The Opportunity for National Brands in SMB Technical Support Services. A Parks Associates white paper developed for PlumChoice

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1 The Opportunity for National Brands in SMB Technical Support Services A Parks Associates white paper developed for PlumChoice

2 Understanding the Small and Medium-sized Business Market Sizing the Market and Technology in the SMB Environment According to the U.S. Census Bureau and Parks Associates estimates, there are roughly 5.7 million U.S. businesses with 1-99 employees. Since 1998, the number of SMBs has grown, on average, 1-2% per year. Together, these firms have an annual payroll of over $1.3 trillion. The average SMB uses nearly ten computers, split between desktops and laptops. After adding in netbooks and tablets, the average number of computer workstations per business is around 11, with roughly three printers per business. 8 Technology in the SMB Environment (Average Number of Products in Use, Millions) 4 0 Desktop Computers Mobile Phone Handsets Laptop Computers Printers Scanners Fax Machines Netbook Computers Projectors Tablets Current and Future Expenditures Although current expenditures for ongoing and per-incident technical support are a relatively low portion of spending for IT equipment and services, indications are positive for increased spending on technical support services. The size of the small or medium business in terms of employees is today a chief indicator of the willingness to increase investment in support services. As the technology environment continues to increase and diversify across different sizes of businesses, frustrations with technology complexity and business owners desire to prioritize business activities as opposed to technology management will drive an increase in outsourced technology support services. 2

3 IT Spending The Connected TV and Video Experience: Recommendations, Search, and the User Interface 2010 Parks Associates $1,600 Average Annual Amount Spent on IT Equipment and Services (Average Expenditure, in U.S. dollars) 30% Percentage of U.S. SMBs (%) Mean Amount Spent ($) $800 $0 Communication services IT equipment Software Mobile/wireless phone issues Ongoing support contracts from outside IT firms Warranties/ service plans Per-incident support from outside IT firms The average number of computer workstations per SMB is around 11 Increases in Tech Support Spending, Future Intentions All SMBs 1-10 employees employees employees employees 15% 0% IT support staff Warranties/service plans Ongoing support Per-incident support All rights reserved. 3

4 The Technical Support Landscape There was no single thirdparty brand that could integrate technical support, data services, and communications at a nationwide level until AT&T launched its Tech Support 360 service in This offering has changed the landscape of SMB technical support services as it is national in its reach, it offers a full suite of support services, and it is not limited to supporting only certain IT brands. Another key factor in AT&T s nationwide rollout is the robust service offerings that it can bring to the SMB environment. Tech Support 360 goes beyond a computer break/fix service to include comprehensive SMB tech support services. These include both proactive and as-needed support, provided both remotely and on-site. AT&T recently added Server Support into its mix of offerings, which monitors servers, applications, the office network, and Internet connectivity, plus areas such as firewalls, switches, and routers. Remote diagnostics, monitoring, and troubleshooting capabilities are critical components in delivering SMB support. The most-critical need for SMB IT managers is to resolve technology problems as quickly as possible. Remote services provide this speed and effectiveness, allowing tech support personnel to quickly connect to, diagnose, troubleshoot, and resolve the majority of problems without the need for the SMB to wait for a technician to arrive on-site. For What Services do SMBs Prefer Remote Tech Support? Server problems Internet access problems Setting up/troubleshooting company mobile phones Networking problems Routine maintenance Training for new software & hardware Computer malfunctions Setting up PCs, , etc. for new users Problems with peripherals (Among SMBs) Setup of new PCs, software, hardware or peripherals 0% 20% 40% Percentage Indicating Remote as Preferred (%) Two key trends are emerging from SMB support offerings: 1. Greater flexibility in how SMBs use , applications, database, and servers (for example, setting up physical servers on-site or allowing the support provider to host them in an off-site environment) 2. Backup moving from per-desktop or per-server file recovery to a more comprehensive offering that can include real-time virtualization and restoration in the event of a disaster (such as a server crash or a natural disaster) 4

5 Tech Support Needs The Connected TV and Video Experience: Recommendations, Search, and the User Interface 2010 Parks Associates Significant percentages of SMBs have used professional technical support services for a variety of issues, notably for problems related to servers, networking, and computers. SMBs are most likely to consider support for these three areas, but they also are interested in support for additional products including peripherals and mobile phones. In addition to demand for as-needed support for both products and services, there is also interest in ongoing care such as routine computer maintenance and non-troubleshooting services such as training for software and hardware. Among SMBs that have used professional technical support services previously, they are highly satisfied with the courtesy and professionalism of the tech support agent(s) who provided the assistance. Where SMB technical support services can improve are areas such as the initial response time, complete resolution of the problem, and the time it took to resolve the issue. Leveraging remote access solutions will allow SMB support providers to raise customer satisfaction with faster response times and more convenience to the business, which will not have to wait for a technician to arrive on-site or have to ship its IT equipment to a depot or repair center. Leveraging remote access solutions will allow SMB support providers to raise customer satisfaction SMBs and Professional Tech Support 40% Have Used Tech Support Likely to Use Tech Support Percentage of U.S. SMBs (%) 20% 0% Server problems Networking problems Computer malfunctions Internet access problems Set up PCs/ for new users Problems with peripherals Software/hardware training Mobile phone issues Routine computer maintenance The use of and interest in professional support services correlate to the current technology challenges facing SMBs today. These businesses are more likely to face problems with Internet access, peripherals, and computer malfunctions. Interestingly, although the percentage of SMBs experiencing problems with mobile phones is relatively small, IT managers report significant hours of lost time per month because of these issues. As smartphone and tablet use continues to grow in the SMB environment, a technical support provider will need the expertise and capabilities including remote access to handsets to respond appropriately to these challenges. All rights reserved. 5

