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The Quantification of South Africa
SME Cloud Market

Profit from the cloud

Alex Fine
Sales Director Sub-Saharan Africa

TM
Introduction to Parallels
• Global software company headquartered in
Renton, WA, United States
• African HQ in Johannesburg, South Africa
• 12 years of experience in the Cloud & Hosting
space

• 900+ people
• Close strategic partnerships with IBM, Cisco and
Microsoft
• Certified for ISO 9001 and 27001
• Parallels helps service providers to grow and
profit from the cloud with
•
•

Deep industry expertise

•

Profit from the
Cloud™

Software
and our open partner ecosystem

SOFTWARE

2

Profit from the cloud

TM
Parallels in the Telco and Cloud/Hosting market

3

Profit from the cloud

TM
Parallels Automation Customers’ Online Stores

4

Profit from the cloud

TM
The cloud services market in South Africa
has grown to $165M USD in 2013
South African SME Cloud Services Market in
$Millions (2013)

2013

R 2.0
$165M USD
R 1.6
R 1.2
R 0.8

R 0.4

$72M USD
$40M USD

$34M USD
$19M USD

R 0.0
Infrastructure as a Web Presence
Hosted
service (IaaS)
and Web
Communication &
Applications
Collaboration

5

Business
Applications

Total

Profit from the cloud

TM
SME Hosted Service Penetration Rates
SME Cloud service penetration rates (South Africa,
2013)

2013

30%

27%

85% of
these are 3rd
party hosted

25%

20%

20%

16%
15%

10%

8%

7%

5%

1%
0%
Hosted
Infrastructure

Website

Hosted Email

6

Paid Hosted
Email

Hosted PBX

Business
Applications

Profit from the cloud

TM
South African Cloud market for SME expected to
reach $189 USD by 2016
$189M USD

$156M USD

34%
42%
10%

21%

2013

2016

Business Applications
Hosted Communication & Collaboration
Web Presence and Web Applications
Infrastructure as a service (IaaS)
7

Profit from the cloud

TM
South Africa: Hosted Infrastructure

Profit from the cloud

TM
Price by far the primary reason to keep servers
in-house; in-house specific apps also important
to medium businesses
60%

SME reasons to keep servers in-house (South Africa, 2013)

50%
Micro

Small

Medium

40%
30%
20%
10%
0%
Price

Security or
privacy
concerns

Bandwidth /
connectivity
issues

Specific
Specific
Not
application(s) application(s) recommended
not supported needs to be inby my IT
by any provider house / other
personnel /
tech. concerns
consultant

Note: Only including the 17% of SMEs with a server in-house
Source: Parallels SME Cloud Insights (South Africa, 2013)

9

Profit from the cloud

TM
Webserver, CMS, and Ecommerce systems are
top use of hosted servers with database
applications also widely used
Application penetration on hosted servers (South Africa, 2013)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

Micro

Small

Medium

Note: Only including the 25% of SMEs with a hosted server
Source: Parallels SME Cloud Insights (South Africa, 2013)

10

Profit from the cloud

TM
Server backup and security poised for most growth
among all SMEs in the coming years
SME plans to purchase add-on applications (South Africa,
2013)

45%
40%

35%
30%
25%
20%
15%
10%
5%
0%
Server backup

Security

Database
add-ons
Micro

Small

LAMP stack

Control panel

Development
platform

Medium

Source: Parallels SME Cloud Insights (South Africa, 2013)

11

Profit from the cloud

TM
South Africa: Web Hosting

Profit from the cloud

TM
20% of SMEs have website; 85% of these are 3rd
party hosted
Website use among South African SMEs,
2013
30%

7%
25%
6%

All SMEs
3rd-party
hosted
website

3%

17%

Self-hosted
website

3%

No website

20%

80%

15%
10%

17%

23%

20%

5%
0%
Micro

Small

Third-party hosted

Medium
Self-hosted

Source: Parallels SME Cloud Insights (South African, 2013)

13

Profit from the cloud

TM
Overall, strong growth potential for web apps;
SEO and security have highest demand in
coming years
40%
35%

SME plans to purchase web applications (South Africa, 2013)

30%
25%
20%
15%
10%
5%
0%
Search
Security and
Mobile
engine
health
optimization
optimization monitoring

