Category Archives: SMB Cloud Insights

Japanese SMB Cloud Journey Accelerates in 2013

Accounting for more than 99 percent of all local enterprises, Japanese small and medium businesses (SMBs) account for a substantial share of Japan’s economic output. Traditionally, Japanese SMBs largely operated as suppliers for large enterprises as part of the keiretsu system of integrated supply chain groups. With some exceptions, SMBs tend to focus on the domestic market and export indirectly via the value chains of large multinational enterprises and general trading houses.

Get It Right The First Time: The Importance of Customer Onboarding

by Duncan Robinson, Cloud Market Strategist, Parallels



Increase revenue per user and reduce churn – two of the key business drivers for service providers moving into the cloud. Customers who already have a relationship with service providers are a key target for cross-selling cloud services for good reason. Research by Parallels SMB Cloud Insights ™ shows that SMB customers are highly likely to consider their existing supplier for cloud services and 68% of US small businesses have a strong preference to buy more services from a single supplier. All good news for traditional service providers entering the cloud services market. However, making the most of this opportunity relies on delivering a great end-to-end customer experience. 


A crucial (and often overlooked) part of this is customer onboarding. Customer onboarding is the process of setting up the customer’s service once they have completed their purchase. This is often done by phone appointment but can be done onsite (usually for an additional fee). This is a critical step as customers often don’t know how to set up and get the most from cloud services. Service providers need to take the lead in ensuring that customers have their services properly set up and help them to get the most out of them by providing advice on getting maximum business benefit.


To avoid churn, customers need to feel like they are getting value for their services. Imagine a scenario where a loyal, existing customer with 10 employees buys a new cloud service. None of the employees activate the service as they are unsure how to do it and eventually switch it off. This means the customer has been paying for something they have never used and are likely to feel pretty aggrieved at their service provider. Something meant to decrease churn could end up driving an increase!


The key to avoiding this is to build a high quality onboarding process into your end-to-end customer experience. We have seen great examples where service providers have implemented proper onboarding processes with impressive results. One such provider measures (on a weekly basis) customers who have been properly activated have a 90% lower churn rate than those who are inactive.


You can choose to do this in-house or outsource to a specialist partner. Either way it does require investment but will payback through lower churn, a reduction in ongoing calls to customer service and importantly higher customer satisfaction.


The message is clear: get it right the first time – invest upfront for happy customers and lower churn.


Learn more about Parallels Cloud Acceleration Services.




Cloud PBX Services Poised to Take Off

by John McMillan, Director, Partner Business Consulting, Parallels


SMBs make up 99% of businesses worldwide, and they are adopting cloud services. According to Parallels SMB Cloud Insights™ research, the most commonly adopted cloud services include: web hosting, security add-ons, and a wide range of SMB-focused SaaS applications. Parallels research predicts that, on average, SMBs will have seven cloud services by end of 2016, growing from four services consumed today.


One service that will enjoy broad SMB adoption is cloud PBX. Cloud PBX services are a classic example of the cloud’s transformational impact on the SMB segment, allowing SMBs to have access to an enterprise-class communications experience without the overhead cost and maintenance of a traditional in-house PBX system. Cloud PBX typically includes mobile integrations, an automated attendant, and web conferencing – all packaged and priced for SMBs.



In the US, up to 50% of SMBs who have an existing in-house PBX system today and up to 30% who have regular land-lines are interested in switching to cloud PBX services. It is easy to see why – cloud PBX services are a good solution for the following key SMB needs:


1) Projecting a professional, enterprise-like image by providing a single phone number for the business, extensions for employees, and simple call routing.

2) Increasing customer intimacy by quickly connecting clients to the right resource using an automated attendant.

3) Increasing worker productivity by extending cloud PBX features to mobile devices, providing anytime, anywhere communications with customers, partners and employees.


In conclusion, cloud PBX services are poised to gain broad adoption in the SMB segment, as more cloud service providers add them to their SaaS portfolios, and SMBs widely recognize the impact that cloud PBX can have on their business and customer experience.


