Despite small and medium-sized enterprises (SMEs) representing 99% of the world’s businesses and estimated to be worth $433bn by 2025, their potential as a major source of future 5G revenue for communications service providers (CSPs) remains somewhat ignored, says a study from BearingPoint//Beyond.
Carried out by Omdia on behalf of the SaaS-based business support system and digital platform solution provider, the report, The 5G For SMEs: what does it mean for CSPs? found that despite the preponderance and potential of the SME community, not enough CSPs were recognising SMEs as a major source of B2B revenue, especially as regards 5G.
Instead, most CSPs were focusing 70% of their resources on the 1% enterprise market, even though the many SMEs that see value in 5G perceive CSPs as their trusted 5G go-to partner, with 42% prioritising them to execute their 5G strategies.
Such a strategy may be a mistake in both regards, said the report. Even though CSPs recently identified large multinational enterprises as the segment that will drive 5G revenues, that favour was not being returned, as large enterprises surveyed did not regard CSPs as their primary 5G provider.
In fact, the report found that 72% of enterprises said they preferred to work with a service provider that was not a CSP. Indeed, 31% of large multinational enterprises said they would choose cloud service providers to execute their 5G strategies and 34% even favoured a DIY approach.
BearingPoint//Beyond also found that digitisation and Covid-19 have transformed the needs of SMEs and their awareness of the impact that new technologies such as 5G, the internet of things (IoT) and artificial intelligence (AI) can have on their business to enhance productivity and efficiency, and boost sales.
“CSPs are still trying to approach 5G the same way they approached 4G, with a clear focus on consumer and enterprise,” said Angus Ward, CEO at BearingPoint//Beyond. “However, 5G opens new opportunities for CSPs and one of them is the SME segment.
“In fact, our previous research highlighted that, on average, 73% of global SMEs see 5G as important to their business. Yet it is clear that it’s not 5G technology that they’re after; instead, SMEs understand that 5G is one part of a broader technology solution that they need. In fact, 93% of SMEs told us that it’s more important for CSPs to collaborate with an ecosystem of partners to build solutions that better fit their needs than to simply provision 5G services.”
The report called on CSPs not to squander the opportunity to support SMEs in realising their 5G ambitions, as SMEs digitised their business amid what it called the deeply transformational impact of Covid-19. CSPs, it said, were encouraged to consider the business needs of SMEs and assess how 5G can improve productivity and efficiency or enable them to grow their business.
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The report saw 5G’s real value as lying in the creation of partner ecosystems to help them achieve significant strategic shifts to sell more services and reach larger audiences. But to realise this opportunity, CSPs would have to address the different types of SMEs out there, their unique needs and the vertical context.
The report added that CSPs orchestrating the right partner ecosystems appear to be the way forward, as 5G alone will not be the ultimate differentiator. Rather, the ability for those CSPs to create a more complex value proposition across vertical industries will be key in today’s competitive environment.
“This will mean gradually developing a growing number of solutions with an increasing number of technology partners and vertical specialists,” said Ward. “Using a digital marketplace will enable the orchestration of these multi-partner solutions, while also simplifying the complexity for the SME user. This marketplace needs to allow CSPs the speed and the scale to grow from selling a few SME solutions, to selling multiple solutions as more partners and customers come on board.”
Camille Mendler, chief analyst, enterprise services, service provider and communication, at Omdia, added: “SMEs are aware of the benefits 5G can bring to their businesses and already view CSPs as their trusted 5G partners. It is therefore critical that CSPs enable 5G to triage SMEs’ business context and industry solutions with outcome-based value propositions, to reap the rewards of this customer base.
“In some cases, global CSPs have launched programmes that are capitalising on the SME opportunity. These collaborative approaches demonstrate how CSPs can marry 5G capabilities and other assets with ecosystem players to deliver profound value to SMEs.”