Looking to make gains in the SMB market? It’s time to reach for the clouds

Ever wondered what the fastest growing customer segment is for service providers? No prizes go for guessing that it’s small- to medium-sized businesses (SMBs), particularly when you think that ninety nine percent of businesses worldwide are SMBs.

With this in mind, we commissioned Coleman Parkes to research this market. Key findings show that cloud-based services offer an ideal chance for service providers to break into the lucrative SMB market:
• Over 66 percent of SMBs consider cloud services to be extremely important to their business
• 57 percent of SMBs already consume cloud-based services, such as storage and backup (72 percent), computer networks (48 percent) and office software (41 percent)
• 44 percent of those which are not already consuming cloud-based services, are actively considering it

However, what we found most surprising is that while the majority of SMBs (74 percent) would prefer to receive their cloud-based services from their primary communications service provider, only 45 percent actually do. What’s more, 33 percent of SMBs weren’t even aware that their primary service provider offers cloud-based services. That being said, service providers are still ideally positioned to get their hands on a significant portion of SMB market share.

To set up a viable cloud business – you need to focus on what’s important to SMBs
Regardless of whether service providers are acting as a cloud service broker or selling cloud-based services directly to SMBs, how well do they really understand what SMBs want from their cloud vendors? The research aimed to delve into this in more detail by questioning more than 1,300 SMB decision-makers across industries from North America to Europe, Latin America and Asia Pacific regions. This in-depth study, which is the first of its kind when it comes to scale, shows that 67 percent of SMBs are more likely to select a service provider, or extend their current contracts with their primary service provider if offered cloud-based services. We found that 34 percent believe being offered cloud-based services would even improve their relationship with their primary service provider. Looking past the evident need to inform potential SMB customers of their offerings in this area, the research also demonstrates that service providers need to ensure their cloud-based offerings encompass the following:
• A single bill for all communication services – as wished for by 80 percent of respondents
• Bundles of cloud-based services and traditional communications services– wanted by 75 percent of respondents
• Tailored offerings– requested by 51 percent of respondents

Ian Parkes, managing director at Coleman Parkes Research concludes that “The research validates that there is increasing need and adoption of cloud-based services by SMBs, it identified that service providers are considered a viable or even preferred source for cloud-based services, representing a big revenue opportunity for those service providers who choose to capitalise on this.”

Next step – you need to think about operational requirements
Service providers are finding it a challenge to achieve competitive differentiation against independent cloud vendors whilst keeping costs down.1 To combat this, service providers need to implement a solution that removes the barriers to setting up a cloud business, specifically by paving the way for them to use their existing systems to support cloud-based services and by introducing one-stop-shop information and communications technology (ICT) capabilities. By using a solution like this, service providers can deliver more value to SMBs and can drive increased SMB loyalty with tailored bundles of core and cloud-based services, and generate incremental revenue from cloud play and new related business models.

Service providers need to be able to rapidly introduce new revenue streams with cloud-based services, such as solutions for storage and backup by enabling their cloud ecosystems and ICT services with quick partner onboarding. With BSS and OSS capabilities, service providers can handle and bundle their existing and cloud services, and by leveraging cloud technologies (such as virtualisation) reduce costs.

Ultimately, to enable service providers to differentiate themselves from independent cloud vendors and empower SMBs with cross-service bundles and discounts that are tailored to their needs, what’s needed is a convergent systems environment, in combination with enhanced SMB self-service capabilities..

1 Market Trends: Cloud is a Critical Enabler for CSP Enterprise Digital Services, Gartner, March 31, 2014