2014

Parallels SMB Cloud Insights

Singapore

TM

DEFINITIONS
Cloud Services Categories
This research is focused on the cloud services that matter most to SMBs: IaaS, web
presence and web applications, unified communications, and a general category we
refer to as business applications.
Infrastructure-as-a-service (IaaS): Dedicated servers, virtual private
servers (VPS), managed hosting, as well as add-on applications and
services for hosted infrastructure, such as control panels, development
platforms, LAMP stack, security, server backup, and database add-ons.
Includes cloud servers as of 2014, due to their increasing use among SMBs.
Web Presence and Web Applications: Third-party web hosting,
domain registration, SSL and ecommerce add-ons, site-building tools,
high-opportunity web applications web server backup, content delivery
networks (CDN), content management, mobile optimization tools, search
engine optimization (SEO), and web server security and health monitoring.

The Overall Singapore SMB Cloud

Services Market

S$520M
$416M
2014

Unified Communications: Business-class email services, including

email security, email archiving, along with mobility and hosted phone
services, including hosted PBX. As of 2014, includes communication and
collaboration applications, such as web and phone conferencing, instant
collaboration, and mobile device management (MDM).
Business Applications: The major types of software applications that
can be accessed onlinefile sharing, online accounting, online backup and
storage, online CRM, payroll and HR, support and help desk, and virtual
desktop (VDI).

SMB Definition and Segmentation

We define SMBsalso known as small and medium enterprises (SMEs) - as companies
with 1 to 250 employees. There are around 130,000 such SMB establishments in
Singapore today. SMB segments include: micro (1-9 employees), small (10-49 employees)
and medium (50-250 employees).
Cloud Opportunity Type
Cloud leapers: This category consists of SMBs that currently are not using
an in-house IT solution (no servers, no web server, or no PBX system) and are
likely to move straight to the cloud, leaping over the intermediate in-house
IT solutions.
Cloud converters: These SMBs currently have in-house solutions but are
either moving or planning to move to hosted services. For example, many
SMBs that currently have in-house servers may switch to hosted servers
when it comes time to upgrade their infrastructure.

Parallels SMB Cloud Insights has entered its fourth consecutive year
of research into the consumption of cloud services by small and
medium businesses (SMBs). In 2014, Parallels updated its research
by redefining some of the categories examined. Infrastructure-as-aservice (IaaS) now includes the use of cloud servers by SMBs, which
wasnt previously measured due to cloud servers being an enterprise
level solution. But SMBs are also beginning to take advantage of
them as a scalable and flexible solution. Unified Communications,
previously called Communication and Collaboration, is now an
aggregate category which includes Hosted Email, Hosted PBX, and
collaboration applications.
As an addition to the existing research for the Asia-Pacific region,
Parallels interviewed SMBs in Singapore to learn about their
consumption of each category of cloud services. The Singapore
SMB cloud market as a whole is estimated to sit at S$520M ($416M
USD) as of mid-2014. Infrastructure-as-a-service is the largest
part of the overall market by a considerable amount, at S$195M
($156M USD). Web Presence adds S$57M ($45M USD), and
Unified Communications makes up S$126M ($113M USD). Business
Applications accounts for the remaining S$142M ($101M USD), which
is the second largest share of the market.

Cloud expanders: These SMBs, who are already using some form of cloud
services, represent an opportunity for upselling to new and expanded cloud
offerings. For example, an SMB who is using web hosting would be acting as
a cloud expander when they purchase mobile optimization to complement
their website.

INFRASTRUCTURE-AS-A-SERVICE (IaaS)

IaaS Market

S$195M

($156M)
IaaS is 38% of
Singapores Cloud
Services Market

S$520M
($416M)
Overall market

Hosted Servers Are Heavily Used as

Webservers

63%
Web Server

In developed countries, Infrastructure-as-a-service has grown at

low but steady rates over the past few years. However, this year
were seeing some factors which are likely to create more growth in
this market. One trend is that SMBs have entered the cloud server
space. As of 2014, cloud servers comprise 19% of the Singapore IaaS
market at S$37M ($29.5M USD). Additionally, use of fully managed
servers is on the rise among SMBs. Managed services and popular
add-ons can sustain growth for this market over the coming years, as
we will explore in this section.