Five Top Trends for 2013 in the SMB Cloud

by Emily Kruger, Sr Manager, Market Research, Parallels


Parallels has just finished our 2013 SMB Cloud Insights™ research and have heard from over 6,000 small and medium businesses from 15 countries around the world about their use of cloud services. Here are five of the most interesting trends we are seeing in the SMB cloud market worldwide:

1. Cloud storage is a hot topic in IaaS for SMBs. The majority of small businesses are willing to pay 25% to 50% more for their VPS if it comes with extra storage.
2. When SMBs buy their web applications varies dramatically by SMB size. Over 40% of micro SMB (< 10 employees) bought their web apps with their web hosting and never returned to buy anything else. Medium SMBs (50 employees +) are much more likely to return to their web hoster for additional purchases.
3. Hosted business email took off this past year and was the fastest growing cloud service category in many countries. Perceived security of business class email and better integration with mobile devices are the leading reasons to switch from free to paid email accounts.
4. Hosted PBX is another cloud service that is growing quickly. Automated attendant and call control are the most popular features for SMBs – and ones not omit from a hosted PBX offering.
5. The most popular SaaS applications remain file sharing, instant collaboration and online backup & storage…but there is growing interest in support / help desk apps, online conferencing (phone and web) and online accounting.

Find out much more about the SMB cloud market in Parallels SMB Cloud Insights™ reports.  Look for the 2013 research for Europe and Asia-Pacific to be released this Fall at WHD.local events or download all the research at





Are You Making Enough of Your Sales Online?


Do you want customers to buy online or offline? Parallels experience working with service providers shows a high percentage of small business hosting plan purchases are made on the phone talking to a living, breathing salesperson. Depending on the type of service provider, as few as 10% of direct channel sales by small businesses are via online purchase with up to 70% being made “offline” – via inbound phone calls – and the remainder being outbound campaign sales to existing customers. To be sure, these “offline” purchases are driven by online content. SMBs call after reviewing the service provider website. Research done through our SMB Cloud Insights report series reveals that for SaaS applications, for example, an SMB’s own online research is their number one source of information with more than 60% of SMBs citing it.


If that’s the case, why are so few hosting plan purchases by SMBs made online? Typically it is because of services discoverability issues on the website and the natural tendency for a generally non-technical buyer to need reassurance before pulling the trigger. 

But if your goal is to increase the number of purchases your SMB customers make online because you want to spend less on your call center staffing, what can you do? One area to investigate is your buying and checkout experience. The Baymard Institute does an unusual annual study related to customer checkout experience. They take users and watch them go through the checkout processes of 15 different popular e-commerce sites. What they discover from this is general principles around usability-related issues due to poor checkout design and how that increases customer abandon rates.  


Their findings are massive but touching on a few high level items might help get you pointed in the right direction.


+ The top reasons for checkout abandonment:

– Extra cost (shipping, tax, fees) 33%

– Forced account creation 23%

– Credit card trust 18%

– Complicated checkout process 18%


You may say that the top two don’t apply to service providers. But the study found it wasn’t so much the charging of extra fees, for example, as it was the confusing way it was presented or explained.


+ A disruptive problem with copywriting: Try to avoid technical jargon – think about who your audience is. That’s an obvious one, right? Here’s one that isn’t so obvious on the copywriting front and it is even more harmful: Not having descriptions for form field labels. In many cases what may seem obvious to you (“Address line 2”) will make no sense to some of your potential customers and in other cases what is obvious makes buyers balk (“Email address”) because they need an explanation of why you need that information (“To communicate with you – we never sell your email address”).  

+ A layout problem: Unclear error indications. This is the most harmful issue related to layout. If buyers can’t find the error on the form or don’t understand it there is a very high probability they will abandon the checkout process. This is especially true if they can’t find the error and submit the form again only to have it rejected yet again. In those situations they think the problem is a bug on your site. Ouch.

So while you may always have a high rate of “offline” purchases just because it’s the nature of the beast with this type of customer and product, you might want to take a look at your online checkout experience to see if it’s as buyer-friendly as you need it to be.



