RESEARCH STRATEGY REPORT DIGITAL SMEs: OPPORTUNITIES FOR CSPs PROVIDING SOCIAL, MOBILE, ANALYTICS AND CLOUD SERVICES CHRIS NICOLL and SANDRA O BOYLE Analysys Mason Limited 2015 analysysmason.com
About this report This report looks at how communication service providers (CSPs) are bundling elements of social, mobile, analytics and cloud (SMAC) platforms to provide small and medium-sized enterprises (SMEs) with advanced tools and services in return for increased ARPU and stronger customer relationships. 1 The report also provides recommendations to CSPs on key service features, bundling strategies and customer segmentation. It is based on several sources: reviews of service provider SME portfolios and strategies interviews with executives at service providers targeting SMEs. COMPANIES COVERED DropBox Google Apps McAfee Microsoft Salesforce Symantec CASE STUDIES AT&T (USA) Telefónica 02 (UK) Verizon (USA) Vodafone (UK) KEY QUESTIONS ANSWERED IN THIS REPORT Why do SMEs, and not just large enterprises, need to use technology to transform their business to compete in a digital world? How can CSPs address SME pain points and enable their businesses with SMAC technology and services? What are the key elements of innovative service offers/bundles for SMEs? Which service providers are offering SME portfolios with SMAC elements? How are CSPs transforming processes and platforms to deliver digital services? WHO NEEDS TO READ THIS REPORT CTOs, strategy and product development and management executives in CSPs. Vendors that are advising and selling SME technology and solutions to CSPs. Cloud and IT service providers and mobile virtual network enablers (MVNEs) that are targeting the SME segment. Cloud technology and software vendors that partner, or plan to partner, with CSPs in targeting SMEs. 1 In this report, SMEs are defined as companies with fewer than 250 employees. Analysys Mason Limited 2015 2
CONTENTS EXECUTIVE SUMMARY SMEs ARE GOING DIGITAL CSPs AS PARTNER OF CHOICE REDEFINING SME SERVICES APPENDIX ABOUT THE AUTHORS AND ANALYSYS MASON Analysys Mason Limited 2015 3
Executive summary Communications service providers (CSPs) are well positioned to sell SMAC services to SMEs. The difficult part is delivering these services with a good customer experience. CSPs need to be easier to buy from, and need to simplify and digitally transform their processes and operations. SMEs are demanding a one-stop shop for their digital services. They are more reliant than ever on technology and the latest apps to compete effectively. CSPs have the challenge of selling digital services profitably to a diverse set of small businesses, while at the same time adding value and providing real business solutions. CSPs are transforming processes, developing integrated network and cloud platforms, and value propositions that focus on business benefits and individual customer segments. CSPs need to speed up provisioning times and offer better levels of customisation on solution components. Analytics and sophisticated customer segmentation play a key role in helping SMEs understand customer requirements in terms of vertical solutions and preferences. CSPs need to add partnerships to stretch their brand into new areas such as digital marketing, mobile advertising platforms, mobile point of sale solutions and the Internet of Things (IoT). Figure 1: SME services are evolving as communications service providers transform towards digital service providers Real-time upsell recommendations 1 2 3 Analytics for SMEs e.g. retail footfall insight, mobile advertising Vertical solutions Cloud business apps Connectivity and collaboration services CSP BENEFITS LEADING EDGE OPTIMISED WITH ANALYTICS CURRENT BEST-IN-CLASS Improves targeting, relevancy and ultimately sales TRADITIONAL Enables digital services and transforms CSP image Verticals surface specific needs and drive solutions Source: Analysys Mason Analysys Mason Limited 2015 4
Delivering a good customer experience to SMEs is a real challenge Integrated cloud and network platforms, analytics and integrated omni-channel customer care are key to efficiently serving SMEs, increasing customer satisfaction and loyalty. Customer experience and engagement is critical in knowing the customer and ensuring loyalty and satisfaction. SMEs can use self-serve portals for routine ordering, bill checks etc., but service providers also recognise that the personal touch is an important option for SMEs at particular stages of the buying journey. The key is giving customers a choice and a consistent experience. Service providers are investing in teams to support small businesses to give advice on technology and cloud solutions, help with migration and provide after-sales support. This can be done in-store, on the phone and via web chats or video. CSPs are also investing in marketing and customer engagement, for example small business blogs, social media, developing case studies and best-practice material. This is a positive step for service providers in developing better customer relationships. CSPs have a huge amount of rich data on SME customers available to them the types of businesses, the types of apps they are using, the stage of maturity of the businesses and their preferred customer support channels. Buying patterns can also be analysed, interpreted and fed back into marketing, sales, product design and customer care departments. Figure 2: CSPs should offer omni-channel customer care and should obtain a full picture of SME customers Print Internet Mobile Social Retail store Call centre Scan brochures Read reviews Order online Ask opinion Check order Collect in store Compare products Post review Query and problem resolution Read contract In store use Return and exchange in another store Analysys Mason Limited 2015 5