6 Tech Support Needs Between the time spent on the part of the Frequency of IT Problems and Lost Productivity IT manager resolving these issues and the amount of lost productivity experienced issues. An important marketing message from support providers to the SMB community should be in promoting how professional care can assist businesses in recapturing time for building a business Percentage of SMBs 6 40% 0 0% and serving customers. The notion of recurring care strongly resonates among SMBs. The value of ongoing care, preventative maintenance, and opti- ls ns ers ms ms ms nce ing rals ues hera rain nctio oble tena w us e iss iphe roble roble perip r malfu r ne g pr are t hon /per ss p er p main ile p with Serv te acce ardw orkin fo ware uter b s t u h d p w o / r e p t m a e m n M r le Ne co Cs/ war Com re/h Inte Prob tine Soft up P ftwa Rou Set w so p ne Set u mization of systems not to mention asneeded technology consulting services will grow as SMB technology decisionmakers recognize the need for proactive U.S. SMBs with Current Professional Tech Support Service 80% care. These types of services also become more attractive when they are bundled with existing services that an SMB uses already. AT&T s Tech Support 360 is a good 40% example of a program that can be tied with communications and data services. The market opportunity for technical support subscriptions is significant as 85% of SMBs do not currently have an ongoing tech support relationship. 0% All SMBs 1-10 employees employees employees employees Percentage of U.S. SMBs (%) per month at stake in addressing technical 80% Hours of lost productivity Hours of lost productivity, per month (#) by employees, there are dozens of hours (Among SMBs) 10

7 The Connected TV and Video Experience: Recommendations, Search, and the User Interface 2010 Parks Associates Marketing and Promoting Technology Support Services Companies seeking to establish a foothold in IT support services for SMBs need to offer support across a wide range of products and services servers to smartphones, workstations to tablets. Second, they must offer these support services in a way that is timely and convenient to their customers. Therefore, remote technology support services are critical in allowing technology support companies to be more responsive and comprehensive in their offerings, from timely response times to offering proactive care such as computer tune-ups. Providing timely and comprehensive support is the highest-valued characteristic of a support provider Importance of Technology Support Service Characteristics (Among SMBs) The speed with which problems are resolved The ability to understand technicians Ability to have a technician on-site within a day Ability to have a technician access my equipment remotely Ability to proactively prevent IT problems Company is one we already use for equipment/other services The price of the service Ability to offer offsite/ hosted storage Multiple options for submitting a work order Ability to keep service on retainer and pay them as needed Flexible payment terms 0% 40% 80% The ability by a service to offer remote support rates high among SMB IT decision-makers, as is the ability of a company to offer communications or data services along with the support services. The ability by a company such as AT&T or another broadband/communications provider to bundle support with core offerings is an important selling point for a carrier in this business, making it highly likely that additional service providers will enter the SMB support space. All rights reserved. 7

8 Influences SMBs cite recommendations from peers and their existing service providers as the chief influencers for choosing a technology support service. To educate the SMB community about the benefits of using professional outsourced technical support services, providers should promote the work that they are already doing in this space and use current customers as case studies. Important information to disseminate includes cost comparisons between external support services vs. full- or part-time internal hires (or no support at all), discussions from current customers about time savings in using external resources, and information that targets a critical SMB need does using outside professional support services allow SMBs to focus on what really matters: acquiring and serving customers? In addition to using resources such as peers, service providers, professional networking websites, and local entities aimed at supporting the small-business community (chambers of commerce, etc.), support providers need to build packages of support services that are easy to understand. Clear information about what a support subscription includes in terms of the types and numbers of IT equipment serviced, processes in delivering services, and pricing options is important for SMBs when judging the value and affordability of different plans. If price breaks are offered for bundling support with the purchase of IT equipment or with a subscription to specific communications or data services, these benefits need to be clearly explained. Influences for purchasing technology support services Recommendations from other businesses of similar size Recommendations from service providers with whom we currently work Recommendations from outside, IT consultants Recommendations from warranty support companies with whom we work Recommendations from friends or family members Recommendations from company employees Recommendations from equipment manufacturers with whom we work Tech support forums/ crowd-sourcing Recommendations made from professional networking sites (Among SMBs) 0% 25% 50% 8

