Managed services for enterprises in the telecom space has traditionally been targeted at multinationals (MNCs), and not without good reason. Not only do they have bigger budgets than SMBs, they also tend to require the connectivity, geographic reach, scale and reliability that telcos can provide. The needs of SMBs have typically been fairly modest in comparison.
But that is changing, and changing fast. The communications needs of SMBs have grown far beyond a managed PBX and a DSL connection. SMBs have the desire and the ability to leverage ICT tools from VoIP and data centers to enterprise resource planning systems and hosted apps to build affordable, flexible platforms for sustainable growth. They also want to be able to leverage mobility for even greater efficiencies. But - like their MNC counterparts - CIOs and IT managers don't want to spend the extra time and effort to design, manage and secure all of that.
That represents a major opportunity for telcos looking for new or underserved customer segments to crack, especially in Asia Pacific, where SMBs are a sizable chunk of the enterprise market.
Targeting SMBs is not a new thing per se for the telecom sector. But regardless of the amount of experience telcos have with SMB customers, the rapid ICT evolution within the SMB managed services segment raises several new challenges, from the seriously competitive landscape (which includes web-centric heavyweights like Amazon Web Services) to the fact that selling services to SMBs isn't the same as selling to MNCs - SMBs have different needs and smaller budgets, and represent a more fractured market that may also require more handholding and education on the kinds of service options and packages available to them.
So how ready are telcos in Asia Pacific to support the next generation of SMBs? How do they plan to do it? Can they compete with seasoned enterprise service providers and nimble OTT players? And can they adjust from selling mass-market services for consumers to offering highly customized services to thousands of small businesses at the right price point?
According to an in-depth survey conducted by Telecom Asia, and sponsored by Huawei, the short answer is this:
Most telcos say they're ready, or at least know what they have to do to succeed, and they have the skillsets to pull it off. But it's going to take a lot of investment in time and money to make it happen.
Value for money
Telcos don't expect to be able to succeed in the SMB space unless they can offer a compelling service bundle for the right price that offers the most value for money. Both accounted for close to 40% of responses, rating far higher than having a strong salesforce or customer support.
But that's not to say sales and customer support don't matter. If anything, says Kat Luna-Abelarde, first vice-president and head of PLDT SME Nation, it matters more when dealing with SMBs than with large enterprises.
"Unlike multinationals and large corporations, SMBs do not have established IT departments with their directors, directives and budgets," she says.
That's why PLDT's success with SMBs will hinge on both a strong, tailored product portfolio that's affordable and easy to integrate, and the sales and support force who will bring it to market - to include customer education of new concepts like cloud services, Luna-Abelarde says.
Telstra, which is targeting SMBs with its 3G/4G services in Australia, also pursues a hands-on approach with SMB customers, giving them all the support and training they need to get the most out of the service.
"We understand SMBs are time-poor and have plenty on their plates, so our service approach is to put them at the center - giving them flexibility and choice," says John Boniciolli, executive director for small business at Telstra. "We also offer a range of services, support and training for SMBs to ensure that they are getting the most out of their technology solutions."
The biggest challenges telcos foresee in cracking the SMB market are customers with limited budgets and corporate cultures or business operations that don't fully grasp the advantages of next-gen ICT. Consequently, customer engagement is key to making this work.
"The promise of the cloud is change - real business transformation for the SMB - and it is the fulfillment of this promise where the greatest and most fulfilling challenge lies," says Luna-Abelarde of PLDT. "This change - in mindset, behavior, down to day-to-day activities - requires a modicum of learning and commitment to the practice, from upper management down to rank-and-file. SMBs have to learn and embrace these new systems to harness the power of this new technology thereby making operations more efficient."
Make it simple and easy The value proposition telcos want to offer to SMBs is pretty straightforward: a one-stop shop offering integrated solutions that are easy to deploy and save you money.
Since respondents were asked to pick only one possible value proposition, the answers suggest there will be a diversity of approaches taken by telcos to sell enterprise services, although it's also likely at least some telcos will have more than one pitch when approaching potential enterprise customers.
However, says Boniciolli of Telstra, it's important to tailor value propositions carefully by first getting to understand just what the SMB customer needs in the first place. "When working with SMBs, it's really important to listen and understand their business challenges before recommending technology solutions."
There's a wide range of potential services telcos are considering for their SMB offerings, but for many, initial services will focus mainly on their core competency - connectivity - followed by BPO-business services and cloud services.
It's notable that cloud isn't a top priority for telcos, despite the hype over cloud in general. But it's also early days for cloud, and the results show cloud is definitely on the "to-do" list. That number is likely to go up in the coming few years as cloud technology and offerings mature, and as both service providers and customers get a better sense of what everyone wants, and a more realistic sense of what is possible at that time.
Various roadmaps to success
In terms of investment and timeframes, the majority of telcos expect to invest a lot of money in their SMB offerings to make them successful. And the timeframe varies - telcos could be making high investments in SMB for as little as one year or up to three to five years, or possibly longer.
In terms of actual service rollout speeds, most expect to be able to get SMB services up and running in two years or less. That may sound slow at a time when OTT service providers have a reputation for rolling out all kinds of services in weeks or even hours. When you own decades worth of legacy infrastructure, you can only be so nimble.
On the other hand, says Kevin Lim, managing director of Enterprise Business Group at StarHub, being a successful player in the SMB space isn't always about being the fastest to market or setting deadlines for service rollouts. "We don't believe it is a static target or point in time. To be more competitive, we strive to be increasingly relevant to customers by understanding their needs and leveraging technology and new business models to help them grow their business."
SDN: important but not crucial
Software-defined networking may be one of the key technologies for enabling cost-effective and fast service rollouts, especially for cloud services, but telcos aren't banking on it as a prerequisite to get started. (Some aren't even sure what SDN even is.)
Those numbers might be surprising given the current buzz over SDN, but they do make more sense when remembering that SDN is a fledgling technology, with a lot of the discussion focused on standardization issues. It's going to take time for SDN to stabilize enough for telcos and enterprises to start deploying it. As such, telcos need service rollout strategies that aren't dependent on it.
However, many telcos do understand the significance of SDN and the potential benefits it promises.
"If service agility is a core value proposition for enterprises, SDN becomes part of that critical equation for telcos in enabling that agility for data center service providers, specifically, in the areas of designing and deploying resilient infrastructure for such solutions or services," says Lim of StarHub.