2015
SMB Cloud Insights
TM
ITALY
DEFINITIONS
SMB Defined
We define SMBs—also known as small and medium enterprises (SMEs)—as companies
with one to 250 employees. There are around 3.7 million SMBs in Italy 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” 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.
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), fully managed hosting, as well as add-on
applications and services for hosted infrastructure such as control panels,
development platforms, LAMP stack, security, and server backup.
Web presence and web applications: Third-party web hosting,
domain registration, and web applications including web server backup,
content delivery networks (CDN), content management systems (CMS),
Ecommerce, site health monitoring, mobile optimization tools, search
engine optimization (SEO), site-building tools, SSL, web server backup, and
web server security.
Unified communications: Business-class email services including email
security, and email archiving, along with mobility and hosted business voice
services such as hosted PBX. Includes communication and collaboration
applications such as web and phone conferencing, instant collaboration,
and mobile device management (MDM).
Business applications (also known as software-as-a-service or
SaaS): The major types of software applications that can be accessed
online such as file sharing, online accounting, online backup and storage,
online customer relationship management (CRM), payroll and human
resources (HR), support and help desk, and virtual desktop (VDI).
c
The Overall Italy SMB Cloud Services
Market
€2.8B
($3.5B USD)
2015
Odin SMB Cloud Insights has entered its fifth year of research into
the consumption of cloud services by small and medium businesses
(SMBs). Globally and locally, we are finding that SMBs from a variety
of sectors are moving their 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 outlined in this
report in order to meet the evolving needs of their SMB customers.
2015 marks the first year Odin research is examining the cloud
services space in Italy. Odin sizes the 2015 overall Italian SMB cloud
market at €2.8B ($3.5B USD). Infrastructure-as-a-service (IaaS) is
the largest category of the market valued at €1.1B ($1.3B USD).
Web presence adds €595M ($750M USD), unified communications
makes up €430M ($542M USD), and business applications (often
called software-as-a- service or SaaS), accounts for €682M ($858M
USD) of the Italian cloud services market. This report analyzes each
of these categories, examines the trends of how SMBs are using
these services, and details how service providers can leverage this
information.
1
INFRASTRUCTURE-AS-A-SERVICE (IaaS)
IaaS Accounts for 38% of the Cloud Services
Market in 2014
16%
Unified
communications
38%
21%
€430M
($542M
USD)
25%
IaaS
Web
presence
Business
applications
€1.1B
($1.3B USD)
€595M
($750M USD)
€682M
($858M USD)
€2.8B ($3.5B USD)
The Italian IaaS market was €1.1B ($1.3B USD) in 2015. Across
markets with similar Internet penetration levels, IaaS has shown
steady, single-digit growth over the past few years. However, this
year we’re seeing some factors which are expected to create future
growth in this market. One trend is that SMBs have entered the cloud
server space. Currently, cloud servers comprise 19% of the Italian
IaaS market at €202M ($256M USD), and SMBs indicate that they
are interested in moving to more cloud servers in the coming years.
Additionally, use of fully managed servers is increasing among SMBs.
Server Usage
60%
50%
40%
30%
20%
10%
0
Micro
% of firms with
in-house servers
2
Small
Medium
% of firms with
hosted servers
SMB usage of hosted servers is popular in Italy, but varies across firm
size. Micro businesses are proportionally the lowest consumers of
hosted servers and prefer in-house servers. In contrast, small firms
use more hosted servers than in-house servers. As a firm’s size grows
past 100 employees, both in-house and hosted servers are frequently
represented. Many firms still rely on in-house servers due to the
barriers to hosted infrastructure, which we will explore in greater detail
below.
