME Strategies research programme Our objective: to help operators and vendors become award-winning marketers to SMEs and SoHos 1. Present strategic insights into SME/SoHo segments. 2. Share global, best-practice, go-to-market tactics. 3. Highlight innovative service and product offerings for SMEs/SoHos. 4. Assess the size of the SME/SoHo opportunity.

© Analysys Mason Limited 2012

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Marketing to SMEs: trends, opportunities and challenges

Recommendations for operators and vendors  Marketing to SMEs and SoHos requires careful attention to business rather than technology challenges.  Operators in developed markets should offer cloud services – starting with unified communications – to reduce the rate of decline in fixed-line revenue and supplement mobility services.  Operators in emerging markets must effectively segment SMEs and SoHos to capture burgeoning demand.  Vendors must develop unique SME and SoHo cloud solutions for sale to particular SME segments through several sales channels including operators.  Operators and vendors must offer different services to SMEs than to large enterprises, and consider different pricing structures.  Operators and vendors should consider using their indirect sales channels, and positioning themselves as trusted advisors to SMEs on their technology needs.

© Analysys Mason Limited 2012

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Marketing to SMEs: trends, opportunities and challenges

Our approach to SME/SoHo technology buying behaviour is based on business challenges 1. Business challenges that drive an SME or SoHo to consider a technology purchase 

grow and change



protect



simplify.

2. SME picks a trusted advisor – sales and support channel – for guidance. 3. Advisor recommends a delivery model. 4. Advisor recommends and SME chooses a technology solution to adopt.

© Analysys Mason Limited 2012

Figure 2: SME/SoHo technology decision-making framework [Source: Analysys Mason, 2012]

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Marketing to SMEs: trends, opportunities and challenges

Our worldwide SME ICT services forecast Figure 3: SME ICT services forecast categories [Source: Analysys Mason, 2012]

Regions

Services

Size segments

Channels to market

 16 services in five service segments – mobile voice and data, fixed voice, fixed broadband, video and cloud.

Figure 4: Services by service segment in SME ICT services forecast [Source: Analysys Mason, 2012] Mobile voice and data Mobile telephony

Fixed voice

PSTN

Fixed broadband Video services

ADSL

Cloud services

Pay TV

Mobile device management

Mobile messaging

ISDN

Dial-up

–

Cloud unified communications

Mobile handset content and data

VoIP/VoBB

Ethernet

–

Cloud desktop management

Mobile nonhandset broadband

–

Leased Line

–

Cloud storage and back-up

© Analysys Mason Limited 2012

 Eight regions – Caribbean and Latin America, Central and Eastern Europe, Developed Asia–Pacific, Emerging Asia–Pacific, Middle East and North Africa, North America, SubSaharan Africa and Western Europe.

 Three size segments – micro, small and medium.  Seven channels-to-market in two categories  direct includes direct sales, telephonebased sales, online sales, company-owned retail stores

 indirect includes agents/VARs, distributors, non-company owned retail stores.

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Marketing to SMEs: trends, opportunities and challenges

ICT services will become increasingly important to SMEs during the next 5 years

 SME ICT service revenue will increase at between 1.4% and 3.0% year-on-year worldwide.  The number of SMEs will increase by 0.6% worldwide.  Overall SME ICT service revenue will be USD203 billion in 2012 growing to USD226 billion by 2017.  Micro, small and medium-sized enterprises will account for 27%, 32% and 41% of total worldwide SME ICT service revenue in 2012. © Analysys Mason Limited 2012

250

5%

200

4%

150

3%

100

2%

50

1%

0

0% 2012 2013 2014 2015 2016 2017 Medium (50–249 employees) Small (10–49 employees) Micro (0–9 employees) Number of SMEs (growth rate) SME ICT revenue (growth rate)

Growth rate (year-on-year)

 SME ICT service revenue will increase at between 3 and 6 times the rate of increases in the number of SMEs worldwide.

Figure 5: SME ICT service revenue by size of SME, and growth rates for SME numbers and ICT service revenue, worldwide, 2012–2017 [Source: Analysys Mason, 2012]

Revenue (USD billion)

 ICT services will become relatively more important for SMEs in the next 5 years.

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Marketing to SMEs: trends, opportunities and challenges

Cloud-based services fill the operator’s revenue gap  Cloud services will become increasingly important for operators and vendors in the next 5 years.  In 2012, cloud services will account for 1.66% of total SME ICT service revenue worldwide.  By 2017, cloud services will account for 3.89% of total SME ICT service revenue worldwide.