Concerns About Hosted Servers Aross APAC

45%
Database
Applications

60%

33%
Project
Management

SMBs are Willing to Pay More for High

Availability or Unlimited Storage
67%

59%

High Availabity

Unlimited Storage

67% of SMBs would

pay $5/month more for
high availability

59% of SMBs would pay

$10/month more for
unlimited storage

$5

70%

$10

Top Hosted Server Add Ons

50%

40%
30%
20%
10%
0%
Price Security/
Privacy

Singapore
2

In-house Unsupported
Apps
Apps

Australia

Bandwidth

Japan

Not
Recommended
by IT

Server Backup

Security

SMBs said they were

interested in buying
more add-on services
with their hosted
servers, particularly
server backup and
security. Looking
forward, we see higher
demand of all add-ons.
In the long run, we
expect add-on use to
continue to add growth
to the IaaS market.
3

WEB PRESENCE

Web Presence Is 11% of Total Market in 2014

Over 40% of Singapore SMBs say their servers are fully managed.
The market for managed services is thriving with a substantial level
of demand, among those who self-manage their hosted servers and
those who dont yet have hosted servers. Managed server solutions
can increase both business efficiency and service provider revenue.

SMBs with selfmanaged servers who

want to upgrade to
fully managed

40%+

SMBs with hosted

servers reported using
fully-managed servers

47%

SMBs without hosted

servers who would
consider going fully
managed

IaaS Opportunity Through 2017

60% of SMBs without servers are planning to leap

to IaaS

24%
3 Year CAGR

60% 51% 44%

Cloud Leapers
New Adoption

Cloud Converters

Switch From In-House

($416M)

As of mid-2014, the Singapore Web Presence market is estimated

to be S$57M ($45M USD). This is a seemingly much smaller Web
Presence market size when compared to those of other mature
APAC countries like Australia and Japan, but mainly is due to the
small number of SMBs within the country. Singapore SMBs are using
websites in similarly high proportions to mature APAC countries: over
70% of SMBs in Singapore have a website, and of those over 80%
are hosted by a third party. This market is healthy, however there is
still room for growth, as we will discuss in this section.

70%

Increase Spending

2014
2017

S$372M
($298M)

Of SMBs in Singapore have a

website and of those over 80%
are hosted by a third party

Highest In-Demand Web Applications

Cloud Expanders

IaaS is already the largest part of the Singapore cloud

market, but is expected to keep pushing forward and
reach S$372M ($298M USD) by 2017, growing 24%
year over year. Where will this growth occur? 60% of
SMBs without servers plan to leap to the cloud for
their first solutions. 51% of SMBs putting resources
into in-house servers said they would like to switch to
hosted servers, and 44% of current IaaS users want
to spend more. Each of these consumer types offers
a growth opportunity.
4

S$520M

($45M)

40%

S$57M

SMB Usage of Managed Servers

34%
66%

21%
53%

SEO

Security

15%
44%
SSL

WEB PRESENCE

Top Forms of Social Media Use in 2014

55%

Facebook

36%

Local Directories

22%

17%

LinkedIn

Twitter

SMBs Are Starting to Use Third Parties to

Design and Manage Their Websites

Of the SMBs who have a website, 75% are using a web application
of some kind. Nearly half of SMBs purchase their web applications
from their hoster, bundled in at the time of the initial website purchase.
Only 20% return to buy them from their hoster after the fact, and even
fewer buy them through other channels. This trend is common across
many markets, and should be observed service providers can take
advantage of the timing by offering SMBs web applications at the time
of the website purchase.

Mobile-Optimized Websites are Growing in

Popularity and Many SMBs Still Need One

35%
No Optimization
Needed

27%

51% 45%

33% 39%

Web Hoster or
Web Designer

Mobile Optimized

In-house

Web Designer

In-house, would
switch to
3rd party

29%

PC Only Optimzed

Remaining 9% were unsure

Web Presence Opportunity in 2017

23%
3 Year CAGR

Designed By

Managed By

SMBs are taking advantage of third parties for website design. About
half of the SMBs interviewed in Singapore said they had their website
designed by a web designer. SMBs are also using third parties to
manage their websites. 33% of the SMBs who have websites hosted
by a third party are also having them managed by their web hoster or
a web designer. This figure is expected to grow, as 39% of businesses
who manage their websites in house indicated that they would like
to move to third-party managed websites by 2017. For web hosters,
this means they can increase revenue from higher-touch managed
services, rather than competing in the saturated market of commodity
hosting. Managed web hosting will be a key area for growth in Web
Presence in the coming years.

