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Monday, 18 August 2014 13:10

Why the small and medium sized business market is wide open to service providers

Posted By  Liron Golan

If you’re a service provider then you’re missing a profitable sector by ignoring the small and medium sized (SMB) market says Liron Golan of Amdocs

When you consider that ninety nine percent of businesses worldwide are SMBs, it is no surprise that they are proving to be the fastest growing customer segment for service providers.

We decided to commission Coleman Parkes to research this market and key findings reveal that cloud-based services offer an interesting opportunity for service providers to break into the profitable SMB market. Here are some of the top line results:

  • More than 66% of SMBs consider cloud services to be extremely important to their business
  • Nearly 60% of SMBs already consume cloud-based services, such as storage and backup (72%), computer networks (48%) and office software (41%)
  • 44% of those who aren’t yet using cloud-based services, are actively considering it

 

Whilst three quarters of SMBs (74%) would prefer to receive their cloud-based services from their current primary communications service provider, only 45% actually do.

 

Surprisingly, 33% of SMBs weren’t aware that their primary service providers even offered cloud-based services. When you consider this, it is evident that service providers are still ideally positioned to capture a significant portion of SMB market share.

A refocus on what’s important to SMBs

Whether acting as a cloud service broker or selling cloud-based services directly to SMBs, it is questionable how well service providers really understand what the requirements of SMBs are of their cloud vendors.

The research aimed to investigate this in detail, by surveying over 1,300 SMB decision-makers across multiple industries in North America, Europe, Latin America and Asia Pacific regions. This in-depth study, which is the first of its kind on such a scale, shows that 67% of SMBs are more likely to select services, if offered, from a service provider or extend their current contracts with their primary service provider, to include cloud-based services.

We found that 34% believe their relationship with their primary service provider would even be enhanced by being offered cloud-based services. Looking past the clear need to better highlight their offerings in this area to potential SMB customers, the research also demonstrates that service providers need to ensure their cloud-based offerings include the following:

  • A single bill for all communication services – as favoured by 80% of respondents
  • Bundles of cloud-based services and traditional communications services – wanted by 75% of respondents
  • Tailored offerings – requested by 51% of respondents

Thinking about operational requirements

The challenge of achieving competitive differentiation against independent cloud vendors is a constant struggle for service providers, whilst also striving to keep costs to a minimum. To overcome this, service providers need to implement a solution that makes setting up a cloud business simpler.

They can do this by paving the way for them to use their existing systems to support cloud-based services and by introducing one-stop-shop information and communications technology (ICT) capabilities. Through a solution such as this, service providers can offer more value to SMBs and can drive increased SMB loyalty by tailoring bundles of core and cloud-based services to cater to SMBs, and generate incremental revenue from cloud play and new related business models.

The ability to rapidly introduce new revenue streams with cloud-based services, for solutions such as storage and backup, by enabling their cloud ecosystems and ICT services through quick partner onboarding, is a vital requirement of SMB service providers. With BSS and OSS capabilities, service providers can manage and bundle their existing and cloud services, which through leveraging cloud technologies, such as virtualisation, can reduce cost to businesses.

Ultimately, to allow service providers to set themselves apart from independent cloud vendors and empower SMBs with cross-service bundles and personalised discounts, what’s required is a convergent systems environment, in combination with enhanced SMB self-service capabilities.

About the author

Liron Golan is product marketing manager at Amdocs, where he is responsible for defining the marketing and business strategy for Amdocs’ telco cloud solutions, which include cloud brokerage (cloud enablement) and BaaS (BSS as a service). 

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