 This growth in revenue from cloud services will replace some of the revenue loss from fixed voice and fixed broadband service.

© Analysys Mason Limited 2012

Figure 6: SME ICT service revenue by service segment, worldwide, 2017 [Source: Analysys Mason, 2012] Video Cloud services, services, 2.09% 3.89%

Fixed broadband, 16.97%

Fixed voice, 18%

Mobile voice and data, 59%

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Marketing to SMEs: trends, opportunities and challenges

SME ICT service revenue in emerging regions is growing faster than in developed regions

 In 2012, 31% of worldwide SME ICT service revenue will be from the emerging regions, increasing to 37% by 2017.  The relative ubiquity of mobility – both voice and data services – in emerging regions makes it the connectivity solution of choice for most SMEs.  However, limitations in mobile broadband speeds and increased reliance on online activities encourage SMEs to explore fixed broadband connectivity as it becomes available and more affordable.

Figure 7: SME ICT services revenues by region, emerging and developed regions, 2012-2017 [Source: Analysys Mason, 2012]

100% 90%

80% Share of total revenue

 Growth of ICT services – particularly mobility and fixed broadband – is driving increases in revenue in emerging regions.

70% 60% 50% 40% 30% 20%

10% 0% 2012

2013

2014

Developed

© Analysys Mason Limited 2012

2015

Emerging

2016

2017

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Marketing to SMEs: trends, opportunities and challenges

Content streams included in Analysys Mason’s SME Strategies research programme Strategies

Tactics

Market sizing

Target segment

Drivers of decision making

Products and solutions

Key macroeconomic and technology trends

Pricing strategies Market messages, positioning and advertising Sales and support channels Partnerships

 Sizing in key countries or typical emerging and developed countries – communication services (fixed, mobile) and cloud services by size of SME/SoHo.  Four key business challenges for SMEs and SoHos.  Changes in global economies, supply chains, industry segment growth/decline, consumerisation, BYOD, etc.

© Analysys Mason Limited 2012

 Benefits of segmentation by size, industry sectors, buying behaviour, employee segments, etc.  New and innovative tactics for pricing, bundling, solution development, promotions, messages, etc.  Best practices for sales and support channels.  Operator and vendor partnerships – success.

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Marketing to SMEs: trends, opportunities and challenges

Publication schedule for the SME Strategies research programme Figure 8: Proposed 12-month publication schedule [Source: Analysys Mason, 2012] Topic / title

Type of publication

Month

A look at the three SME business drivers: how SMEs make technology purchase decisions

Viewpoint

June 2012

Deutsche Telekom launches a public cloud marketplace for SMEs

Viewpoint

July 2012

SME ICT services worldwide forecast, part 1: 2012-2017

Report

September 2012

A BYOD framework: helping IT departments make BYOD a reality

Comment

September 2012

Mobile device management for SMEs

Viewpoint

September 2012

Cloud UC for SMEs: show me the money

Viewpoint

October 2012

Sales channels today and tomorrow

Viewpoint

October 2012

SME ICT services worldwide forecast, part 2: 2012-2017

Report

December 2012

Examples of SMEs in action today

Viewpoint/Comment

December 2012

Competition in the SP market – telecoms vs. cable TV operators

Viewpoint

January 2013

Bundling, pricing and other churn reduction strategies

Viewpoint

February 2013

Mobile cloud offerings for SMEs: case study

Viewpoint

March 2013

Home-based businesses: approaches by operators

Viewpoint/Comment

May 2013

© Analysys Mason Limited 2012

 Additional Comments as needed  Topics are open to guidance from clients of the SME Strategies programme

Marketing to SMEs: trends, opportunities and challenges

Conclusions  Business challenges, not technology challenges, drive SMEs to purchase technology.  Cloud services fill the revenue gap left by declining fixed revenue.

 Segmentation is key.  Vendors need to offer cloud services through multiple channels.

© Analysys Mason Limited 2012

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Marketing to SMEs: trends, opportunities and challenges

Q&A and thank you Patrick Rusby Research Analyst

[email protected] +44 7766 058 246

Steve Hilton Principal Analyst [email protected] +1.617.480.1474

© Analysys Mason Limited 2012

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