48%

Of SMBs buy web apps bundles

with website purchase

69% 70% 22%

Cloud Leapers
New Adoption

Cloud Converters

Switch from In-House

Cloud Expanders
Increase Spending

The Singapore SMB Web Presence market is expected

to continue growing at 23% year over year to S$106M
($85M USD) in 2017. There is strong potential among
cloud leapers and converters; about 70% of the SMBs
without websites or with self-hosted websites want to
move to third-party hosting, allowing them to focus their
time and resources on business-related endeavors.
Additionally, 22% of businesses who have third-party
hosted websites are looking to invest more, maybe
through web applications or managed hosting.

S$106M
($85M)

UNIFIED COMMUNICATIONS (UC)

($416M)

($101M)

S$520M

Typically, the Unified Communications (UC) market is the smallest

segment of the SMB cloud market in most countries. Singapore does
not follow this trend. While also seemingly small, as a result of the
low number of Singapore SMBs, at S$126M ($101M USD), UC is a
bigger portion of the overall Singapore cloud market than it is in other
developed countries. Singapore has a slightly larger ratio of mediumsized businesses within their SMB population, and medium-sized
businesses spend a great deal more on hosted email and hosted PBX
because of their higher seat count. The penetration of these services
is comparable, if not a little higher in Singapore than in Australia.

Top Purchase
Triggers: What
Would Cause SMBs
to Switch from
Free Email to Paid
Business Email

50%
Increased
Security

37%
Good Price
Point

39%
Professional
Look & Feel

What Features Caused SMBs to Choose Paid

Business Email Over a Free Email Provider?

Calendar
Alerts
8

Shared
Calendar

Archiving

Outlook
Integration

What Features Are Most Useful to SMBs in

Hosted PBX Systems?

S$126M

Unified Communications Accounts for 24%

of Total Market

Security

Single Mailbox

Mobile Phone
Integration

Barriers to Hosted PBX Adoption across APAC

60%
50%
40%
30%
20%
10%
0
Price
Singapore

Technical
Australia

Security

Unaware
of PBX
Japan

Price, technical and security concerns are primary barriers to

conversion from in-house to hosted PBX systems. SMBs who have
in-house phone systems, however, would consider moving to hosted
PBX under a few circumstances. A third of SMBs would consider
hosted PBX if they liked the price, or when their in-house system
equipment becomes old or breaks. Other motivators involve strong
business growth or relocation. Making sure SMBs are aware of
hosted PBX and the benefits it offers over in-house systems, as well
as offering low costs options, can capture more of the cloud
converter and cloud leaper markets.

BUSINESS APPLICATIONS

New Office
Locations

33%

33%

Existing PBX
Unreliable

35%

S$520M

Good Price
Point

Business
Growth

($416M)

Use of Collaboration Apps Varies

37%

12%

Instant Collaboration

The Singapore Business Applications market is S$142M ($113M USD),

the second largest portion of the entire cloud services market. The
overall usage of online applications in Singapore outshines that of
other mature APAC markets, at 85% compared to 79% in Australia.
The top-used applications in 2014 include file sharing, online backup
and storage, payroll and HR.

9%

Web and Phone

Conference

56%
34%

Cloud
Converters

Hosted Email

34%

Cloud Leapers

Hosted PBX

8%

Instant
Collaboration

New Users

9%

Web/Phone
Conferencing

Payroll
and HR

Online
Backup/Storage

Payroll
and HR

File
Sharing

Online
Backup/Storage

8%
Mobile Device
Management

Increased Spending

The Unified Communications market is projected

to grow 29% year over year through 2017, reaching
S$213M ($171M USD). There is growth potential
across all consumer types for hosted email and
hosted PBX, with a third or more of SMBs looking to
add hosted email or PBX for their first solution, switch
from in-house versions, or spend more on their current
hosted solutions. Likewise, there is a strong market for
new users within each collaboration application.
10

File
Sharing
50- 249
employees

32%
19%

Cloud
Expanders

29%

1- 49
employees

3 Year CAGR

37%

33%

41%

Top App Consumption Slightly Varies by

SMB Size

Mobile Device
Management

Unified Communications Through 2017

53%

of SMBs use
at least one
online app

($113M)

33%

85%
S$142M

Business Apps Make up 27%

of the Overall Market

What Are Major Purchase Triggers

for Hosted PBX?

S$213M
(171M)
2017 Market
Size

Expected Use of Top Applications in the

Next Three Years
80%

File Sharing

56%

Online Backup/
Storage

44%

Payroll
and HR

40%

Online
Accounting
11

BUYING CLOUD SERVICES

Where Do You Buy Online Applications?

