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Enterprise 5G, cloud and IoT disrupting the comms service provider market

Research predicts major uptick in enterprise IT spending, spurred by edge, 5G and private network investments, representing significant opportunity for communications service providers in 2022 and beyond

The future form of businesses in the post-Covid environment is fluid to say the least, but, as revealed by research from CSG and Analysys Mason, as many as 92% of enterprise respondents have accelerated their plans to use the internet of things (IoT), security, cloud and unified communications (UC) in the near future.

Moreover, the Large enterprises’ demand for communications and IT services report found that while communications service providers (CSPs) were well placed to meet future enterprise demand for communications and IT services after Covid-19, they were not wholly fulfilling the potential opportunity ahead of them.

CSG and Analysys Mason surveyed 16 CSPs and more than 200 multinational corporations between February and May 2021. The report focused on three core areas: identifying changing patterns of enterprise demand for communications and IT services; the opportunity for CSPs; and the role of billing and invoicing.

A key finding, said the analysts, was that a significant percentage (more than 80%) of the largest global enterprises surveyed would consider buying edge, 5G slicing and private network services in the next five years. Though the report indicated that opportunities abound, it added that disparities between CSP and enterprise views on the importance of technology solutions and billing and invoicing for supplier selection could lead many CSPs to fall short on capitalising on the post-pandemic economy.

More than 60% of enterprises reported using at least three different suppliers for their core communications services, with nearly all enterprises expressing the desire to reduce this number. The most common reason (69%) cited for having multiple suppliers was the need for additional services, suggesting an opportunity for suppliers with a wide portfolio to upsell add-on services. 

“There is significant appetite among enterprises to buy additional IT services from their main communications provider”
Catherine Hammond, Analysys Mason

Yet while CSP revenue from IT was found to be increasing, the study showed it was not growing as rapidly as enterprises were increasing their IT spend. That said, the survey suggested that the CSP share of this spend was falling. Only a quarter of CSPs reported selling services other than voice and data connectivity to the majority of their enterprise customers.

“There is significant appetite among enterprises to buy additional IT services from their main communications provider,” said Analysys Mason principal analyst Catherine Hammond. “Up to 50% of enterprises say they already buy cloud, security and IoT services from their main CSP and another 30% would consider buying these services from their CSP in future. This poses an opportunity for CSPs to continue investing in leading-edge technologies that not only broaden their portfolio but enable them to deliver a one-stop-shop to meet enterprise IT needs.”

Drilling deeper into the findings, 92% of enterprise respondents were found to have accelerated their plans to use more IoT, security, cloud and UC services. Though connectivity still accounts for the majority of current revenue for CSPs from large enterprises, cloud, security, edge and IoT services have come out on top as the main drivers of future revenue growth. Almost two-thirds of enterprises surveyed expected to increase cloud services spending over the course of the next year, reflecting, said Analysys Mason, the growing importance of the cloud for business continuity.

“5G, cloud and IoT are disrupting the CSP market in profound ways,” added CSG’s chief operating officer and global head of revenue management and digital monetisation, Ken Kennedy. “It’s no longer purely about voice and data. Today’s enterprises look to their communications provider to deliver a broad ecosystem of products and services that will allow them to unleash the full potential of their business. To deliver on this promise, CSPs need to modernise their technology stacks to create scalable processes that enable them to bring new products and services to market faster and lead to new revenue streams.”

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