9 The Market Opportunity The Connected TV and Video Experience: Recommendations, Search, and the User Interface 2010 Parks Associates The individual software, hardware, and services that constitute SMB support services are extremely broad and can encompass data and website hosting, server maintenance, communications systems, service level agreements (SLAs), and networking support. Because Parks Associates research focuses on computer systems and subscription services, forecasts include the following areas: Computer set-up services; Computer troubleshooting; Technical support service plans; Server support; and Backup. U.S. market revenues for SMB technical support services will grow from $9.6 billion in 2011 to $20.1 billion in Projections for market revenues begin with the current use of and interest in these services, all obtained from the Parks Associates survey SMB Demand for Technical Support Services. These figures are then applied to projections for the growth of small businesses, computer sales, and server usage. $25,000 SMB Tech Support Services, Annual Revenue (U.S. Revenues, in Millions) Millions of Dollars Spent ($M) Computer Set-up Backup Desktop Support Server Support Support Subscriptions $ Source: Opportunities for SMB Support Services All rights reserved. 9

10 Key Takeaways SMB IT decision-makers will rely on their peers and information such as case studies to make decisions about implementing outsourced technical support. Companies servicing the SMB market need to have marketing material that emphasizes success stories and explains in clear language the time and cost benefits of outsourcing technical support. Within the cost estimates should be explanations of both time and cost benefits to using external support entities including faster deployment of services and lower development costs. Data backup/hosting is an opportunity. Today, fewer than 20% of U.S. SMBs use hosted storage. However, marketing hosted storage for convenience (mobile access, collaboration, etc.) and disaster preparedness will make this service more enticing to businesses. Emphasize network and server support services. SMBs looking for professional support will likely be wrestling with a plethora of server and network issues. Service providers should cater to this core need and use marketing and sales material to emphasize their networking and server strengths. IT support includes more than servers and computers. A successful IT support offering will address care to not only fixed equipment such as computers and servers but mobile devices as well. As indicated by Parks Associates survey, SMB IT managers find that mobile phone troubleshooting is a significant drain on their time and employee productivity. As growing numbers of SMBs incorporate smartphones and tablets into their IT environment, they will expect technical support for these devices. Work with internal IT managers, not against them. An outside provider positioning itself as a comprehensive IT support solution may generate resistance from internal IT managers concerned about loss of influence or even job security. Offering services that enhance and facilitate (rather than replace) their jobs is a smart marketing approach. Comprehensive care services will be critical. Many SMBs are seeking technical support service offerings that go beyond one-off computer break/fix services; they are interested in comprehensive offerings for server and mobile device support, hosted storage, and peripheral support. Companies addressing this market will need to put together holistic care services and offer flexible pricing that takes into account the budget limitations and unique requirements of smaller firms in addition to subscription-based pricing that includes unlimited remote and on-site support. As more SMBs use smartphones and tablets, they will expect technical support for these mobile devices. 10

11 This white paper was commissioned by PlumChoice. Research results came from SMB Demand for Technical Support Services, a U.S. survey The Connected TV and Video Experience: Recommendations, Search, and the User Interface 2010 Parks Associates fielded in December 2010 of several hundred owners, managers, and IT support decision makers from small and medium businesses across a number of industries. For further information on this study or help to bring your National SMB Tech Support brand to market, contact PlumChoice at or sales@plumchoice.com. ABOUT PLUMCHOICE PlumChoice is setting a new standard of customer care with its Service 2.0 approach that has reinvented the way technology care is provided to connected homes and small businesses. As the largest independent technology care provider in the industry, PlumChoice pioneered the remote technical services business in 2001, providing 24x7 online repair and assistance for digital devices through local industry-certified agents. With the addition of its patented SAFElink service relationship platform, PlumChoice now offers a fully integrated and highly secure solution for service providers and other business partners, working under their brand names to provide them with new sources of revenue and cost reduction. PlumChoice s services can be delivered remotely or on-site as a one-time incident, bundled with products/services, or subscriber-based solution. Covered devices include PCs and Macintosh computers, laptops, and mobile phones, TVs and home theater systems, routers and servers, networks, security systems, consumer electronics, software, peripherals, iphones and other devices sales@plumchoice.com ABOUT PARKS ASSOCIATES Parks Associates is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups through market reports, primary studies, consumer research, custom research, workshops, executive conferences, and annual service subscriptions. The company s expertise includes new media, digital entertainment and gaming, home networks, Internet and television services, digital health, mobile applications and services, consumer electronics, energy management, and home control systems and security info@parksassociates.com Attribution: Authored by Kurt Scherf, Vice President & Principal Analyst, Parks Associates Published by Parks Associates Dallas, Texas All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America. Disclaimer: Parks Associates and PlumChoice have made every reasonable effort to ensure that all information in this report is correct. We assume no responsibility for any inadvertent errors. All rights reserved. WP

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