Symantec Launches A ‘Long Tail’ Small Business Strategy For EMEA
Martin Hingley
Symantec has launched a dedicated team in EMEA to address the small business market more effectively. Having had a chance to talk to its executives, customers and partners Martin assesses the move and provides background information on the World's fourth largest software company.
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ITCandor - Information Technology and Communications research
Symantec launched a new EMEA Small Business group in May 2009. It invited a number of analysts along to its impressive EMEA Business Centre in Reading on July 2nd to tell us about its plans.

Its presentations and discussions, which included customers and a partner as well as the company’s sales people and executives, illustrated the need to focus on specific business opportunities – in this case Small Business. I believe this is more important than ever in a downturn. It epitomises a practical implementation of advice given in books such as Geoffrey Moore’s Crossing The Chasm and Chris Anderson’s The Long Tail.

One interesting discussion we had was about the description of businesses as large and small. While it makes sense from a top-down approach to classify companies as large, medium and small (in Symantec’s case ‘small’ means 5 to 99 employees), companies themselves don’t like to be called small. My (not wholly serious) suggestions would be to use terms such as ‘Enterprise lite’, or to borrow words such as ‘Express’ and ‘Metro’ from the language of supermarket chains.

Symantec Backgrounder 2009

Symantec had revenues of $6.2 billion in the year to the end of March 2009, making it the fourth largest software company after Microsoft, Oracle and SAP taken from a ‘company’ point of view (and after Microsoft, Oracle and IBM if you look at just software revenues). It claims that its products help back-up 50% of the world’s data and that they touch 33% of the 60 billion emails sent worldwide every day. It also claims to have 50k partners and 50 million active users.

Like many other US-based vendors it has enhanced its business through acquisition. I am not aware of any other acquisition in the software industry larger than the $13.5 billion it spent on Veritas in July 2005. However most of the companies it has taken over are far smaller. For a list please see Table 1. Symantec specialises in data protection, anti virus, security, storage and systems management solutions, back-up and de-duplication. It generates approximately 30% of its worldwide revenues from consumers, for whom Norton is the most well known anti-virus software. The majority of its revenues in the business-to-business market come from large and medium companies, although it claims that 68% of its total transactions come from small companies.

Symantec’s revenues have grown significantly, albeit helped by the non-organic revenues of acquired companies. A picture of revenue and Symantec’s largest acquisitions are shown in Figure 2.

Symantec’s revenue growth has also been significantly affected by the Veritas acquisitions, giving it high growth in the quarters following the purchase. Although it has enjoyed stronger growth than most non-software companies it has under-performed SAP, Oracle and Citrix in recent quarters in terms of rolling 4 quarter revenue (see Figure 3).

One interesting development has been its decision to announce a non-cash expense of $7.4 billion in ‘goodwill impairment’ in the last 2 quarters of its latest financial year, a decision based on the poor macroeconomic climate, the drop in the value of the company’s shares (to around $10 last November), the impact of the recession on the company’s short-term growth rate and new assumptions about the increased cost of capital. It will be interesting to see if other ITC companies have to announce similar provisions in their Q209 financial reports.

Andrew Douglas Heads Symantec’s New EMEA Small Business Group

Symantec has already launched a US Small business approach coverings a lot of what’s required in EMEA, however it has decided to do more by launching a new specialised group in May 2009. Headed up by Andrew Douglas, it has dedicated 44 full-time sales people to the team enhanced by a virtual team of 35. The sales team is split into Small Business Account Managers (SAMs) who work on a 1:20 basis covering around 400 of the largest partners and Internal Small Business Account Managers (ISAMs) who work on a telephone basis and a 1:60 basis with about 1,200 of the smaller partners.

Like all ITC companies Symantec spends a lot of time talking in acronyms – especially in the product area. So it’s a good idea to translate these for those not too accustomed to its offerings. Symantec’s products for Small Businesses in order of sophistication and price include:

Symantec Anti Virus (SAV)

Back-up Executive (BE) – the next version of which (BE 2010) will include de-duplication and email archiving as standard features.