Scott Fallon, Senior Director, Partner Marketing



Cloud-making SMBs in India – a force to reckon with

by John Zanni, Vice President of Service Provider Marketing and Alliances, Parallels


I have been visiting India for more than 10 years and I have seen an amazing transformation in the last years. Today, there are 36 million micro, small and medium enterprises in India. Many face seeming insurmountable challenges of sub-optimal scale of operation, technological obsolescence, supply chain inefficiencies, increasing domestic and global competition, fund shortages, and turbulent and uncertain market scenario.


That’s the bad news. The good news is that today’s new generation of entrepreneurs in India is young, bold and willing to try new ideas. They see an opportunity and take the plunge. They know that as small businesses they have the benefit of being agile and nimble against much larger organizations. They are therefore able to capitalize more quickly on emerging opportunities. They are also more willing to take a few hits at the beginning of the business to win big later.


They understand that being small means they don’t have the luxury of large financial backing to support the various activities of the business. This means they need to be smarter at deciding how best to compete and grow.


One smart proven approach is the use of web presence to create brand awareness and generate business opportunities. They are turning to the cloud to reach out to potential customers locally, nationally and internationally. Creativity and technology are making it possible for these small upstarts to compete against much larger businesses.


The result is phenomenal growth in adoption of ICT particularly those delivered via cloud computing. In the past, the biggest barrier to adoption to cloud services in India was bandwidth but that’s changing very rapidly. Bandwidth is significantly better now, and reliability issues are slowly going away. Cloud adoption will explode and we see the opportunity for cloud services accelerating.


The latest Parallels SMB Cloud Insights™ for India estimates that the Indian SMB cloud services opportunity in 2013 is worth ₹16.9 billion (US$339 million), and expects it to grow 35 percent year-over-year for the next three years, reaching ₹42 billion (US$839 million) by the beginning of 2016.  This growth will be driven by new adopters of cloud services and current users adding more applications and functionality to their existing cloud services. They are eager to get online and consume services that will help them reach their customer base, increase their productivity, and improve their IT capabilities and they are willing to PAY for it. 


The opportunity is huge.  We are seeing it in our business at Parallels.


Service providers who are able to stay on top of this growing demand by SMBs and engage them with the right mix of services and applications will grow and profit in the years to come.


Global SMB Market: Web Presence


Part 3 of a 5-part series detailing Parallels SMB Cloud Insights research

In this Global SMB Market series we’ve been discussing our Parallels SMB Cloud Insights to help service providers target the rapidly-growing cloud services market for small and medium businesses. In our last post we talked about global growth opportunities in hosted infrastructure. This week we’ll discuss the opportunities for web presence with these companies.


As with hosted infrastructure, the opportunities in the web presence sector depend on the market segment to which a country belongs. However, compared to hosted infrastructure, there is already a strong penetration rate for all three market segments identified in our report (see Table 2, below), which can mean an easier job for service providers.




A Developed Web Presence


Developed countries with mature cloud services already have a well-developed web presence, with about 50% of companies having a service provider and 70% having a website. But even with these web-savvy companies, or Cloud Expanders, there is opportunity. 


First, self-hosting a website is an expensive and technically complex solution for SMBs, yet the 15 to 20% of micro and small companies in this segment are currently doing just that. Service providers can educate these SMBs about the advantages of third-party web hosting and encourage them to switch to a hosted service. Second, service providers can offer tools such as website design, social media, and e-commerce capabilities, all elements that can be overwhelming and otherwise expensive for smaller businesses.


Maturing into Cloud Services

For companies in developed countries with maturing cloud services the opportunities are a little different. Our research found that only 50% of the SMBs in this group have a website, compared to 70% in the previous segment. But even with this dramatic drop in penetration, there is an opportunity to switch companies that are currently self-hosting – so-called Cloud Converters – to more affordable, easier to manage third-party web hosting as well as upsell services. 


In addition, the 50% of SMBs in this segment that don’t currently have a website actually show a high willingness to adopt a hosted web presence, with over 30% of them considering adding third-party web hosting plans in the next three years, so now is the perfect time for service providers to get in on the ground floor.


