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SMB 4 Tier Segmentation Overview

Jake Mosher SMB and .cloud Strategic Marketing and Planning

SMB and .cloud Strategic Marketing and Planning | INTERNAL SYMANTEC USE ONLY

Segmentation Research Background

2

• AMI Partners Background

– Global SMB End-User/IT-User Research: Founded in 1996, each year AMI invests in the industry’s most comprehensive primary research based surveys around 15,000 SMBs (targeting IT and business decision makers - TDMs/BDMs) globally across North America, Europe, Asia-Pacific and Latin America to update its proprietary knowledgebase and models.

– Markets are gauged both on an annual and semi-annual basis via tracking platforms

• SMB Survey Overview

– Customized AMI Segmentation Model for Symantec based on primary surveys

• 3 countries: US, Germany, China; Sample of N=300 per country across HBB & SMB

• Survey focused on insights into purchase channels, cloud vs. on premise, decision influencers, purchase triggers, media usage, & brand usage/preference


SMB Segmentation Project Overview

3

• Why behavioral/attitudinal segmentation?

– Segmenting the SMB market by behavior offers a differentiated and more effective way to target and reach customers

• Understanding their IT sophistication, what their core needs are, who the buyer is, how & where they purchase, who their key influencers are, etc.

• Enables us to target the most relevant solutions and messages to each customer segment/buyer

– Aligns to SMB Marketing Organization’s FY13 Priorities

• “Drive revenue by creating messaging, campaigns and offers that address customer needs”

• Segmentation Project Overview

– Proprietary 4 Tier SMB Segmentation delivered by AMI Partners, anchored around SMB surveys, tailored for Symantec’s SMB and .cloud business

– Actionable GTM recommendations for each SMB Tier

– Deliverables

• Segmentation & GTM recommendations

• Detailed Symantec Portfolio Mapping

• Gearbox and Profiling Tool to enable actionable targeting and implementation


SMB Segmentation Overview – AMI 4 Tier Segments

4

Tier 1 “Enterprise-ish”

Tier 2 “Vanguard”

Tier 3 “Pragmatist”

Tier 4 “Straggler”

Mindset “Process” “Experimental” “Risk Averse” “Just Get By”

IT Decision Making Process

Formal with multiple decision makers

Formal or semi-formal with multiple decision makers

Unstructured, usually by owner

Unstructured, usually by owner

Attitude Towards IT

IT is integral to business growth, considered worth the cost

IT enables agility, considered worth the cost

IT as means to automate, often viewed as necessary evil

IT as point solutions, viewed as necessary evil

Presence of Server

Yes Yes Yes ~66% Yes ~28%

Preferred channel

Direct from software vendor or VAR

Regional retailers or Direct from software vendor

Direct from software vendor or Retail

Small VAR or Retail

Brands Used Premium Premium Second tier or generics Generics

% of SMB IT spend (US)

42% 27% 18% 13%


Total Spending ($M) on Security and Storage/Backup Solutions (Excl H/w)

Market Opportunity by Segment (US data)

• Big pockets of opportunity exists in Tier1 and Tier 2, and the 10-49 sub segments across all Tiers

• Easy migration path from T3 to T2 is critical

5 SMB and .cloud Strategic Marketing and Planning | INTERNAL SYMANTEC USE ONLY

$304 $330 $250 $143

$856 $912

$573

$998

$658 $521 $103 $120

$756 $304 $40 $0





<10

10-49

50-99

100-249

$173 $119 $64 $38

$267 $174 $106

$56

$108 $65

$11

$212 $65





<10

10-49

50-99

100-249


• Big pockets of opportunity exists in the 10-49 sub segments across all Tiers

Market Opportunity by Segment (Germany data)



$5 $3 $2 $5

$60 $25 $37

$3

$84 $18 $18 $40

$143 $45 $3 $0

Market Opportunity by Segment (China data)





<10

10-49

50-99

100-249


• Big pockets of opportunity exists in Tier1 and Tier 2, and the 10-49 sub segments across all Tiers