SSL
Content
E-commerce
certificates management capabilities

Micro

Small

Backup

Content
delivery
network CDN

Site building
tools

Medium

Source: Parallels SME Cloud Insights (South Africa, 2013)

15

Profit from the cloud

TM
South Africa: Hosted Email, Office
phone and voice

Profit from the cloud

TM
Hosted email and ISV/free email highest use; 66%
of SMEs have yet to get email
SMEs with Email Accounts (South Africa, 2013)
All SMEs

100%

ISP or Hosted
Service Provider

66%

66%

2%

Free email
provider

16%

No email

66%

66%

50%

2%
16%

6%
9%

16%

20%

19%

Micro

25%

16%

In-house
server

75%

Small

Medium

Free email provider

In-house server

13%
2%

0%

Hosted service provider

No Email

Source: Parallels SME Cloud Insights (South Africa, 2013)

17

Profit from the cloud

TM
PLANS: 40% SME’s consider purchasing hosted
emails
SME plans to purchase hosted email
80%
70%
60%
50%

43%

40%

30%

34%

40%

20%
10%

24%

17%

11%

0%
Micro

Small

Yes

Medium

Maybe

Source: Parallels SME Cloud Insights (South Africa, 2013)

18

Profit from the cloud

TM
SME hosted PBX use is very small; most SMEs
use land lines or mobile phones only
PBX Use (South Africa, 2013)

100%

3%

0%
2%

1%
3%

90%
80%

18%
30%

36%

No phone
lines

50%
73%

50%

20%
16%
1%

2%

8%

Micro

0%

Regular
phone lines

49%
17%

Hosted /
Virtual PBX

1%

58%

30%

10%

30%

In-house PBX

60%

3%

Mobile phone
lines only

70%

40%

All SMEs

Small

Medium

Hosted PBX
Regular phone lines
No phone lines

In-house PBX
Mobile phone lines only

Source: Parallels SME Cloud Insights (South Africa, 2013)

19

Profit from the cloud

TM
Price is main concern for switching to hosted
PBX, & many SMEs have already paid for inhouse PBX
SME reasons against switching to hosted PBX (South Africa, 2013)
60%
50%
40%

30%
20%
10%
0%
Price

Already paid
for an inhouse PBX

Technical
concerns

Micro

Security and Do not know Learning a
Not
We are
privacy
about
new product / recommended planning to
concerns
hosted/virtual complexity
by my IT
switch
PBX
personnel /
consultant

Small

Medium

Source: Parallels SME Cloud Insights (South Africa, 2013)

20

Profit from the cloud

TM
South Africa: SaaS

Profit from the cloud

TM
Instant collaboration, file sharing, backup and
payroll/HR are most important overall
25%

SME application Use by size (South Africa, 2013)

20%

15%

10%

5%

0%
Instant
File sharing Online back- Payroll and
Online
collaboration
up and
HR
accounting
storage

Micro

Support /
Phone
Virtual
Web
Online CRM
Help desk conferencing desktop/VDI conferencing

Small

Medium

Source: Parallels SME Cloud Insights (South Africa, 2013)

22

Profit from the cloud

TM
SMEs indicate highest likelihood of adopting
online backup and storage and instant
collaboration tools in next 3 years
SME plans to purchase online applications (South Africa, 2013)
60%
50%
40%
40%

18%

30%
29%
26%

20%
10%

29%

27%

26%

23%

23%

25%

17%
12%

10%

9%

0%

8%

10%

9%

6%

Online backInstant
Online
File sharing
Phone
Payroll and
Virtual
Web
Support /
up and
collaboration accounting
conferencing
HR
desktop/VDI conferencing Help desk
storage

Yes

20%

6%
Online CRM

Maybe

Source: Parallels SME Cloud Insights (South Africa, 2013)

23

Profit from the cloud

TM
78% of SMEs show some preference to buying
apps in bundles; small and medium SMEs have
stronger preference for a single service provider
Purchase online applications as part
of a discounted package/bundle?

