A new study of enterprises’ attitudes to purchasing IT services reveals that unless telcos radically change their approach and become more open, innovative and collaborative they will miss out on a multi-billion dollar revenue opportunity.
New research conducted by BearingPoint//Beyond validates the multi-trillion-dollar enterprise ICT sales opportunity facing Communication Service Providers (CSPs). The study surveyed 250 decision makers in enterprises in Europe, Asia and the USA, and found that 97% of organizations were willing to purchase ICT services from CSPs. The study also investigated the approach and changes 100 CSPs are making to address this massive opportunity with their enterprise customers.
The research discovered that if CSPs are to successfully claim their share of a market estimated to be worth USD$3.6 trillion by 2022, they must re-align their investment strategies and offer reassurance to enterprises that they will accelerate innovation and speed to market, invest in better understanding their customers’ business needs and improve collaboration with other valued partners.
“Enterprise IT spending is huge, growing fast, and one of the last untapped growth engines for CSPs in saturated markets. Enterprise will be pivotal to 5G and IoT. The research makes for positive reading in the main – there is an obvious opportunity for CSPs to capitalize on – but there are obstacles they must overcome. Among them, they must prioritize investment in enterprise, junk overly bureaucratic legacy processes and policies that slow them down and commit to understanding and engaging with enterprise customers differently,” said Angus Ward, CEO BearingPoint//Beyond. “Critically, CSPs must act quickly – if not, they stand to lose out to more agile and open competitors.”
The study identifies six critical areas of improvement for CSPs, the more prominent three are:
- Improve levels of investment to drive enterprise revenue
- 47% of operator executives expect the enterprise segment to be their organization’s main revenue source in 2-3 years
- But only 31% expect this segment to be their main focus for investment. CSPs must better align their investments with revenue drivers or they will lose out
2. CSPs need to remove overly bureaucratic processes and legacy technology that is stifling innovation to rapidly meet the needs and expectations of enterprise customers
- 39% of enterprises pointed to challenges around innovation and solution relevancy in working with CSPs in the past
- Only 26% of enterprises see CSPs as a key partner for new and innovative ICT services today
- When asked how CSPs can become preferred IT partners, the most popular enterprise response was for CSPs to collaborate with other vendors to provide complete, “joined up” solutions.
3. CSPs must accept they can’t do it alone, build an ecosystem of valued partners and draw on their relevant skills, expertise and technology to better serve enterprise customers
- 86% of CSPs recognize that third-party collaboration is important. However, just 12% of CSPs have ecosystems in place today and only 33% are “fully engaged” in developing high quality partnerships
- More than half (54%) of CSPs admitted their current IT systems do not support seamless orchestration and settlement within a partner ecosystem
- 51% of enterprises regard digital disruptors such as Google and AWS as key sources of products and services. However, only 32% of CSPs currently partner with these disruptors, and only 37% expect to do so in two years.
As they gear up to launch 5G, operators worldwide point to the enterprise services market as a key revenue source for the new technology: in January, AT&T announced that “Businesses are leading the 5G revolution”. CEO Thaddeus Arroyo echoed this sentiment at Mobile World Congress in March when he said,“5G will generate revenue in the enterprise first for AT&T… Services have already launched in the US”.Orange Business Services CEO, Dr Helmut Reisinger, took a similar position: “The enterprise segment will be where 5G can fulfil its promise”.
The BearingPoint//Beyond’s study casts doubt on operators’ readiness and willingness to act on the enterprise opportunity. It is available to download here.
Gartner [Enterprise IT Spending by Vertical Industry Market, Worldwide]