CAPTURING THE SMB CLOUD OPPORTUNITY AND UNCOVERING SECRETS FOR PARTNER PROFITABILITY AMI-Partners 546 Fifth Avenue, New York New York, Houston, Singapore,

CAPTURING THE SMB CLOUD OPPORTUNITY AND

UNCOVERING SECRETS FOR PARTNER PROFITABILITY

AMI-Partners546 Fifth Avenue, New York

New York, Houston, Singapore, Bangalore, Kolkata, London, Tokyowww.ami-partners.com

http://www.ami-partners.com/

Source: AMI-Partners (www.ami-partners.com) 2014

AMI Background Capturing the SMB Cloud Opportunity Benchmarking Against Best-in-Class Cloud Partners Q&A

2

Agenda

Source: AMI-Partners (www.ami-partners.com) 2014 3

Actionable Global Market Intelligence, GTM Strategy & Implementation Support- 18+ Year History -

AMI Tracking Surveys Cover Countries Driving over 90% of WW SMB IT/Telecom Spending

(SB = 1-99 Employees, MB = 100-999 Employees)

SMB End User Tracking

Channel Partner Tracking

Global IT/Telecom Market Sizing

Actionable Market Segmentation Model & Predictive Analytics

Go-to-Market Consulting

Strong Global Presence Across Americas, Europe & APAC

AMI: Extensive Global Footprint


We must understand SMBs’ needs, mindsets, and challenges: Internal Constraints: Managing Cash flow, Talent/HR, Weak Economy External Environment: Pricing/Competitive Issues, Response Time, Savvier

Customers Key IT Purchase Drivers: Affordable, Simplicity, Productivity, High Performing,

Ensure Customer Loyalty Position our solutions and messaging to address SMBs’ needs and

challenges.

How Can We Capture the SMB Opportunity?

SMB = Companies with 1-999 employees


Concerned about economy

Conditions will improve

81%

23%

Economic Impact on Business

Slower receivables Decreased revenue Restricted cash flow Pricing pressure

49% 48%41%

27%

Business Pain Points

Improve customer experiences

Reduce costs

Expand into new mkts

Launch new products/services

Leverage more technology

51%

45%

27%

21%

17%

Actions Planned

5

U.S. SMB Perceptions & Pain Points


Small Business Medium Business

Improving bandwidth

On-premise data back-up & disaster recovery solutions

On-premise data security & privacy for PCs/network

Security for mobile devices

Data Loss Prevention (DLP) solutions

CRM (Customer Relationship Management)

Hosted data back-up & disaster recovery solutions

71%

59%

45%

40%

39%

37%

37%

ApplicationsConnectivity/

CommunicationsIT Infrastructure MobilitySource: AMI ICT Tracking Studies

6

Improving bandwidth

On-premise data back-up & disaster recovery solutions

Security for mobile devices

Server virtualization

On-premise data security & privacy for PCs/network

IT systems mgt tools

Data Loss Prevention (DLP) solutions

74%

74%

73%

72%

71%

68%

68%

SMB Strategic IT Imperatives and InvestmentsTechnology remains a strategic focal point for SMBs


2014 2019

$45 $82

$235

$277 On-Premise

Cloud(In $

Bill

ions

)

Migration to Cloud

$281 B $360 B

CAGR: 12.8%

CAGR: 3.3%

(% of Total)

7Source: AMI Global Model 1H14

US SMB ICT Transformation



8

2014 2019$ 0.0

$ 5.0

$ 10.0

$ 15.0

$ 20.0

$ 25.0

$ 30.0

$ 35.0

$ 40.0

$ 45.0

$5.6

$15.8$4.4

$10.9

$2.7

$5.9

$8.7

$10.1Web Hosting & Devel-opment

UC Services

Software-as-a-Service

IaaS

In $

Bill

ions

$21 B

$43 B

2014 2019$ 0.0

$ 2.0

$ 4.0

$ 6.0

$ 8.0

$ 10.0

$ 12.0

$ 14.0

$ 16.0

$ 18.0

$ 20.0

$1.6

$3.8$1.8

$4.5

$2.3

$4.2$5.5

$6.4

In $

Bill

ions

CAGR (%)

2.9%

13.3%

19.5%

18.4%

CAGR (%)

23.0%

16.8%

19.6%

23.0%

$11 B

$19 B

Source: AMI Global Model 1H14

US Cloud Spending


Small Business

12%

77%

11%


Medium Business

19%

74%

7%Increased need for support

Remained the same

Decreased need for support

9

Shift to Cloud Has Not Drastically Reduced the Need for Service and Support


$7 $735 $846

$5,383

$8,533$7,252

$10,769$11,950

$16

$868 $1,820

$10,900

$14,869 $14,941

$18,061

$20,806

20142019

10

Channel Partners and Hosters continue to be Cloud RTM-of-choice for SMBs through 2019


We have quantified the addressable opportunity and uncovered the challenges faced by SMBs.