Key Segmentation Highlights & Takeaways

• Market Opportunity – Tier 1 and Tier 2 and the 10-49 band across all tiers offer the biggest opportunities

• Attitudes towards IT – Tier 1 and Tier 2 view IT as strategic to their business, Tier 3 and Tier 4 view IT as tactical

• Cloud adoption – Tier 1 and Tier 2 firms have adopted cloud solutions aggressively – fueled by revenue growth and need to

have agile/responsive IT

• Mobility – Tier 1 and Tier 2 firms are increasingly using business app's on mobile devices, so the need to secure

those devices is becoming increasingly important

• Channels – Tier 1 and Tier 2 purchase primarily from VARs and Direct from vendor

– Tier 3 and Tier 4 prefer Retail and Direct from vendor

• Brand Preference and Usage – Norton usage is very high across the Tiers, but Symantec is viewed as more suitable to their needs --

therefore, an easy migration path from Norton to Symantec is critical

• GTM & Messaging – Messaging directed at Tier 1 and Tier 2 firms needs to be 2 pronged: (1) Business benefits oriented for

CEOs, and (2) In-depth technical for in-house IT staff

– Messaging for Tier 3 and 4 firms needs to be business issue oriented and simple


8


Key Characteristics Impacting IT Security and Storage/Backup Imperatives

Tier 1 Tier 2 Tier 3 Tier 4

Business Performance & Organizational Characteristics

Key IT-Centric Business Concerns

IT Environment (Managed & Unmanaged and Infrastructure)

Multiple Sites 1-2 Sites

1.5 – 2X higher revenue growth; hiring and expansion

plans, growing base of end points

Mobile communications, virtualization, collaboration, streamlining business

operations, analytical insights, access to enterprise class solutions, managed svcs.

Compliance, integration,

centralization, agility

Single site, average/below average revenue growth, weak hiring plans, cash flow constraints, limited access to capital

CAPEX mitigation

Maintain and extend solution life cycles, CAPEX avoidance

Business grade solutions, network

deployment

IT is fully internally managed

Full/part time internal staff +

partner

Loosely managed: partner + part

time staff

Unmanaged + ad hoc partner involvement

Deep infrastructure, high average end-

point count

Growing infrastructure –

end-points, apps

Thin infrastructure, no network

First implementations

of network

Mobile communications

From 2 into 1 • Compliance – accounting,

regulatory (industry specific) • Enterprise extensions –

integration across firms. Sales to large enterprises drive IT solutions

• Custom solutions required

From 3 into 2 • Collaboration/mobility

• Remote access/VPN • CRM Cloud/ low end • HR Cloud/ on premise

• Branch offices • Company experiences growth and

tries to manage it efficiently without over investing in IT

From 4 into 3 • LAN usage – typically

occurs at 3-5 PCs Segment Migration

Triggers and Behaviors

9

Mindset and Importance of Security and Storage Related Strategic IT Issues (US data)

% of PC Firms who answered 5, “Very Important” + 4, “Important” Scale of 1 to 5, where 5 = Very Important and 1 = Not at All Important

Importance of Strategic IT Issues SMB Total TIER 1 TIER 2 TIER 3 TIER 4

Deploying in-house or hosted data back-up & disaster recovery solutions

60% 80% 65% 71% 40%

Enhancing IT security & privacy 58% 79% 68% 61% 41%

Using server virtualization 57% 86% 63% 60% 39%

Adding IT storage solutions 47% 79% 55% 54% 22%

Outsourcing business processes 31% 62% 43% 30% 11%

Implementing security for company’s mobile devices 32% 55% 48% 27% 24%

Tier 1 firms have an IT security and storage mindset that is fairly distinct/aggressive even relative to Tier 2. The sensitivity to protecting business operations/continuity is highly pronounced.

Tier 2 and Tier 3 firms are much closer in the degree of sensitivity/needs from a mindset point of view. But the two have different implementation styles, given presence of internal IT staff and overall business performance.

Tier 4 firms are less engaged in thinking through security related implications for their business beyond the most obvious.