Concerns About Hosted Servers
41% 40% 13% 9%
Price
Security /
privacy
Needs to be Bandwidth
in-house
9% 8%
Unsupported
Not
apps
recommended
by IT
Top Workloads for Hosted Infrastructure
1
48%
Web server
2
40%
Database
applications
3
37%
Accounting /
financials
3
SMBs Are Willing to Pay More for High
Availability and Unlimited Storage
High availability
Unlimited storage
61%
Would pay up to
€5/month more
67%
39%
Would pay up to
€10/month more
45%
Top Hosted Server Add-Ons
2015
2018
Security
Server
Backup
Control
Panel
Server
Backup
Security
Control
Panel
Moving from servers to server add-ons, our research shows that 80% of
Italian SMBs purchase at least one add-on for their hosted servers. The
most popular add-ons are security and anti-virus, server backup, and
control panels. Looking forward, we expect these add-ons to remain
popular, and we see growing demand across virtually all add-ons.
SMB Usage of Managed Servers
56%
of SMBs with
self- managed servers
want to upgrade to fully
managed within three
years
42%
of SMBs with hosted
servers reported using
fully managed servers
30%
of SMBs without hosted
servers are considering
migrating to fully
managed servers within
three years
SMBs are starting to rely more heavily on fully managed servers to
run their businesses. 58% of SMBs with hosted servers manage
their servers in-house with their own IT personnel, and 56% of these
businesses are considering migrating to fully managed servers within
the next three years. Managed services offer an opportunity for
service providers to increase revenue while enabling SMBs to focus
on their own business.
4
IaaS Opportunity through 2018
42%
Cloud leapers
(New adoption)
59%
Cloud converters
(Switch from in-house)
31%
Cloud expanders
(Increase spending)
17%
CAGR
€1.1B
€1.7B
($1.3B USD) ($2.2B USD)
2015
2018
IaaS comprises the largest share of the Italian SMB cloud service
market and will continue to do so in the coming years. By 2018,
the IaaS market will grow to €1.7B ($2.2B USD) at a CAGR of 17%.
Service providers in this sector will be best positioned by offering
managed and high-touch services to SMBs. Additionally, addressing
the unique migration challenges SMBs face while moving from inhouse to hosted servers will allow service providers to take advantage
of the significant growth coming from cloud converters.
5
WEB PRESENCE
Web Presence Accounts for 21% of the Cloud
Services Market in 2015
16%
Unified
communications
38%
21%
€430M
($542M
USD)
25%
IaaS
Web
presence
Business
applications
€1.1B
($1.3B USD)
€595M
($750M USD)
€682M
($858M USD)
€2.8B ($3.5B USD)
The Italian Web Presence market has an estimated value of €595M
($750M USD). Italy is still a maturing market, and only 42% of SMBs
have websites. Among SMBs with a website, 79% are hosted by
a third-party. The market will see growth as more SMBs come
online with hosted websites. Managed options are also growing
in popularity, along with website add-ons such as e-commerce
capabilities and search engine optimization.
Website Fundamentals
The SMB’s path to successful web presence, from website design to
regular management, presents a significant opportunity for service
providers. Website design is split relatively evenly between in-house
development and third-party designers. Once an SMB’s website is
developed, it is roughly four times as likely to use a third-party hoster or
service provider to host its website compared to doing it themselves.
From the service provider’s perspective, shared hosting is highly a
competitive and commoditized industry, meaning that higher margins
will come from offering high-touch solutions and appropriate add-ons to
SMBs.
While 68% of SMBs’ websites are managed in-house, 47% are
considering moving to a third-party managed website within three
years. By integrating website design, hosting, application add-ons,
and management into a single service for SMBs, service providers can
offer SMBs a strong value proposition while building a stickier revenue
stream.
