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Q&A: The multi-trillion-dollar enterprise opportunity

(Image credit: Image Credit: Flex)

Tell us a bit more about your research and why you decided to commission it?

Telcos and vendors alike have labelled 2019 as the year of the ‘enterprise’. With the launch of 5G, a priority for telcos is to collaborate with enterprise-focused partners to co-create 5G-embedded products and services for business users.

Enterprise ICT spending is huge and continues to grow rapidly with new technology consumed or controlled as cloud-based services. According to analyst firm Gartner, global enterprise spending is expected to reach $3.6 trillion by 2022 – this, is one of the last untapped growth engines for telcos in today’s saturated markets.

We wanted to find out how CSPs could compete and win within this lucrative market. But, before doing this, we needed to understand the ‘gaps’ between what CSP want to sell and what their enterprise customers want to buy. We did this by comparing CSP B2B leaders and Enterprise viewpoints on their current and future investment plans, challenges and growth opportunities. This is why we commissioned the report Mind the gaps: Six reasons why CSPs could miss out on the multi-trillion-dollar enterprise IT opportunity. 

Your research highlights a multi-trillion-dollar enterprise IT opportunity for CSPs, can you tell us a bit more about this?

As mentioned above, global enterprise ICT spending is expected to reach $3.6 trillion by 2022, with a CAGR of 3.4 per cent, and some analysts believe, that with an attractive new business model that moves into this adjacent market, CSPs can quickly capture as much as 16 per cent of this spend.

Enterprise ICT is an immediate new revenue opportunity for CSPs and looks like a wide open door from SoHo and small business right up to large global corporations. From our research, an amazing 97 per cent of enterprise customers would consider purchasing ICT and new technology solutions from CSPs.

If the ‘enterprise’ is willing to buy from CSPs, then CSPs must ask themselves: Where do we play? How will we win? Who do we target?

On the surface, it appears that CSPs are ready to take on the enterprise market but dig a little deeper, and a series of ‘gaps’ start to appear in the CSPs’ ability to execute – we identified six major ones. It’s imperative CSPs close these ‘gaps’ in order to compete and win in the enterprise market.

Your report also mentions that CSPs are facing many challenges when targeting the enterprise market. What are they?

Our research found that nearly half (47 per cent) of CSP executives expect the enterprise market will become their largest source of revenue source within the next two years, surpassing their consumer market. Yet, only 31 per cent expect this segment to be their focus for future investment, which makes little sense.

Meanwhile, CSPs innovation to meet the needs and expectations of target enterprise customers is currently being held back by overly bureaucratic processes and legacy technology. This problem is abundantly obvious to enterprises customers. In fact, around 39 per cent pointed to challenges CSP endure around ability to innovate and the relevance of their current product portfolio to solving enterprise needs. Remember that 55 per cent of enterprises are investing to modernise their business so innovation in crucial.

But there is light at the end of the tunnel. When we 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. Which leads on perfectly to the final challenge I would like to discuss. CSPs need to accept that they can’t do this alone, they need to build an ecosystem of valued partners and draw on their relevant skills, expertise and technology. This means helping enterprise customers solve problems by using the right partner and being famous for providing the best solutions. It means switching away from being product-focused – having a long list of standard offerings that need to be integrated to form solutions – a major organisational change.

So, how can they overcome these challenges?

Well, CSP leaders must make tough choices and put enterprise markets as their top priority, allocating the required resources to realise this – from marketing and sales through to IT enablers and innovation. Even at the expense of their consumer businesses.

They have to remove the product development and launch policies that were designed to control cost and risk that are now strangling their businesses. Today, CSPs say it takes 6-9 months to launch a new enterprise offer, as every launch needs to involve so many divisions such as legal, finance and compliance. They need more lean and agile processes that accelerate speed to market and are the de facto model for innovation and split testing offerings with real customers to validate and iterative build ahead of a full-blown launch, and they need to do it fast. Partner ecosystems are key to this.

Around 86 per cent of CSPs recognise that third-party collaboration is important. However, just 12 per cent of CSPs have ecosystems in place today and only 33 per cent are “fully engaged” in developing high quality partnerships. The issue is that more than half (54 per cent) of CSPs legacy IT systems do not support seamless orchestration and settlement within a partner ecosystem. A real challenge that needs to be overcome.

How can collaboration between telcos and enterprises work in the 5G era?

5G networks are likely to cost four times more than 4G, so telcos must ensure that they get ROI within the next decade. To do so, operators need to start selling a new generation of OTT services – 5G with IoT devices, apps and analytics – targeted at the enterprise adopters of Industry 4.0 and the new “smart” use cases.

For this, establishing partner ecosystems is key. They can help generate new ideas, drive innovation, expand offerings, increase reach and grow revenue by filling in the gaps in operator’s knowledge, experience and technology as well as helping enterprise customers to modernise their operations. An effective partner ecosystem will be able to solve enterprise problems through the exchange of ideas and combining the capabilities, products, services to create the perfect solution and therefore collaboration.

Success in 5G is so much more than handsets and pricing plans. 5G will be all about the new business models for enterprise. It’s a more complex market and telcos must significantly improve their understanding of their enterprise customers and the end customer markets they serve.

Angus Ward, CEO, BearingPoint//Beyond