How do we target and segment these end-users? Introducing AMIs SMB Segmentation Model…

Allows us to uncover who the key decision makers are and how we can connect with high value customers.

Targeting High Value Customers


Tier 1 SMBsCloud Integrators

Tier 2 SMBsCloud Innovators

Tier 3 SMBsCloud Pragmatists

Tier 4 SMBsCloud Minimalists

% PC SMB Firms 10% 20% 30% 40%

% of Cloud Spend 40% 30% 20% 10%

ICT Mindset Process Experimental Risk Averse Get by

View of Cloud Integral to growth & operations Enables agility Means to simplify Point Solutions

Decision Making StructuredMultiple BDM-TDMs

SystematicMainly BDMs, Some TDMs

AdaptiveBDMs

ReactiveOwner-Manager

Cloud Mindset & Purchase Process Implications

12

AMI’s WW SMB Segments: ICT/Cloud Needs, Adoption & Behavior Based Mindset, Decision Process & Cloud Implications – Identifies High Value Segments


Tier 1 Tier 2 Tier 3 Tier 4SaaS

Acctg/Financials

Payroll

HR

CRM

ERP

Proj Mgt.

Bus Intel/analytics

IaaSStorageServers

Security

UC

Audio Conf.

Video Conf.

Web Conf.

Hosted VoIP

IM

25%

48%

22%

37%

13%

25%

28%

39%34

% 56%

75%

48%

64%

24%

73%

21%

33%

3%

8%

1%

3%

2%

32%14

% 28%

43%

18%

23%

37%

59%

6%

7%

2%

1%

4%

13%

8%15%

18%

17%

12%

7%

57%

3%

9%

1%

1%

1%

5%

3%12%

26%

25%

17%

7%

34%

13

Cloud Applications/Services Usage – Tiers 1 and 2 are Principal Drivers


What steps are partners taking to drive success & profitability in the cloud and what metrics should we track to benchmark ourselves against them?

AMI has segmented and benchmarked partners based on how far they are along the cloud transformation journey.

How to Measure Yourself Against Best in Class Partners?


Cloud Partner Segmentation Cloud Transformed

Cloud Migrating

Cloud Emerging

Cloud Emerging – 27% Have not allocated adequate investments to cloud Lack expertise needed to effectively sell cloud

Cloud Migrating – 24% Have begun to take steps necessary to be

successful in selling cloud, but have not yet met their goals

Some cloud expertise, but require additional vendor support

Cloud Transformed – 13% Have taken steps necessary to successfully sell

cloud Meeting and exceeding their cloud sales goals

15

AMI’s Partner Transformation ModelOnly 1 in 10 partners are fully Cloud Transformed

Non-Cloud Partner– 37% Exclusively on-premise focused; no cloud

investments

Non-Cloud Partners


Cloud Partner Metrics

Sales Expertise

Technical Expertise

Cloud Revenue Model

Marketing Expertise

Vendor Engagement

Customer Engagement

Cloud Sales Goals

Cloud dedicated sales staff

Cloud marketing activities

Cloud certified emps

Cloud biz. modelsCustomer Sat.Customer demand

Cloud vendor partnerships

Marketing funds for cloud

Cloud Models Offered

% of revenue from cloud

Cloud Partner Benchmarking Metrics

16

Partner Benchmarking Approach & MetricsThere are several business areas that are key for partner transformation


Cloud Transformed Cloud Migrating Cloud Emerging

Average Changes in Revenue – Last Year vs. Next Year

Proportion of Sales from on-Premise vs. Cloud

18.2%21.5%

11.4%

27.6% 26.2%

10.2%Avg. Growth in Last Year

Avg. Growth in Next Year

42% 52%66%

58% 48%34%

Cloud-Based solutions and services

On-premise solutions and services

17

Firmographic Comparison of Cloud PartnersTransformed partners are generating significantly more revenue from cloud and growing faster


