XSLED 17 STATE OF THE SLED MARKET Fielded

#XSLED 17 STATE OF THE SLED MARKET • Fielded by The Channel Company • February / March 2017 • 170 Qualified Respondents

Revenue Trends 30% of Revenue Derived From SLED Average Percentage of Revenue Derived from SLED 15% of Revenue Derived from Fed Average Percentage of Revenue Derived from Federal Accounts #XSLED 17

Local Government Focus Leads The Way 79% [VALUE] 71% State Government Local Government Higher Education Which of the following specific SLED (state, local and education markets) customers do you serve? What percentage of your company's overall revenue is derived from state/local government or education customers? 70% K-12 Education #XSLED 17

K-12 Represents Fastest-Growing Sector 31% K-12 Education Higher Education 17% Local Government [VALUE] State Government 26% 0% 10% 20% 30% 40% #XSLED 17

78% Reported Increased SLED Sales in 2016 vs. 2015 Hyper-growth (YOY Sales Increase of 20% +) 24% Fast-growth (YOY Sales Increase of 10 -20%) 32% Moderate Growth (YOY Sales Increase of up to 10%) 22% 19% Holding Steady (Flat Sales) Declining Sales 3% #XSLED 17

Challenges In Growing/Expanding SLED Business Competition 52% Pricing 50% Bidding process 43% Budgets 42% “Red Tape” 25% Long sales cycles 24% Connecting with the right contacts 21% E-Rate issues Getting our foot in the door Resources 14% 6% 5% #XSLED 17

Fastest Growing Technology Areas for SLED Business Cloud Services & Solutions 28% Managed Services 19% Security Services & Solutions 14% Application Development 12% Big Data 12% IT Consulting Services 12% Mobility 12% Data Center Services & Solutions 10% Automation 9% Hardware Resell & Integration 9% Software-as-a-Service Identified as Fastest Growing Cloud Technology for SLED Business Anti-Virus/ Malware/Spyware/Threat Management Identified as Fastest Growing Security Technology for SLED Business #XSLED 17

Technology Supplier Funding Are you seeing an increase in technology supplier funding to drive customer demand marketing to SLED customers for your organization? Yes 66% No 34% 7 out of 10 Solution Providers that are not seeing an increase in tech supplier funding report that it negatively impacts their SLED business growth. #XSLED 17

Tech Suppliers that UNDERSTAND SLED Market and How to Grow SLED Sales via Partners Microsoft 43% Cisco 41% Dell/EMC 38% HP VMware 34% 27% Top Strategic Vendor Partners for SLED Business Microsoft Cisco 24% Dell/EMC 24% HP 25% VMware HPE 25% Ingram Micro 24% Google 22% Lenovo 22% 19% HPE Apple AWS 32% 16% 13% 12% Lenovo 11% AWS 10% Apple 6% IBM 6% #XSLED 17

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