Material Differences in Attitudes


Managed Vs. Unmanaged: IT Management Environment and Impact on Buying Behavior (US data)

By full - time, internal, dedicated IT employee(s)

By part - time, internal, IT employee(s)

By non-technical, FT co. employees who manage IT on a PT basis, in addition to their main duties

By external technology consultants who handle technology

No one actually looks after it

61%

22%

13%

14%

1%

AMI Tier 3 AMI Tier 4 AMI Tier 1 AMI Tier 2

50%

12%

19%

25%

2%

15%

23%

23%

26%

19%

17%

3%

17%

40%

28%

Strong FT internal resources. IT is a key function

IT not managed in a dedicated manner as a key function

DIY + External consultants as needed (ad hoc) Proactive

Greater awareness of brands and solutions Coordinated acquisitions IT buying integrated with business issues

Proactive Greater awareness of brands and solutions Ad hoc, IT acquisitions

Reactive acquisitions Little awareness of solutions and options No one really is responsible for IT

Passive partner/device dependent acquirers

SMB and .cloud Strategic Marketing and Planning | INTERNAL SYMANTEC USE ONLY 11

Cloud Services Usage Overlay: Degree and Nature of Cloud Adoption (US data)

89%

74%

47%

23%

% of Firms Using Paid Cloud Solutions By Segment


• Agility and competitiveness are key drivers of cloud adoption • Multiple applications and services, high seat count • Integration with on-prem. infrastructure and apps

• Access to enterprise functionality at low cost is key driver • Select applications and services only • Fewer seats deployed, on average

• Some usage of IaaS to complement internal IT

• Negligible usage

Cloud is integral to multiple business areas

Collaboration enabled via cloud

Early stage cautious, limited adoption

Negligible need for IT in any form or manner

• Bundle/partner with CRM, accounting, HR SaaS providers

• Target with comprehensive cloud-based security suites

• Cloud based point solutions or “lighter” suites limited to essential capabilities – e.g. anti-virus + spam control


Security and Backup/Storage Purchase Channels/RTM Preferences and Opportunity Size (US data)

Tier 1 and 2 firms will typically purchase via VARs as they seek expert advice and installation capabilities, regardless of on-premises or cloud solutions. Purchasing cloud solutions direct will continue to be an ingrained behavior over the next few years, before VARs carve out an even larger piece of this business.

Tiers 3 and 4 gravitate towards retail for boxed/packaged solutions for use on a limited number of end-points.


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Total ($M)

U.S. SMB 2010 Security Spending U.S. SMB 2010 Storage/Backup Spending

2% 2% 2% 2%

40% 43% 48% 50%

50% 45% 40% 33%

8% 10% 10% 15%

Tier 1 Tier 2 Tier 3 Tier 4 0.4% 0.3% 0.4% 2% 30% 40% 47% 50%

62% 51% 44% 33%

2% 2% 2% 15% 6% 7% 6%


SPs

DMR

CPs

Vendor Direct

Retail

$969 $611 $416 $11 $983 $568 $395 $175

On Premise

Cloud Based

15% 35% 45% 52% 30%

43% 28% 34% 43%

18% 17% 4%

12% 4% 10% 10%


$601 $337 $196 $75

19% 37%

53% 58% 29%

25% 18% 16% 37% 20% 11% 12%

15% 18% 18% 14%


$666 $505 $148 $210

(Excl H/W)

Personas and Buying Priorities

Purchase Decision Making – Influencers and Personas

Identify Need Specify

Configuration Select Brand

Sign-Off Purchase

Tier 1

Tier 2

Tier 3

Tier 4

• Owner/CEO • VARs • LoB heads • In-house IT

• VARs • LoB heads • In-house IT

• In-house IT • LoB heads • VARs

• Owner/CEO • LoB heads


• LoB heads • In-house IT


• Owner/CEO

• In-house IT • Office Manager • VARs

• Owner/CEO • Office Manager • VARs

• Owner/CEO

Messaging directed at Tier 1 and 2 firms needs to be 2 pronged – (1) Business benefits oriented for CEOs … and (2) In-depth technical for in-house IT staff to quickly get to the heart of the matter. At the same time, messaging needs to have a good bridge between the two, so discussions can smoothly transition from business issues into technical specs and vice-versa.