Emerging into the Cloud


The web presence market among SMBs in developing countries with emerging cloud services has ample room for growth. Currently, less than 40% of SMBs in these countries have a company website, making these Cloud Leapers the primary opportunity in this market. Not only are they the largest group with no website, but they also show a strong willingness to adopt: about 35% of them plan to add a third-party web hosting plan in the upcoming three years.


Among all SMBs, whether they have a website or not, social media pages are the top forms of web presence. Although current penetration rates are still low, service providers should keep social media integration tools in mind, especially as Internet usage in all segments grows and leads to higher penetration rates.


In the next installment we’ll discuss options for Hosted Communication and Collaboration for SMBs.


Want to know more? Parallels has updated and enriched its wildly popular research on SMBs and their move to the cloud. We’ll present our findings in a webinar on May 30thIn this webinar, we will share the results of our latest US SMB research, including how SMBs are adopting cloud services, how much is being spent on each type of service, and how service providers should market to SMBs to benefit from the upcoming growth in this booming market.


Register now!



Global SMB Market: Hosted Infrastructure


Part 2 of a 5-part series detailing Parallels SMB Cloud Insights™ research. View part 1 here


In part one of our Global SMB Market insights™ series we defined some of the key global SMB market categories and segments. Now, we’d like to look closely at how SMBs around the world are adopting and using each major cloud service, beginning with hosted infrastructure.


Hosted infrastructure, also known as infrastructure-as-a-service, includes dedicated servers, virtual private servers (VPS), managed hosting, and utility (or elastic) computing.  As we mentioned in the previous post, whether or not an SMB uses hosted infrastructure depends a lot on where it’s located and the level of economic development and cloud services maturity there. Take a look at Table 1 to get a better idea of what we mean:


Developed with Mature Cloud Services

Hosted infrastructure is relatively common in these markets, with about 20% of SMBs already using hosted servers. Encouraging the micro and small SMBs (aka Cloud Converters) that are using in-house servers to switch to hosted servers can lead to even further growth. 


Hosted servers don’t require maintenance or technical expertise, which is a huge advantage for SMBs who don’t generally have in-house IT staff, but price is a top factor keeping them from making the leap. Service providers should consider offering lower-priced options to these SMBs, but also on educating them about the true cost of owning an in-house server. Pushing VPS offerings is likely the best route to take with these SMBs, as they deliver all the security and isolation benefits of a dedicated server at a fraction of the cost. 


Developed with Maturing Cloud Services

Fewer than 15% of SMBs in these countries use hosted services, so the hosted infrastructure market for this group is definitely still growing. Since many of them are currently using in-house servers to about the same degree as they do hosted services, they make a good target for service providers looking to encourage conversion. 


We also identified a significant opportunity among companies that currently don’t use servers at all—the Cloud Leapers. The best targets among these Cloud Leapers are the micro SMBs, approximately 65-70% of which have no servers. 


Developing with Emerging Cloud Services

In developing countries less than 10% of SMBs use hosted infrastructure and 75% have no servers at all, which is unsurprising given their limited Internet access. The market should grow as Internet usage does though, with much of the growth driven by Cloud Leapers moving directly to hosted servers. Willingness to adopt hosted infrastructure is high, so as infrastructure improves and bandwidth and connectivity issues fade, usage is poised to increase dramatically.


Any questions or thoughts to share on hosted infrastructure in the global SMB market? Check in soon for the next blog segment on our SMB Global Market insights: Web Presence!


Want to know more? Parallels has updated and enriched its wildly popular research on SMBs and their move to the cloud. We’ll present our findings in a webinar on May 30th. In this webinar, we will share the results of our latest US SMB research, including how SMBs are adopting cloud services, how much is being spent on each type of service, and how service providers should market to SMBs to benefit from the upcoming growth in this booming market.


Register now!




SMB Cloud Services and the Changing Role of IT Professionals Who Service Them


Cloud computing is affecting the role of IT professionals who typically manage a business’s technological infrastructure, and depending on who you ask the cloud is either an exciting new development or a serious challenge to job security.