Steps Taken by Partners to Drive Success When Selling Cloud Solutions & Services

Have a dedicated cloud marketing team

Employees Have achieved Cloud certifications

Integrated cloud into primary sales & marketing motions

Specify sales goals for Cloud solutions/services

Installed a separate Cloud services business unit

Steps Taken by Most Successful Cloud Partners


Cloud Marketing programs

Cloud Sales reps training

Cloud Customer Support

44%

39%

38%

Cloud partnerships with vendors

Cloud Sales reps training

Cloud Technical expertise

39%

32%

32%

Cloud Sales reps train-ing

Cloud Customer Support

Cloud partnerships with vendors

45%

40%

36%

Cloud Transformed

Cloud Migrating Cloud Emerging

19

Critical Cloud Investments

Critical Investments Necessary to Drive Cloud SalesThe most successful cloud partners are focused on improving their cloud marketing programs to generate greater demand for cloud in order to accelerate cloud sales


Cloud Transformed

Cloud Migrating Cloud Emerging

Our customers are more satisfied 69% 49% 51%

Closer relationships with vendors for sales and marketing support 69% 53% 40%

We generate strong overall margins and profitability 64% 61% 44%

There is strong demand among our SMB customers for cloud 64% 53% 40%

We have well-defined cloud services value propositions and pricing 59% 48% 44%

20% of Respondents answering 4+5 on a scale from 1-5 where ‘1’ is Strongly Disagree and ‘5’ is Strongly Agree

Transformed Partners Are More SuccessfulTransformed partners have more satisfied customers, closer vendor relationships, and generate stronger profitability than other partners


Marketing Activity

Published Articles/Ads in IT or Business Magazines

Perform Marketing Activities On a Daily

Basis

20+% Marketing Budget Dedicated to

Cloud

Work with IT Vendors for Marketing

Has a Dedicated Cloud Sales & Marketing

Team

Hosting Online Webinars & Webcasts

Hosting On-site Events, Seminars,

Trade Shows

Using Social MediaEmail Campaigns

Online Marketing Tools

Direct Mail Campaigns

White Papers, Case Studies

Revenue Growth

Marketing Approach

21

AMI has developed a predictive model that correlates partner marketing activity with partner segments and cloud revenue generation


Online marketing tools

E-mail Campaigns

Hosting on-site events

Attending conferences or tradeshows

Online banners ads

Publishing Articles/Ads in IT mag.

White papers or data sheets


Hosting webinars or webcasts

Case studies

Using social media

52%

46%

45%

41%

41%

36%

35%

33%

33%

32%

26%

Online marketing tools

Online banners ads

E-mail Campaigns


Hosting on-site events

Case studies

Hosting online webinars or webcasts

White papers or data sheets

Publishing Articles/Ads in IT Mag.

Using social media

Attending conferences or tradeshows

65%

52%

50%

45%

45%

34%

31%

30%

29%

27%

27%

Daily Weekly

Monthly

Quarterly

Sales and Marketing Activities

Generate Strong Success

Frequency

Others

Sales and Marketing Activities Frequency

Transformed

22

Partners are overlooking potentially high impact marketing activities


Cloud Transformed Cloud Migrating Cloud Emerging

Direct/Face-to-face Via Field Salesforce 67% 49% 55%

Direct Through Telesales 56% 52% 50%

Indirect via other channel partners/resellers 36% 42% 44%

Indirect via App Stores/ Aggregators/Brokers 28% 37% 36%

Via our website 47% 50% 48%

% of Respondents answering 4+5 on a scale from 1-5 where ‘1’ is Not at all Effective and ‘5’ is Very Effective

Top Cloud Sales MethodsTransformed partners are self-reliant whereas other partners prefer indirect sales tactics


Cloud ConnexMaking Money Just Got Easier – Resell Private-Labeled, Cloud-Based Services

Extend

Customer Opps

NEW

Revenue Sources

Minimal

Investment

Increase

Profit Margins

NEW

Portfolio Products

Combine or Sell

Standalone


Cloud ConnexEasily and Affordably Resell and Deliver Your Own Branded Cloud Solutions


Cloud ConnexAvailable Services

Reseller

Customers

Q & A?

Documents

CAPTURING THE SMB CLOUD OPPORTUNITY AND UNCOVERING SECRETS FOR PARTNER PROFITABILITY AMI-Partners 546 Fifth Avenue, New York New York, Houston, Singapore,