There are an estimated 400 million SMBs (small and medium-sized businesses) around the world so it is no surprise that they are a target for telcos.
In most countries, it is accepted that SMBs are the main source of job creation, accounting for over 95% of enterprises and 60-70% of employment worldwide. SMBs are universally recognised both as the drivers of national economic success, the bedrock of local business, and the incubator of future market leaders.
This market opportunity has not gone unnoticed by telcos around the world as their battle for new revenue and profit grows, particularly as competition for business with larger corporate enterprises and public sector organisations is being intensified through deglobalisation and strained government budgets.
Robert Pritchard, Principal Analyst, Enterprise Technology and Services at GlobalData, comments: “There has always been a glamour associated with winning ‘big ticket, big name’ business, but often margins are tight, and the resources required for delivery are substantial and often in short supply. That’s why telcos around the world are refocusing on smaller businesses. They have also noticed that SMBs are often less cost-driven and mainly require reliable and secure services and applications that basically meet their needs without too much fuss. This makes for a super-valuable behavioural market sub-segment as margins are high, churn is low, and there are plenty of upselling opportunities.”
GlobalData analysis reveals that telcos are expanding beyond their core connectivity business with value-added solutions and strategic partnerships, usually in adjacent or connectivity-enabled markets such as security and hosted applications, in order to improve their SMB propositions.
Pritchard adds: “Telcos have long known that SMBs are a huge market, but they have been challenged in how best to address such a diverse opportunity. Often, they have resorted to simple connectivity products with one or two extra features, or to bundles to try to optimise their ability to capture share of wallet.”
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By GlobalDataPritchard continues: “The game is changing. Competition is forcing telcos to become more imaginative, changing their thinking from technology push to business needs pull – essentially the narratives they have been using in the larger enterprise market. There is also a potential tectonic shift in telcos’ ambitions to be able to address what is known as the ‘segment of one’ – highly tailored solutions that meet the needs of each individual business. Telcos are starting to understand that they have the data, and now also the tools (AI/Artificial Intelligence-driven), to analyse customer behaviours and trends so they can focus their own sales efforts or enable businesses to ‘pick and mix’ offering themselves to meet their specific needs, ideally using a portal to empower the customer and reduce service provider overheads. The AI-driven approach also represents a substantial commercial advantage for longer established service providers who have mountains of data to exploit. The SMB market is the hottest area in the telco enterprise market. It represents a huge opportunity across all countries, and now service providers are scrambling to up their game to drive future revenue and profits.”
