Telcos around the world have pivoted to target smaller businesses for the opportunity to grow their enterprise revenues, says GlobalData, a leading data and analytics company.
Robert Pritchard, Principal Analyst, Enterprise Technology & Services at GlobalData, says: “Deglobalization and hypercompetition in the multi-national corporation (MNC), large corporate, and public sector segments of the telecoms market have seen service providers re-examine their priorities, with most now realizing that the small business market potentially offers the best opportunity to grow revenues and margins. This is particularly the case in the UK.”
With 5.5 million small and medium-sized businesses (SMBs) in the UK, the country is distinguished by the proportion of smaller businesses compared to peer countries such as Germany – the UK has exponentially more enterprises that are small (5.45 million with up to 49 employees), rather than medium-sized (37,800) according to the UK Office of National Statistics.
Pritchard comments: “In spite of economic and tax headwinds, the UK’s small businesses will continue to drive economic growth. Some may not last for more than a few years, but all large companies started small.”
Despite a flat or even slightly shrinking base of SMBs, their increasing reliance on technology to drive their growth and profitability offers service providers the opportunity to move “beyond connectivity” to value-added offerings such as cybersecurity, hosted and unified applications, and AI-enabled services – although this is still in its early days as a market.
Pritchard explains: “Essentially, SMBs are emulating their larger corporate counterparts as business solutions enabled by technology become the watchword – and this pace of change is accelerating, driving growth in the overall market opportunity.”
Pritchard continues: “Needless to say, a market with 5.5 million target customers is complex, confusing and disparate, so to get it right service providers need to understand who their target customers are and what they want. Segmenting the market by number of employees is the usual way, but it is dumb and not fully fit for purpose. Far greater insight is needed to differentiate and succeed in a crowded and increasingly competitive market. In addition, a structured go-to-market strategy that embraces direct, indirect, and digital channels needs to be designed around the specific needs of target customer clusters.”
Pritchard concludes: “GlobalData also expects that UK service providers will identify the Small Office Home Office (SOHO) market as the next big opportunity as it follows the same evolutionary path as its larger counterparts. This will pose new challenges as it overlaps the consumer market and telcos are generally not structured to cope with such challenges. This journey will not be easy, but it offers the best opportunities for the B2B revenue growth that telcos so desperately need.”