Messaging for Tier 3 and 4 firms needs to be business issue oriented, AND simpler to digest relative to business messaging to Tier 1 and 2. Emphasis on ease of deployment and usage.

• TCOD

• Not over engineered, yet

scalable

• Known brand,

recommendation

CEO/Owner

• Feature set

• Ease of usage

• Service/support

• TCOD

IT Staff/Office Mgr.


Reaching Target Markets With Appropriate Media – Security and Backup Products and Services (US data)

New Social Media Traditional Print Media

Traditional Social Influencers

Usage of Information Sources for Making Security and Storage/Backup Products and Services Purchase Decisions

0%

10%

20%

30%

40%

50%

60%

70%

80%

Internet /web sites

Search engines

Social media Trad'l mass media

IT-oriented print media

Referrals/ recommend -

ations

Sales reps, bus assocs,

friends/ family

Trade assoc/ industry conf

TIER 1

TIER 2

TIER 3

TIER 4

F.3. How much do you rely on, or use each of the following information sources in your decision making process for purchasing security and storage/backup products and services for your business?

N = 329 % of Internet SMBs who answered 5, “Use heavily” + 4, Scale of 1 to 5, where 5 = Use heavily and 1 = Do not use


16

Appendix

SMB Segmentation Implementation Overview

17

• Implementation components

– GTM • Target customers/prospects more effectively

• Develop Personas for each tier

• Develop tailored messaging and campaigns targeted for the tiers

• Understand key influencers and decision makers

• Understand preferred media vehicles and behaviors

– Product Mapping • Map Symantec solutions to each tier

– Gearbox • For application on large-scale customer and/or prospect databases

– Profiling Tool • For application in face-to-face (phone) and web interactions






<10

10-49

50-99

100-249

Solution Drivers/Needs by Sub-Segment

• Above guidelines used to map Symantec products by sub-segment

• Breadth of features • Compliance • Virtualization • Centralized

mgmt./control • Mobility • Business continuity • Data warehousing • Outsourcing/cloud

• Server backup • LAN based solutions • Outsourcing/cloud

• PC protection and backup

• LAN based essential solutions

• Cloud or on-premises


• Cloud or on-premises


• Outsourcing /cloud

• Mobility

• Breadth of features • Centralized

mgmt./control • Mobility • Data warehousing • Outsourcing/cloud


Drivers/Needs and Priorities by Sub-Segment, <50 employees

Tier 1 (Fully networked multi-site environment, Strong FT IT)

Tier 2 (Fully networked multi-site environment, Limited FT IT)

Tier 3 (Adopting First LANs/Servers,

No IT Staff)

Tier 4 (Non-LAN Environment, No IT)

<10 • Multiple servers – Exchange, database, LOB, BI

• Cloud – multiple apps – accounting, HR, CRM, UC

• E-commerce – colocation/dedicated managed server for paid downloads

• Mobility for senior staff

• E.g. Market research agency

• Multiple servers to manage accounting, inventory, logistics, Exchange etc.

• Cloud – multiple apps – HR and CRM to fit with polished image

• E-commerce – colocation/dedicated managed server

• Mobility business for sales associates – e.g. e-mail

• E.g. Luxury good retailer

• Server adoption – 1 server for file print/share and Exchange (or hosted e-mail such as Google)

• Cloud – Security, storage – paid services to safeguard network and securely store client images/data for access anywhere

• E.g. Modeling/talent placement agency

• Cloud – ISP delivered e-mail & related services

• Transition to laptops • No servers, no IT – more face-to-

face interaction

• E.g. Family owned restaurant

10-49 • Cloud – multiple apps – HR, accounting, UC

• Multiple servers – imaging, databases, Exchange, LOB

• Compliance – Encryption, Data Loss Prevention for patient records

• E-commerce for self service and payments – colocation/dedicated managed server

• Mobility for doctors

• E.g. Medical group

• Multiple servers to manage accounting,, imaging, databases, Exchange etc.

