The SMB opportunity for CSPs

David Bellini of Accenture

Small and medium-sized businesses (SMBs) play a substantial role in the global economy. While it’s easy to focus on the larger players, the International Labour Organisation estimates SMBs contribute around 70% of global GDP and about the same proportion of total employment around the world, says David Bellini, managing director communications and media, Accenture.

The SMB market has been widely underestimated by Communications Service Providers (CSPs) until now. Faced with increasingly saturated consumer and enterprise markets with limited growth, many CSPs are finally waking up to the SMB opportunity.

However, to capitalise on this opportunity and reap the rewards, CSPs must treat SMBs as a distinct market with unique needs…

What SMBs really want

The pandemic accelerated SMBs’ digital transformations and they have been spending more across a range of technologies. In fact, SMB spending on IT and digital services between now and 2026 is set to increase by 7.6% CAGR to reach $1.7Tr, according to Analysis Mason’s SMB Technology Forecaster.

So, where do they want to invest? Our own research identified that SMBs are looking for easy, pre-bundled options that come with strong support. They have made a decisive leap to digital but need the support and tools to make this switch as successful as possible. These include cloud-based services, support for secure remote working and digital customer.

Frustratingly for SMBs, there’s a significant gap between what they want and what’s currently available including exhaustive product catalogues full of technical data, irrelevant features and unnecessary complexity.

Re-building the model

To meet SMBs needs, including their growing appreciation of new tech, the desire for a single vendor, access to the right customer support, as well as to pre-bundled solutions, CSPs need to move away from their traditional, linear sales models. Instead, they need to build and orchestrate an ecosystem business model that gathers relevant partners and SMBs together.

SMBs’ needs are diverse from online reservation systems for a restaurant, to billing software for a law firm and no single provider can meet them all. But there is a clear opportunity for CSPs to assemble and market the relevant hardware, software, and service providers in a platform-based model. Combined, thes will enable CSPs to better explore untapped use cases and growth areas in the SMB segment.

If telcos can do this, they will increase value for themselves and for every participant joining the ecosystem. In other words, connecting all stakeholders in a digital platform ecosystem that they host will generate value and establish connections that extend beyond one-off transactions. CSPs will be at the heart of a thriving, collaborative, and interactive community.

Exploring the digital market ecosystem model

While the marketplace concept is not new to CSPs, most attempts to put it into practice to date have fallen short. The main reasons for this are the low value they have generated from current marketplaces as well as the difficulty of scaling and creating synergies.

To succeed, a digital marketplace platform needs to provide several additional key components, and they’re quite different from what we’ve seen in the past:

  1. Curated vertical bundles: These do the heavy lifting for SMBs by packaging what they need to achieve for a given business goal with simple and clear pricing. These bundles need to be supported by the next important element…
  • Guided journey: SMBs expect support that understands what they are trying to achieve along with recommendations for the right path to get there.
  • Seamless integration: Implementing a bundled solution needs to be as seamless as possible. And it also has to adapt to each SMB’s degree of technological maturity and savviness. Provisioning cloud-based solutions, services, and support could make it easier for SMBs to stand up new solutions and continue successfully with their digital transformation.
  • Business analytics. A marketplace can do more than simply provide a better way for SMBs to procure the technology they need. It can create higher levels of engagement and longer-term commitment post-sale by offering SMBs a range of valuable tools to do more with their business. These might include, for example, data analysis that enables SMBs to track key performance indicators and progress toward business objectives. As the marketplace orchestrators, CSPs would have access to a unique combination of data from across the ecosystem. This allows CSPs to create engagement in the marketplace and monetise their platform investments via value added services and new business models.
  • Thriving community: Done right, a marketplace-driven model can establish a vibrant community that brings together SMBs, partners and vendors to create new opportunities for monetisation for all participants. SMBs trust their peers and are keen to learn from others’ relevant experience. This community gives SMBs and other participants such as Independent Software Vendors (ISVs) a reason to adopt and engage within the marketplace, thus driving opportunities for new transactions and incremental capture of data (e.g., market insights, SMB preferences, and pain points/challenges).
  • Marketplace approach. Traditionally, we have seen CSPs build up digital storefronts as their “marketplace”, through which they would sell bundled telco and ISV solutions to SMBs. However, achieving sustainable growth is predicated on adopting a multisided marketplace model. A multi-sided platform model brings together as many suppliers and customers as possible in a single platform. This approach entails that any participant to the marketplace can engage with, or sell their services and/or products, to the other. In other words, not only CSPs or ISVs can sell to SMBs, but SMBs can sell to other SMBs and even act as ISVs. In this model, the CSP generates profit by orchestrating the high volumes of transactions between all the participants.

The way forward

As CSPs consider how to expand their SMB business with new pathways for growth and diversification, a marketplace-driven business model can help and drive significant revenue and avenues for growth. But CSPs need to move fast. Big tech players are building offerings to address this market, so delaying means losing market share, or being cut out altogether.

The author is David Bellini, managing director communications and media, Accenture.

Comment on this article below or via Twitter: @VanillaPlus OR @jcvplus

RECENT ARTICLES

Connectbase expands baltic connectivity with Bitė partnership

Posted on: March 28, 2024

Connectbase has announced the addition of Bitė to its ecosystem. This partnership marks a step forward in enhancing connectivity options within the Baltic region, providing a link between local and

Read more

IOT Solutions World Congress 2024 connects semiconductor chips to industry

Posted on: March 27, 2024

Essential to manufacture computers, smartphones, cars, refrigerators or any electronic device, semiconductors are critical elements in the implementation of the Internet of Things. For this reason, IOT Solutions World Congress

Read more