How important is it to you to buy cloud
services from 1 provider (scale 1-10)

10.0

100%

9.0

90%

8.0

80%

7.0

70%

7.0

6.0
5.0

7.1

60%

5.8

27%

30%

59%

61%

Small

Medium

33%

50%

4.0

40%

3.0

30%

2.0

20%

1.0

10%

-

0%
Micro

Small

46%

Micro

Medium

Yes

Maybe

Source: Parallels SME Cloud Insights (South Africa, 2013)

24

Profit from the cloud

TM
Thank you!
Alex Fine

fine@parallels.com

25

Profit from the cloud

TM

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The Quantification of South Africa SME Cloud Market

  • 1. This document is offered compliments of BSP Media Group. www.bspmediagroup.com All rights reserved.
  • 2. The Quantification of South Africa SME Cloud Market Profit from the cloud Alex Fine Sales Director Sub-Saharan Africa TM
  • 3. Introduction to Parallels • Global software company headquartered in Renton, WA, United States • African HQ in Johannesburg, South Africa • 12 years of experience in the Cloud & Hosting space • 900+ people • Close strategic partnerships with IBM, Cisco and Microsoft • Certified for ISO 9001 and 27001 • Parallels helps service providers to grow and profit from the cloud with • • Deep industry expertise • Profit from the Cloud™ Software and our open partner ecosystem SOFTWARE 2 Profit from the cloud TM
  • 4. Parallels in the Telco and Cloud/Hosting market 3 Profit from the cloud TM
  • 5. Parallels Automation Customers’ Online Stores 4 Profit from the cloud TM
  • 6. The cloud services market in South Africa has grown to $165M USD in 2013 South African SME Cloud Services Market in $Millions (2013) 2013 R 2.0 $165M USD R 1.6 R 1.2 R 0.8 R 0.4 $72M USD $40M USD $34M USD $19M USD R 0.0 Infrastructure as a Web Presence Hosted service (IaaS) and Web Communication & Applications Collaboration 5 Business Applications Total Profit from the cloud TM
  • 7. SME Hosted Service Penetration Rates SME Cloud service penetration rates (South Africa, 2013) 2013 30% 27% 85% of these are 3rd party hosted 25% 20% 20% 16% 15% 10% 8% 7% 5% 1% 0% Hosted Infrastructure Website Hosted Email 6 Paid Hosted Email Hosted PBX Business Applications Profit from the cloud TM
  • 8. South African Cloud market for SME expected to reach $189 USD by 2016 $189M USD $156M USD 34% 42% 10% 21% 2013 2016 Business Applications Hosted Communication & Collaboration Web Presence and Web Applications Infrastructure as a service (IaaS) 7 Profit from the cloud TM
  • 9. South Africa: Hosted Infrastructure Profit from the cloud TM
  • 10. Price by far the primary reason to keep servers in-house; in-house specific apps also important to medium businesses 60% SME reasons to keep servers in-house (South Africa, 2013) 50% Micro Small Medium 40% 30% 20% 10% 0% Price Security or privacy concerns Bandwidth / connectivity issues Specific Specific Not application(s) application(s) recommended not supported needs to be inby my IT by any provider house / other personnel / tech. concerns consultant Note: Only including the 17% of SMEs with a server in-house Source: Parallels SME Cloud Insights (South Africa, 2013) 9 Profit from the cloud TM
  • 11. Webserver, CMS, and Ecommerce systems are top use of hosted servers with database applications also widely used Application penetration on hosted servers (South Africa, 2013) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Micro Small Medium Note: Only including the 25% of SMEs with a hosted server Source: Parallels SME Cloud Insights (South Africa, 2013) 10 Profit from the cloud TM
  • 12. Server backup and security poised for most growth among all SMEs in the coming years SME plans to purchase add-on applications (South Africa, 2013) 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Server backup Security Database add-ons Micro Small LAMP stack Control panel Development platform Medium Source: Parallels SME Cloud Insights (South Africa, 2013) 11 Profit from the cloud TM
  • 13. South Africa: Web Hosting Profit from the cloud TM
  • 14. 20% of SMEs have website; 85% of these are 3rd party hosted Website use among South African SMEs, 2013 30% 7% 25% 6% All SMEs 3rd-party hosted website 3% 17% Self-hosted website 3% No website 20% 80% 15% 10% 17% 23% 20% 5% 0% Micro Small Third-party hosted Medium Self-hosted Source: Parallels SME Cloud Insights (South African, 2013) 13 Profit from the cloud TM