• Cloud – multiple apps – security, storage, HR, CRM, UC

• Web site colocation/dedicated managed server – for communications primarily

• Mobility business for entire staff

• E.g. Accounting/auditing firm

• Server adoption – 1 server for file print/share/store and Exchange

• Cloud – Security, storage – paid services to safeguard IT infrastructure. Store and access/share designs anywhere

• E-commerce store – standard hosting

• E.g. Specialty retailer – cushion covers and home furnishings

• Cloud – ISP delivered e-mail & related services

• Transition to laptops • Occasional need to save files -

client records and billing data • No servers, no IT

• E.g. Landscaping services

PCs and Servers Per Employee High Low

Indicates usage of hosted e-mail

(Verticals examples are illustrative of needs within that sub-segment )


SMB and .cloud Strategic Marketing and Planning | INTERNAL SYMANTEC USE ONLY SMB and .Cloud Strategic Marketing

Drivers/Needs and Priorities by Sub-Segment, >50-249 employees

Tier 1 (Fully networked multi-site environment, Strong FT IT)

Tier 2 (Fully networked multi-site environment, Limited FT IT)

Tier 3 (Adopting First LANs/Servers,

No IT Staff)

Tier 4 (Non-LAN Environment,

No IT)

50-99 • Multiple servers – inventory, ERP, CRM, Exchange, HR

• Cloud – multiple apps – security, storage, HR, CRM, BI, some hosted Exchange

• Compliance – Encryption, Data Loss Prevention in line with supplier/buyer requirements

• Virtualization for server consolidation • Business continuity-replication,

backup • E-commerce on dedicated

colocation/dedicated managed server • Mobility for senior/sales staff • Centralized IT mgmt. • E.g. Sporting good wholesaler

• Multiple servers for Exchange, imaging/storage, LOB apps

• Cloud – multiple apps – security, storage, HR, CRM, accounting, UC, some hosted Exchange

• Compliance – Encryption, Data Loss Prevention for client campaigns

• Virtualization - server consolidation • Business continuity - replication,

backup • Web site colocation/dedicated

managed server to showcase capabilities

• Mobility business for entire staff

• E.g. Advertising agency

• 1-2 servers for file print/share/Exchange/accounting and database management

• E-commerce colocation/standard hosting

• Cloud – Security, storage, CRM – paid services to protect and manage information

• E.g. Furniture manufacturer and wholesaler

• 1-2 servers for Exchange, accounting and file sharing/printing

• Cloud – Security, storage such as DropBox or online virus scan services

• Transition to laptops

• E.g. Garment fabrication unit

100-249 • Multiple servers – HR, ERP, CRM, Exchange

• Cloud – multiple apps – security, storage, CRM, HR, BI, some hosted Exchange

• Compliance – Encryption, Data Loss Prevention

• Virtualization for storage, server consolidation, some thin clients/virtual desktops

• Business continuity-replication, backup

• Web site colocation/dedicated managed server/portal for account management

• Mobility for select staff • Centralized IT mgmt. • E.g. Regional bank

• Multiple servers – digital case records, video depositions , Exchange, accounting, HR

• Cloud – multiple apps – security, storage, HR, UC, some hosted Exchange

• Compliance – Encryption, Data Loss Prevention

• Virtualization–storage/server consolidation

• Business continuity – replication, backup

• Web site colocation/dedicated managed server to showcase capabilities

• Mobility for attorneys • Centralized IT mgmt. • E.g. Law firm

• 2-3 servers for accounting, database, Exchange, LOB application

• Cloud – Security, storage, CRM, HR • Virtualization – server

consolidation • Business continuity – backup and

restore • E-commerce colocation - portal for

client self management • Mobility for supervisory staff

• E.g. Building mgmt & maint. firm

PCs and Servers Per Employee High Low

Indicates usage of hosted e-mail

(Verticals examples are illustrative of needs within that sub-segment )

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