36%
Application
Website

19%
IT
Consultant

12%

10%

Web
Hoster

Telco/Mobile
Provider

To Bundle or Not to Bundle?

23%
Ease of
Transactio n

70%

45%
of SMBs

24%

Prefer purchasing
bundles as opposed to
a la carte

Of a la carte buyers say

service provider choice is
their main concern about
buying in bundles

Quote cost
transparency as
their main barrier to
bundle purchases

of SMBs

39% 18%

Purchased after
free trial to access
more features

27%
Purchased
without free trial

Remaining 16% were unsure

Business Applications Opportunity in 2017

30% 15%

3 Year CAGR

of SMBs

Many SMBs prefer buying cloud services as bundles, but what about
those who dont? This year Parallels asked SMBs who purchase
services a la carte about why they prefer that to bundles, and
discovered that when SMBs choose not to bundle, it is because
they want choice in the service provider or brand that they buy and
are concerned about lack of transparency in bundle pricing. SMBs
are willing to pay more to get the exact service or brand they want.
Service providers can still attract these SMBs with bundles, so
long as they offer several bundle options with services that cater to
different SMB preferences and needs.

50% of SMBs Use Only One Service Provider

50%
40%
30%

Avg to Increase Spending

The Business Applications market is estimated to

grow at a 17% CAGR to S$224M ($180M USD),
by 2017. Growth will come from the 30% of new
users, or cloud leapers, and 15% of cloud expanders
who want to increase spending on their business
applications. As mentioned, SMBs using free
versions can be enticed to purchase full versions
with limited term trials. This market is more variable
than those of other cloud services, so its crucial for
service providers to stay innovative to keep up with
the ever-changing needs of SMBs.
12

17%

31%

Ease of Billing

SMBs Motivation for Bundling

Online
Retailer

57% of the Paid Business App Market Was

Captured by Offering a Free Trial

Avg New Use

22%

Ability to Integrate

Discount

4%

Remaining 19% were unsure

Purchased after
free trial expired

24%

20%
10%
0%

S$224M
($180M)

61% 70%
Unified
Support

Number of Service Providers

Better Cost
Value

Better Cost Value and Unified Support are

top benefits of using one service provider
13

OPPORTUNITIES

How Do SMBs Contact Their Service Providers?

66%
76%

Of SMBs contact their service

provider over the phone
Of SMBs use email to
communicate with their
service provider

3 Year CAGR

S$520M
($416M)
2014

This report covers only a portion of the extensive data included in Parallels SMB
Cloud Insights research. To learn more::
Visit Parallels PartnerNet. For Parallels Partners, register for Parallels
PartnerNet at www.parallelsnetwork.com.
Register for a webinar. Register for upcoming webinars, or watch
existing webinars which highlight Parallels research and teaching SMB
marketing strategy, tips, and best practices to help grow your hosting
business. Go to www.parallels.com/about/subscribe/ to sign up for
webinar notifications.

The Singapore Cloud Services Market Will

Grow 21% Year over Year through 2017

21%

Learn More

S$916M
($733M)
2017

Talk to the Parallels Business Consulting team.

Parallels Business Consulting delivers services designed to accelerate
time-to-revenue by 20-35%, increase profits, and grow subscribers.
We provide critical business thinking and best practices forged from
hundreds of deployments, custom research by SMB Cloud Insights,
and go-to-market workshops. Start a conversation with the Parallels
Business Consulting team. Get in touch at accelerate@parallels.com.
Please contact SMB@parallels.com with any further questions. Parallels is
committed to helping our partners understand the best opportunities in the
SMB cloud market.

The SMB cloud services market in Singapore is projected to hit S$916M ($733M USD)
in 2017, with a three-year CAGR of 21%. Infrastructure-as-a-service and Web Presence
will still undergo solid growth through managed services, add-ons and applications.
The Business Applications market will grow at a slightly lower but steady rate, as SMB
needs keep evolving and best-of-breed brands improve to meet those needs. Unified
Communications will have the highest growth rate, approaching the size of the Business
Applications market. Singapore boasts a large cloud market for its SMB population, and
each category faces diverse areas for growth. Successful service providers will capture
their share by offering smart bundles and managed service options.

2014 Parallels IP Holdings GmbH. All rights reserved. The Parallels logo and Parallels
are registered trademarks of Parallels IP Holdings GmbH.
No part of this publication may be reproduced, photocopied, stored on a retrieval
system, or transmitted without the express written consent of Parallels.

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