The Quantification of South Africa SME Cloud Market

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Profit from the cloud TM

Sales Director Sub-Saharan Africa

The Quantification of South Africa

SME Cloud Market

Alex Fine

2 Profit from the cloud TM TM

• 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

• Software

• Deep industry expertise

• and our open partner ecosystem

Introduction to Parallels

SOFTWARE

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Cloud™ Profit from the

Cloud™ Profit from the

Cloud™

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Cloud™

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Cloud™

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Cloud™

SOFTWARE

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Cloud™

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Cloud™

Profit from the

Cloud™

3 Profit from the cloud TM TM

Parallels in the Telco and Cloud/Hosting market

4 Profit from the cloud TM TM

Parallels Automation Customers’ Online Stores

5 Profit from the cloud TM TM

The cloud services market in South Africa

has grown to $165M USD in 2013

$72M USD

$40M USD

$19M USD $34M USD

$165M USD

R 0.0

R 0.4

R 0.8

R 1.2

R 1.6

R 2.0

Infrastructure as aservice (IaaS)

Web Presenceand Web

Applications

HostedCommunication &

Collaboration

BusinessApplications

Total

South African SME Cloud Services Market in $Millions (2013) 2013

6 Profit from the cloud TM TM

SME Hosted Service Penetration Rates

8%

20%

16%

7%

1%

27%

0%

5%

10%

15%

20%

25%

30%

HostedInfrastructure

Website Hosted Email Paid HostedEmail

Hosted PBX BusinessApplications

SME Cloud service penetration rates (South Africa, 2013)

2013

85% of

these are 3rd

party hosted

7 Profit from the cloud TM TM

South African Cloud market for SME expected to

reach $189 USD by 2016

2013 2016

Business ApplicationsHosted Communication & CollaborationWeb Presence and Web ApplicationsInfrastructure as a service (IaaS)

42%

10%

21%

$156M USD

$189M USD

34%

Profit from the cloud TM

South Africa: Hosted Infrastructure

9 Profit from the cloud TM TM

0%

10%

20%

30%

40%

50%

60%

Price Security orprivacy

concerns

Bandwidth /connectivity

issues

Specificapplication(s)not supported

by any provider

Specificapplication(s)

needs to be in-house / other

tech. concerns

Notrecommended

by my ITpersonnel /consultant

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

Micro Small Medium

Price by far the primary reason to keep servers

in-house; in-house specific apps also important

to medium businesses

Note: Only including the 17% of SMEs with a server in-house

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

10 Profit from the cloud TM TM

0%10%20%30%40%50%60%70%80%90%

Application penetration on hosted servers (South Africa, 2013)

Micro Small Medium

Webserver, CMS, and Ecommerce systems are

top use of hosted servers with database

applications also widely used

Note: Only including the 25% of SMEs with a hosted server

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

11 Profit from the cloud TM TM

Server backup and security poised for most growth

among all SMEs in the coming years

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Server backup Security Databaseadd-ons

LAMP stack Control panel Developmentplatform

SME plans to purchase add-on applications (South Africa, 2013)

Micro Small Medium

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

Profit from the cloud TM

South Africa: Web Hosting

13 Profit from the cloud TM TM

20% of SMEs have website; 85% of these are 3rd

party hosted

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

All SMEs

3rd-party

hosted

website 17%

Self-hosted

website 3%

No website 80%

17% 20%

23%

3%

6%

7%

0%

5%

10%

15%

20%

25%

30%

Micro Small Medium

Website use among South African SMEs, 2013

Third-party hosted Self-hosted

15 Profit from the cloud TM TM

0%

5%

10%

15%

20%

25%

30%

35%

40%

Searchengine

optimization

Security andhealth

monitoring

Mobileoptimization

SSLcertificates

Contentmanagement

E-commercecapabilities

Backup Contentdelivery

network -CDN

Site buildingtools

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

Micro Small Medium

Overall, strong growth potential for web apps;

SEO and security have highest demand in

coming years

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

Profit from the cloud TM

South Africa: Hosted Email, Office

phone and voice

17 Profit from the cloud TM TM

16% 20% 19%

16% 9% 2%

2% 6% 13%

66% 66% 66%

0%

25%

50%

75%

100%

Micro Small Medium

SMEs with Email Accounts (South Africa, 2013)

Hosted service provider Free email provider In-house server No Email

Hosted email and ISV/free email highest use; 66%

of SMEs have yet to get email

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

All SMEs

ISP or Hosted

Service Provider 16%

In-house

server 2%

Free email

provider 16%

No email 66%

18 Profit from the cloud TM TM

PLANS: 40% SME’s consider purchasing hosted

emails

17% 24%

11%

34%

43%

40%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Micro Small Medium

SME plans to purchase hosted email

Yes Maybe

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

19 Profit from the cloud TM TM

1% 2% 8%

16%

58%

73% 50%

36%

18%

30%

3% 2% 3% 1% 0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Micro Small Medium

PBX Use (South Africa, 2013)

Hosted PBX In-house PBX

Regular phone lines Mobile phone lines only

No phone lines

SME hosted PBX use is very small; most SMEs

use land lines or mobile phones only

All SMEs

No phone

lines 3%

Mobile phone

lines only 30%

Regular

phone lines 49%

In-house PBX 17%

Hosted /

Virtual PBX 1%

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

20 Profit from the cloud TM TM

Price is main concern for switching to hosted

PBX, & many SMEs have already paid for in-

house PBX

0%

10%

20%

30%

40%

50%

60%

Price Already paidfor an in-

house PBX

Technicalconcerns

Security andprivacy

concerns

Do not knowabout

hosted/virtualPBX

Learning anew product /

complexity

Notrecommended

by my ITpersonnel /consultant

We areplanning to

switch

SME reasons against switching to hosted PBX (South Africa, 2013)

Micro Small Medium

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

Profit from the cloud TM

South Africa: SaaS

22 Profit from the cloud TM TM

0%

5%

10%

15%

20%

25%

Instantcollaboration

File sharing Online back-up andstorage

Payroll andHR

Onlineaccounting

Support /Help desk

Phoneconferencing

Virtualdesktop/VDI

Webconferencing

Online CRM

SME application Use by size (South Africa, 2013)

Micro Small Medium

Instant collaboration, file sharing, backup and

payroll/HR are most important overall

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

23 Profit from the cloud TM TM

SMEs indicate highest likelihood of adopting

online backup and storage and instant

collaboration tools in next 3 years

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

17%

26%

12% 9% 10%

8% 10% 9%

6% 6%

40% 18%

29% 29% 27%

26% 23% 23% 25%

20%

0%

10%

20%

30%

40%

50%

60%

Online back-up andstorage

Instantcollaboration

Onlineaccounting

File sharing Phoneconferencing

Payroll andHR

Virtualdesktop/VDI

Webconferencing

Support /Help desk

Online CRM

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

Yes Maybe

24 Profit from the cloud TM TM

78% of SMEs show some preference to buying

apps in bundles; small and medium SMEs have

stronger preference for a single service provider

46% 59% 61%

33%

27% 30%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Micro Small Medium

Purchase online applications as part of a discounted package/bundle?

Yes Maybe

5.8

7.0 7.1

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Micro Small Medium

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

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

25 Profit from the cloud TM TM

Thank you!

Alex Fine

fine@parallels.com