6
Website Design
58%
Third-party
web designer
Third-party
hosted
42%
In-house
Self
21% hosted
79%
Website
Hosting
Top Website Applications
1
Website Management
2
68%
SEO
Backup
4
3
Security
20%
E-commerce
In-house
Web
designer
agency
6% 6%
Web
hoster
Family /
friend
Website Add-On Purchase Location
50%
22%
18%
Other
thirdparty
Purchased from
web hoster at time
of website purchase
Purchased from
web hoster after
purchasing website
Purchased directly
from application
developer
47%
of SMBs are considering
moving to a fully
managed website
10%
7
Top Social Media Use in 2015
44%
25%
Facebook
20%
LinkedIn
Local Directories
Web Presence Opportunity through 2018:
77%
of SMBs with self-hosted websites
are considering converting
to third-party web hosting
Web Presence
24%
CAGR
€595M
€487M
($750M USD)
€1.1B
€706M
($1.4B USD)
2015
2018
With a projected 24% CAGR, web presence will have one of the
fastest growth rates among all categories within the Italian SMB cloud
services market. Despite the competitive marketplace in basic web
hosting, service providers who can offer SMBs a comprehensive
solution including website design, hosting, applications, and
management will find success. Opportunities lie in SMBs looking
to upgrade and improve their websites and SMBs who host their
websites in-house.
8
UNIFIED COMMUNICATIONS
Unified Communications Accounts for 16%
of the Cloud Services Market in 2015
16%
Unified
communications
38%
21%
€430M
($542M
USD)
25%
IaaS
Web
presence
Business
applications
€1.1B
($1.3B USD)
€595M
($750M USD)
€682M
($858M USD)
€2.8B ($3.5B USD)
Unified communications – hosted business voice services (PBX),
hosted email, and communication applications – contribute
significantly to the success of Italian SMBs. At an estimated market
value of €430M ($542M USD), it is clear that many SMBs are willing to
pay for premium communication tools.
Communication Devices Used by Italian SMBs
61%
61%
Smartphone
Landline
37% 19%
Tablet
IP phone
16%
Softphone
9
Top Barriers to Hosted PBX Adoption
33%
23%
Price
17%
Unaware of PBX
16%
Security
Technical
What Are the Major Purchase Triggers for
Hosted PBX?*
17%
25%
New office
locations
28%
Major change
to business
34%
Business
growth
Good price
point
Price and supporting a growing business are the most important variables for
Italian SMBs deciding to purchase hosted PBX. Service providers looking to
sell hosted PBX in this market should make sure that SMBs understand the
value proposition of hosted PBX. For example, below we can see that SMBs
that currently use hosted PBX report increases in productivity and customer
satisfaction.
SMB Sentiment About Features of Business
Voice Services
40%
30%
20%
10%
0
Instant
message
Increases customer
satisfaction
Mobile
devices
Auto
attendant
Increases productivity
*Some SMBs have multiple purchase triggers for hosted PBX
10
Auto call
distribution
Both
HOSTED EMAIL
Where is Your Email Hosted?
Business Email Location
34%
Hosted by a
service provider
25% 10%
Free
service
31%
In-house
server
Do not use
email
Advantages of paid Business Email Over a Free Service
70%
55%
41%
Security
Archiving
Calendar Alerts
Top Purchase Triggers:
Business Email Location
Top Purchase Triggers for Premium Hosted Email
1
2
Good
price
point
3
Increased
need for
security
Need
professional
look and feel
Note: some SMBs have multiple purchase triggers for paid business email
11
Almost 75% of Italian SMBs use email for their business but only
39% use professionally hosted email. Security is the highest priority
for SMBs who use paid hosted email, as well as for those SMBs
considering a switch. This means that service providers should focus
their marketing messages around security benefits.
Unified Communications Opportunity
Through 2018
4%
27%
9%
Mobile device
management
77%
Hosted PBX
Cloud leapers
(New adoption)
12
30%
Web conferencing
2015
26%
30%
55%
Instant
collaboration
2018
42% 73%
Hosted email
Cloud converters
(Switch from in-house)
Unified Communications
20%
CAGR
€430M
€747M
($542M USD)
($941M USD)
2015
2018
The unified communications market is projected to grow to €747M
($941M USD) by 2018 at a CAGR of 20%. Hosted business voice
services and email will each maintain steady growth into 2018, but
there will be dramatic growth in the communication applications
market – it will double in size over this time period. Service providers
can tap into all elements of this growth by educating SMBs on the
value of hosted communication tools and by providing competitively
priced and secure communication services.