CSPs are taking control of SME cloud strategy with integrated services and customer care Service providers have to ensure that whatever services they launch can be supported end-to-end. There is a move away from a generic cloud marketplace to provisioning best-of-breed, handpicked business apps that can be fully supported not just with a secure cloud platform, but also in terms of customer support cloud consulting, technical support and migration assistance. SMEs can be loyal and profitable customers especially if buying multiple services. CSPs are focused on developing portfolios with customer needs and technology journeys in mind, starting naturally with connectivity and then unified communications moving to collaboration tools and cloud business apps (SaaS). In terms of cloud services, the focus is on best-of-breed apps that increase productivity (for example, Office 365) or protect the business (for example, device security or asset tracking), or enable revenue (for example, mobile point of sale). CSPs are also moving to take full control of cloud SME strategy, adding value with cloud enablement, provisioning and analytics, not over-relying on partners but leveraging partners such as cloud brokers, independent software vendors (ISVs) and local partners when it makes sense. The next phase is to develop more vertical solutions incorporating big data analytics, IoT, mobile advertising and digital marketing solutions. Figure 3: CSP investment in platforms to add value as cloud service providers FIELD SERVICES CALL CENTRE ISV DATA CENTRE SMEs VARs CLOUD SERVICE PROVIDER CLOUD ANALYTICS CLOUD ENABLER NETWORK ONLINE (WEBSITE, SOCIAL) CSP DATA CENTRE DropBox Google McAfee Microsoft Salesforce Symantec Source: Analysys Mason Analysys Mason Limited 2015 6
Recommendations 1 CSPs should develop cloud and business app services, and digital marketing and analytics services, that add value, even if margins are lower than mobile and fixed voice and data services. CSPs should aim to provide a full solution to SMEs and be their partner of choice for their ICT needs. Consumer ARPU is under pressure and SMEs are an important revenue source, but they have an increasing choice of providers. CSPs have the advantage of existing customer relationship and local stores with business advisors. 2 CSPs have to get the back-end systems and processes right to deliver a positive customer experience, before launching new SME cloud services. Of course, it is no small task for many service providers to transform legacy processes and systems, but the single biggest issue that comes up in terms of provisioning SME services is how hard it is to get the service right reduce provisioning times, provide accurate billing and provide real-time changes. 3 Vertical solutions make sense for CSPs to develop, particularly when targeting larger SMEs with bundles of services. This is new territory for CSPs and can be very unforgiving if not done with total commitment. Customers can tell when solutions are only skin deep or if CSPs are really taking the trouble to listen to them and understand the digital needs of their business. CSPs will need to improve their ability to work with partners, develop new value propositions around business benefits and conduct studies showing use cases by vertical etc. Analysys Mason Limited 2015 7
CONTENTS EXECUTIVE SUMMARY SMEs AND GOING DIGITAL CSPs AS PARTNER OF CHOICE REDEFINING SME SERVICES APPENDIX ABOUT THE AUTHORS AND ANALYSYS MASON Analysys Mason Limited 2015 25
About the authors Chris Nicoll is the head of Analysys Mason s Network Technologies and Enterprise and M2M research practices. His primary areas of specialisation include wireless access technologies, wireless traffic forecasting, mobile infrastructure and operator strategy. Chris has more than 20 years of expertise as a leader in defining telecoms strategy. Prior to joining Analysys Mason, Chris held Principal Analyst positions at ACG Research and Nicoll Consulting, where he developed marketing strategy and positioning for leading telecoms operators. At Yankee Group, Chris was a member of the Yankee Group Research Council and provided thought leadership to the research organisation. Analysys Mason Limited 2015 26
About Analysys Mason Knowing what s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research. Research We analyse, track and forecast the different services accessed by consumers and enterprises, as well as the software, infrastructure and technology delivering those services. Research clients benefit from regular and timely intelligence in addition to direct access to our team of expert analysts. Our dedicated Custom Research team undertakes specialised and bespoke projects for clients. For more information, please visit www.analysysmason.com/research Consumer and SME services Digital economy Regional markets Network technologies Telecoms software Strategy and planning Regulation and policy Performance improvement Transaction support Consulting Our focus is exclusively on TMT. We support multi-billion dollar investments, advise clients on regulatory matters, provide spectrum valuation and auction support, and advise on operational performance, business planning and strategy. We have developed rigorous methodologies that deliver tangible results for clients around the world. For more information, please visit www.analysysmason.com/consulting Analysys Mason Limited 2015 27
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PUBLISHED BY ANALYSYS MASON LIMITED IN OCTOBER 2015 Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0)20 7395 9000 Fax: +44 (0)20 7395 9001 Email: research@analysysmason.com www.analysysmason.com/research Registered in England No. 5177472 Analysys Mason Limited 2015. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher. Figures and projections contained in this report are based on publicly available information only and are produced by the Research Division of Analysys Mason Limited independently of any client-specific work within Analysys Mason Limited. The opinions expressed are those of the stated authors only. Analysys Mason Limited recognises that many terms appearing in this report are proprietary; all such trademarks are acknowledged and every effort has been made to indicate them by the normal UK publishing practice of capitalisation. However, the presence of a term, in whatever form, does not affect its legal status as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Analysys Mason Limited 2015