  • 15. Overall, strong growth potential for web apps; SEO and security have highest demand in coming years 40% 35% SME plans to purchase web applications (South Africa, 2013) 30% 25% 20% 15% 10% 5% 0% Search Security and Mobile engine health optimization optimization monitoring SSL Content E-commerce certificates management capabilities Micro Small Backup Content delivery network CDN Site building tools Medium Source: Parallels SME Cloud Insights (South Africa, 2013) 15 Profit from the cloud TM
  • 16. South Africa: Hosted Email, Office phone and voice Profit from the cloud TM
  • 17. Hosted email and ISV/free email highest use; 66% of SMEs have yet to get email SMEs with Email Accounts (South Africa, 2013) All SMEs 100% ISP or Hosted Service Provider 66% 66% 2% Free email provider 16% No email 66% 66% 50% 2% 16% 6% 9% 16% 20% 19% Micro 25% 16% In-house server 75% Small Medium Free email provider In-house server 13% 2% 0% Hosted service provider No Email Source: Parallels SME Cloud Insights (South Africa, 2013) 17 Profit from the cloud TM
  • 18. PLANS: 40% SME’s consider purchasing hosted emails SME plans to purchase hosted email 80% 70% 60% 50% 43% 40% 30% 34% 40% 20% 10% 24% 17% 11% 0% Micro Small Yes Medium Maybe Source: Parallels SME Cloud Insights (South Africa, 2013) 18 Profit from the cloud TM
  • 19. SME hosted PBX use is very small; most SMEs use land lines or mobile phones only PBX Use (South Africa, 2013) 100% 3% 0% 2% 1% 3% 90% 80% 18% 30% 36% No phone lines 50% 73% 50% 20% 16% 1% 2% 8% Micro 0% Regular phone lines 49% 17% Hosted / Virtual PBX 1% 58% 30% 10% 30% In-house PBX 60% 3% Mobile phone lines only 70% 40% All SMEs Small Medium Hosted PBX Regular phone lines No phone lines In-house PBX Mobile phone lines only Source: Parallels SME Cloud Insights (South Africa, 2013) 19 Profit from the cloud TM
  • 20. Price is main concern for switching to hosted PBX, & many SMEs have already paid for inhouse PBX SME reasons against switching to hosted PBX (South Africa, 2013) 60% 50% 40% 30% 20% 10% 0% Price Already paid for an inhouse PBX Technical concerns Micro Security and Do not know Learning a Not We are privacy about new product / recommended planning to concerns hosted/virtual complexity by my IT switch PBX personnel / consultant Small Medium Source: Parallels SME Cloud Insights (South Africa, 2013) 20 Profit from the cloud TM
  • 21. South Africa: SaaS Profit from the cloud TM
  • 22. Instant collaboration, file sharing, backup and payroll/HR are most important overall 25% SME application Use by size (South Africa, 2013) 20% 15% 10% 5% 0% Instant File sharing Online back- Payroll and Online collaboration up and HR accounting storage Micro Support / Phone Virtual Web Online CRM Help desk conferencing desktop/VDI conferencing Small Medium Source: Parallels SME Cloud Insights (South Africa, 2013) 22 Profit from the cloud TM
  • 23. SMEs indicate highest likelihood of adopting online backup and storage and instant collaboration tools in next 3 years SME plans to purchase online applications (South Africa, 2013) 60% 50% 40% 40% 18% 30% 29% 26% 20% 10% 29% 27% 26% 23% 23% 25% 17% 12% 10% 9% 0% 8% 10% 9% 6% Online backInstant Online File sharing Phone Payroll and Virtual Web Support / up and collaboration accounting conferencing HR desktop/VDI conferencing Help desk storage Yes 20% 6% Online CRM Maybe Source: Parallels SME Cloud Insights (South Africa, 2013) 23 Profit from the cloud TM
  • 24. 78% of SMEs show some preference to buying apps in bundles; small and medium SMEs have stronger preference for a single service provider Purchase online applications as part of a discounted package/bundle? How important is it to you to buy cloud services from 1 provider (scale 1-10) 10.0 100% 9.0 90% 8.0 80% 7.0 70% 7.0 6.0 5.0 7.1 60% 5.8 27% 30% 59% 61% Small Medium 33% 50% 4.0 40% 3.0 30% 2.0 20% 1.0 10% - 0% Micro Small 46% Micro Medium Yes Maybe Source: Parallels SME Cloud Insights (South Africa, 2013) 24 Profit from the cloud TM