Back-up Executive System Recovery (BE SR)

Symantec End-Point Protection (SEP)

Symantec Protection Suite (SPS)

Network Access Control (NAC)

It is passing referrals across to MessageLabs where appropriate since this acquired company has not yet been fully integrated into Symantec.

Its campaigns are being built on a quarterly basis and cover a number of areas. In particular:

Marketing Themes– these are ideas such as ‘Anti Virus is not enough’, ‘run your business’ and ‘we’ll protect you’.

Installed Base Programmes – these include BE upgrades, up-selling from SAV to SEP and from SEP to SPS.

Competitive Programmes – against the usual suspects

Campaign Themes – these include ‘information is your business, don’t risk it’

The company sees several areas of growth in sales to Small Business, including Software as a Service (which it handles direct), ‘e-Enablement’ (where it doesn’t intend to by-pass its partners), extending its Systems Builder programme, and through adding resources to its ISV campaign. Symantec was keen to point out that it sees partners as the primary channel to Small Business and that it will do everything to preserve this.

Symantec admits that as a result of its many acquisitions (see Table 1), it has become more difficult to work with. Therefore it has made efforts to improve the experience its partners have with it as a supplier. These include:

A multi-lingual dedicated sales operations team based in Dublin covering EMEA as a region

A Stock-Keeping Unit (SKU) finder.

A Small Business specific price list and buying programme.

A renewals campaign split in two for those under $5k and those under $750. It admits that there are currently too many rejections.

Better partner communications, addressing concerns around both frequency and quality

Rewards and partner lead management aligned with Small Business specialisation.

Table 1 – Symantec Acquisitions By Date, Area And Price From 2002

Date Acquisition/Merger Area

Price ($m)

April-09 Mi5 Networks Web security gateway November-08 MessageLabs SaaS Online security, 19k clients

$695

August-08 PC Tools PC utilities, Australian

$250

August-08 nSuite Technologies Desktop virtualisation

$20

June-08 Swapdrive Consumer storage management

$124

April-08 AppStream Application streaming

$53

January-08 Transparent Logic Technologies Business process automation and workflow December-07 Vontu Data loss protection

$350

April-07 Altiris Endpoint management solutions

$1,015

February-07 4FrontSecurity Risk management

$7

November-06 Company-I Data centre optimisation, UK

$25

November-06 Revivio Continuous data protection

$20

February-06 Relicore Data centre change and configuration management

$52

February-06 Imlogic Enterprise instant messaging

$91

January-06 Bindview Agentless IT security compliance

$221

October-05 Sygate Enterprise network access control, 200 staff

$177

October-05 WholeSecurity Behaviour-based security and anti-phishing, 60 staff

$68

July-05 Veritas Storage software

$13,520

May-05 XtreamLok Anti-piracy and activation technologies, Australia, 30 staff

$18

December-04 Platformlogic Host-based intrusion protection

$30

October 8, 2004 @stake Digital security

$49

September 17, 2004 Liric Associates Global network security, UK

$15

July-04 Turntide Anti-spam router

$28

June-04 Brightmail Messaging security

$370

November-03 On Technology Software distribution, inventory and patch management

$101

September-03 PowerQuest Enterprise IT management

$150

October-03 SafeWeb SSL VMO

$26

July-03 Nexland Firewall and VPN

$20

April-03 Roxio-Goback System recovery

$13

August-02 Recourse High speed network intrusion protection

$135

August-02 Riptech Security operations centres (Texas, UK, Germany and Japan)

$145

August-02 Securityfocus Threat management and alert services

$75

July-02 Mountain Wave Enterprise security management

$20

Source: ITCandor, July 2009

Symantec Small Business Customer And Partner Experiences

There were two customers and one partner represented at the meeting. They ha d a number of observations on their experiences with Symantec and its products. In particular:

McVey and Murricane Solicitors – Aiden Curran explained that his small business is a market-leading law firm providing a full spectrum of legal services. clients include some of the UK’s largest lending institutions, a wide range of Independent Financial Advisors and Estate Agents, commercial organisations and private clients. McVey & Murricane embraces technology understanding. It recognises the important role that IT plays in providing a robust and resilent platform for enabling business management and growth. His company has 7 servers, running Microsoft Exchange. Case Management is a key business application and this is why he has implemented multiple measures to ensure its availability, removing any productivity issues were it offline. They have used Symantec’s BE and SEP on servers and PCs. He also reported that he had managed to add device control using Symantec and Cisco products, locking out the use of CD-ROMs and USBs from the company’s staff.

Datascape Online (DSO) – Andrew Beechener represented this Manchester based company which provides Online back-up and recovery services to small companies in the financial services, legal sectors, as well as some government departments. The company’s change from a Business-to-Consumer (B2C) to a Business-to-Business (B2B) model came about through the willingness of Independent Software Vendors (ISVs) like Symantec to integrate their offerings into Online services. The growing flexibility of software licensing has enabled the company’s business growth. Andrew indicated that his company sees major opportunities in offering Cloud services to small business which would not be an option in the case of a large company with its own IT infrastructure. Andrew uses his own term ‘modest computing’ to describe the trend towards separating hardware and software. As a Service Provider DSO could be negatively affected by a move by Symantec towards direct selling. It should be reassured by its decision not to do so. Andrew is a big fan of de-duplication, claiming that the company’s customers had achieved compression rates of up to 98%, in one case reducing hard disc storage from 1.6TB to 360GB

Aindale Business Management Services Ltd (Aindale BMS Ltd) – is a Symantec partner. The company’s Wayne Cockerill spoke to us about how it offers services to its own set of small business customers. It segments these by size at 30, 50 and 100 users. He stressed that typically IT knowledge grows with company size, that typically these companies look for value propositions rather than technical discussion to help them make decisions. Even in those clients which have some IT knowledge Wayne suggested that a certain amount of retraining was often required for them to make best use of the company’s services. His observation about the use of Symantec products was that only the >100 employee companies tended to use offerings such as Brightmail and NAC. The recession is hitting Small Business in a number of ways. For instance: even when renewing business companies are looking to receive quotes from 3 different companies, some competitors are ‘trashing the renewal base’ and profit margin is becoming ‘more of an option’. Slightly sad is the fact that customers are buying Aindale’s security offerings to protect them from data being lost through staff redundancies

This was an interesting set of people to discuss the downturn and Symantec’s new approach with, especially because they had not been ‘rehearsed’ to repeat marketing messages. In particular I picked up that the initial version of SEP had product problems, that the EMEA call centre was behind the US one in terms of its technical abilities and – in Aiden’s case – that the ability to speak some Spanish came in useful in sorting out an issue. Allegedly the footprints of Symantec’s products are smaller than they once were; however a criticism of competitive products was that it’s easy to have a small footprint if the product doesn’t do very much

Conclusions – It Makes Sound Sense For Symantec To Focus On Small Business In EMEA

The Small Business sector in EMEA is very different to that in the USA for a number of reasons. For instance:

There are more because the national structure of the region reduces the number of larger companies – imagine a series of small triangles representing businesses by size, rather than a single big one

They are more complex because of different culture and natural language, making the location of support more critical, which in turn has led to two-tier distribution as the norm for IT products and services.

Although the recession has severely affected this sector over the last year, it is likely to be the first business area to recover – especially as smaller companies tend to be more dynamic in adjusting to new opportunities and business ideas.

It will be interesting to see how successful Symantec is in addressing these customers more seriously in EMEA. Because there are so many this is likely to be seen mainly in increased sales of its products. While it may have exposed some flaws of its previous activities in this briefing it will certainly do better than other companies which fail to focus on this vital area of the EMEA IT industry.