13
BUSINESS APPLICATIONS
Business Applications Account for 25%
of the Cloud Services Market in 2015
16%
Unified
communications
38%
21%
€430M
($542M
USD)
25%
IaaS
Web
presence
Business
applications
€1.1B
($1.3B USD)
€595M
($750M USD)
€682M
($858M USD)
€2.8B ($3.5B USD)
The Italian business applications market reached an estimated €682M
($858M USD) in 2015. SMBs report significant current use of file
sharing and online backup applications and will continue to do so in
the coming years. Other applications, such as VDI and CRM, currently
have low usage rates but are poised to see strong adoption within the
next three years.
Current and Projected Usage of Top Business
Applications
32% 57% 21% 46% 10% 31% 13% 31% 15% 30% 10% 27%
File
sharing
Online
backup
Support /
help desk
Online
accounting
2015
14
Payroll
and HR
2018
VDI
5% 20%
Online
CRM
42%
32%
26%
Purchased after free trial expired
Purchased without a free trial
Purchased to access
more features
Business Application Opportunity in 2018
20%
14%
Average
new use
Average increase
in spending
Business Applications
25%
CAGR
€682M
($858M USD)
€1.3B
($1.7B USD)
2015
2018
The Italian business applications market will see impressive growth
over the next three years. By 2018, the market will almost double its
present size and reach €1.3B ($1.7B USD). Service providers that want
to take maximum advantage of this growth should offer specialized
bundles of applications and free trials.
15
BUYING CLOUD SERVICES
Number of Service Providers
70%
60%
50%
40%
30%
20%
10%
0%
1
2
3
4
5
6+
Number of Service Providers
Micro
Small
Medium
The vast majority of SMBs choose to use only one or possibly two
service providers, which stresses the importance of capturing an
SMB’s business at the initial transaction.
16
To Bundle or Not to Bundle?
of SMBs prefer to
purchase their cloud
services in a bundle
68%
Discounts on services is the
highest rated reason to purchase
cloud services in bundles
32%
of SMBs prefer to
purchase their cloud
services separately
Only paying for services used is the
highest rated reason to purchase
cloud services separately
This also points to the value of bundling additional services with the
core offering. For the SMB deciding between bundled and separately
purchased cloud services, stretching the value of each euro is the
highest priority. Bundles allow SMBs to take advantage of discounts
and save money. Yet, purchasing services separately allows SMBs
to avoid paying for services they don’t need and won’t use. Service
providers should maintain a portfolio of quality, best-of-breed brands
and maintain cost transparency with their customers.
How do SMBs Contact Their Service
Providers?
68%
54%
of SMBs use email to communicate with
their service provider
of SMBs use their phone
to communicate with their service provider
17
Total Market Opportunity
21%
CAGR
€2.8B
€4.9B
($3.5B USD) ($6.2B USD)
2015
2018
2015 and 2018 Italian Cloud Market
Estimations
17%
CAGR
25%
CAGR
24%
CAGR
20%
CAGR
€1,065M
€1,709M
IaaS
€595M
€1,137M
Web presence
2015
€430M
€747M
Unified
communications
€682M
€1,317M
Business
applications
2018
As SMBs find it advantageous to move business functions into the
cloud, the Italian SMB cloud service market is poised for strong
growth over the next three years. Growing at an overall 21% CAGR,
Odin estimates the total market will reach €4.9B ($6.2B USD) by 2018.
Each category of services offers many profitable avenues, and the
imperative is on service providers to keep up with the complex and
evolving demands of their SMB customers.
18
Learn More
Please contact [email protected] with any further questions.
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.
About Odin
Odin provides the software that powers the cloud ecosystem, from small
and local hosters to some of the world’s largest telecommunication
companies. 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 http://odin.com, follow us on
Twitter, or like us on Facebook.
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logo are registered trademarks of Parallels IP Holdings GmbH.
No part of this publication may be reproduced, photocopied, stored on
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Parallels.
19
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