In Parallels SMB Cloud Insights Report, we explore how cloud services have enabled companies large and small to make massive budget cuts and gain efficiency by forgoing expensive equipment and annually-licensed software. “Parallels SMB Cloud Insights research continues to confirm that SMBs are at the forefront of cloud adoption,” says Birger Steen, CEO of Parallels.  “This research is part of our commitment to service providers to give them both the expertise and technology they need to address the quickly-growing market for SMB cloud services.”


The rise in cloud services marks a shift in IT responsibilities and Parallels is leading that charge by offering targeted services to for hosters to deliver to SMBs that are either converting to the cloud, switching to the cloud, or expanding the cloud services they already have in place.

In addition to serving SMBs with dedicated IT professionals on staff, Parallels research also identifies the cloud delivery opportunities to serve SMBs with no IT staff as well as SMBs that hire outside IT consultants.

Parallels research shows that 45% of SMBs in the U.S. have no IT staff, leaving “do-it-yourself” owners or senior members of the company to handle purchasing decisions, installation, and maintenance of all IT solutions. For the SMBs that hire outside IT consultants (which 18% of micro SMBs do), Parallels allows the consultants (usually hosting resellers) to offer cloud services to the SMB end customer without having to manage the infrastructure themselves. In both cases, cloud services benefit business and the bottom line.


With cloud services in place, IT professionals can focus on what they are often highly undervalued for in business: strategy and innovation. A successful career in IT may mean having a cloud-focused skillset and being able to think strategically on a big-picture level.


In the move toward IT as a service, IT professionals will be measured less by how many fires they put out on any given day and more by the value and efficiency they add to internal and client-facing business processes. “Instead of managing infrastructure, tending the help desk, and commissioning server instances to be created,” Brandon Butler of Network World writes, “IT workers of tomorrow are more likely to be managing vendor relationships, working across departments and helping clients and workers integrate into the cloud.”

Learn more about this transition in any of our Parallels SMB Cloud Insights Reports, and stay tuned for a 5-part blog series exploring areas such as hosted infrastructure, web presence, hosted communication and collaboration, business applications, and more.


SMB Cloud Services in Emerging Markets Poised for Explosive Growth


Parallels research shows the cloud services market in the developing world is growing over three times as fast as that of the developed world. In our Parallels SMB Cloud Insights Report, we modeled the 2011 global SMB market and estimated it to be $34 billion. 


Need more proof? Business Today reports cloud computing will create two million new jobs in India alone by 2015. And here’s a look from ESDS at 24 countries prepared for business in cloud computing. Clearly, these emerging markets are poised for massive expansion.





According to Parallels research, more than 60% of the growth in web hosting will come from emerging markets in the next three years, and the worldwide SaaS market will grow to $20 billion by 2014. While these forecasts are dramatic, cloud adoption could be growing even faster.  BSA recently published a study of 24 countries that together account for 80% of the world’s information and communications technology, and it found that cloud computing in developing countries often lags behind because of weak privacy and data protection laws, as well as poor infrastructure.


Moreover, government and legal regulations are holding up cloud services in developing nations like India, where there are few protections in place to prevent Internet intermediaries or service providers from seizing data at will. But these issues are being addressed, meaning there still exists is tremendous potential in emerging markets.


Parallels research shows that less than 40% of SMBs in developing countries have a company website, making new adopters seeking basic web presence a primary opportunity. Micro and small SMBs in these countries have shown a strong willingness to adapt, as 35% plan to add a third-party web hosting plan in the next three years. Service providers can help encourage this move to the cloud by educating SMBs about the features and benefits of cloud services.  And many of these same firms will never buy a server as well.


For more information, watch Parallels CEO Birger Steen’s Q&A from Ask the Experts at Parallels Summit 2012, and download our Parallels SMB Cloud Insights Report.


In the coming weeks, we’ll be sharing on this blog a five-part series with even more insights from Parallels continuous SMB Cloud Insights research exploring areas such as hosted infrastructure, web presence, hosted communication and collaboration, business applications, and more.