The next multi-billion dollar opportunity for US Telco and Cable providers

Cloud services are being adopted across the business spectrum, with small and medium-sized businesses (SMBs) leading the way in many market segments. This presents a multi-billion dollar market for US Cable and Telco providers.

Author: Jesper Sjogren, Director, Strategy and Marketing

A McKinsey market study shows that by the 2015 SMBs market share is expected to represent 40 to 50 percent of the total cloud services opportunity, which translates into a $28 billion market place – with an expected profit pool of $3.5 billion. And, it is projected to grow around 15 percent compounded average growth rate (CAGR) over the next three years. The current US cloud services market represents more than 7 million SMBs that spend an average of, $3,100 on cloud services annually. Price and security are the two main barriers of entry into cloud services for SMBs across the board. Companies born in the cloud may currently be preferred vendors in the more developed market segments, like subscribing to data backup services from a pure-play Infrastructure-as-Service (IaaS) company. But the overall SMB cloud market place is still an open market. No single vendor type has a dominant market position.

In fact, Communication Service Providers (CSPs) are seen as highly credible cloud service providers in emerging cloud service markets. A recent BCSG study reveals 43% US & UK SMBs would purchase online hosting or cloud services from telecom operators. At the same time, more than half (58%) of SMB’s would switch operators for access to broader range of technology and services. And 39% disclosed they would change provider for better customer service.

Most industry stakeholders agree on SMB’s cloud service appetite, which is leading to the multi-billion market opportunity for CSPs beyond large enterprises. SMB’s are a unique set of businesses in that service providers are testing different go-to-market models, including product configurations to serve this dynamic and prosperous market place. SMB needs and preferences vary greatly. Cloud service providers with a one-size-fits-all approach may work with consumers and large enterprises, but will have less success attracting SMB’s. These buyers need more customization and more servicing than consumers, but have less resources.

Business application customers (BAC) seek service provider(s): to simplify IT aspects of the business, want to purchase and consume IT services as consumers do in app store(s). BACs, need always-on services with security and mobile features, require advice and cloud support services. Other needs entail reactive support with new technology, service installation, usage and optimization.
Company profile; 20 – 49 employees and IT budgets of $20,000 to $100,000.

Cloud migrate customers (CMC) have the same needs as BACs, also seeking reliable, best-in-class uptime and lower total cost of ownership (TCO). CMCs prefer Managed Services support to ensure uninterrupted business for non-owner IT professionals, including LAN and extended device support
Company profile: +50 employees and IT budgets greater than $100,000.

Power user customers (PUC) seek the latest and greatest IT administrative capabilities and solution customization. PUCs tend to see IT & Cloud services as competitive advantages and can add value to the business, considering cost and non-technology secondary. Have the same support needs as BACs & CMCs with customized monitoring and reporting requirements.
Company profile: Company with internal IT expertise and IT budgets of $100,000 to $500,000.

Cloud service customer journeys for SMB’s is more than purchasing and turning on applications. There are thousands of apps to choose from with various business benefits, and all of them come with technological complexity. The cloud landscape with multiple devices, 10 to 15 business applications, and always-on internet technologies is a daunting task for this type of customer. The simplicity of cloud value proposition is promising, but the reality is customers need support in acquiring, activating and maintaining cloud applications. About 40 percent of US SMBs receive no additional technology help or specialist advice from their operators whatsoever. At the same time 60% of SMB’s are willing to pay $200 or more per month to have someone devoted to IT needs full time.

Intelligent Ethernet services with Software-as-Service (SaaS) have a great long-term potential for Cable / Telco service providers. These type of bundled offerings allowing a rich and expanding set of SMB applications, like business and unified communication application, to be delivered seamlessly over Ethernet and/or Wireless networks as SaaS service. This has led to the concept of a SaaS marketplace, which brings together set of business applications that have been pre-selected (at least to an extent), and offered together with broadband network capabilities.

As cloud service provider, you want customers to buy single or bundled subscription services. You also need to provide customer service and support to retain and grow these accounts. Service providers have much to gain by offering business services assisting SMB’s through this journey:

  • Customers discover your organization’s product(s) and services(s). With help from your Cloud service support team and/or through self-service programs, evaluating products and services for a solution that will meet their needs.
  • Customers buy and implement the service(s). With help from your Cloud service support team guiding customers through configuration, setup, installation and device settings using remote assistant technologies to further enhance the customer experience.
  • Value realization starts immediately when the customer goes live because this is the time when they expect to reap the benefits of their investment in service(s). With help from your Cloud service support team providing training, best practices and proactively guiding customer on self-service website(s). Cloud Service support teams offer proactive monitoring of service that include status technical troubleshooting and coordination with all involved vendors.
  • Customers validate the value of your solution by renewing their service agreements. With the help from your Cloud service support team renewing contract and/or adding more subscribers or new services. The service team will also do upselling and cross-selling at any time during the value realization phase.

The SMB cloud support environment is challenging. The SMBs are searching for a single service provider that can provide advice and support cross existing business landscapes. In other words, SMBs need support with a wide range of independent cloud based business software that are delivered over wireless and fixed broadband services to smart phones, tablets and PC’s.

SYKES is a unique strategic contact center outsourcing partner to both Communication and Technology companies acting in global consumer and business markets. SYKES supports a wide variety of devices and applications for globally-recognized brands, and is a long-term trusted partner for manufacturers, developers and retailers everywhere. SYKES’ clients include the best known and respected business technology and internet companies, from switches to servers, from service provisioning to managed services, from smartphones to cloud services. SYKES provide Enterprise and SMB technical and customer support services, with supporting sales programs for revenue growth, which are seamlessly delivered over digital, self-service and voice support channels.

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