Small can be beautiful in telco's B2B agenda

Telcos have long been attempting to sell services to small and midsized enterprises (SMEs or SMBs) with varying degrees of success. Indeed, SMEs have proved elusive or too difficult to take on, sandwiched somewhere between the needs of the mass market and larger enterprises.

In recent years, leading telcos have been making efforts to better target this segment. After all, it represents a sizable portion of the business sector in several markets. In the UK, for instance, the government estimated that of the 5.5 million private sector businesses at the start of 2022 as many as 5.47 million employed up to 49 people.

Figure 1: (Source: Hello I'm Nik on Unsplash)

At a global level, a World Economic Forum report from December 2021 said SMEs represented more than 90% of all companies and are the primary drivers of social mobility, creating seven out of ten jobs.

Telco moves to tap into this market include the establishment by BT in 2021 of a new unit that directly targets single office, home office (SoHo) firms. The SoHo unit sits within the SME unit of BT Enterprise and is now led by Caroline Southall. Vodafone UK has also set up the V-Hub service to offer training, guidance and tools to SMEs and has carried out surveys and polls in recent months in an ongoing effort to crack the SME nut.

Over in Japan, meanwhile, NTT's mobile unit, NTT DoCoMo, turned to Beyond Now to help it better serve its SME customers. Formerly part of consulting firm BearingPoint, Beyond Now supplies a cloud-based software platform called Infonova that enables SMEs to access a range of services from a single source.

Fast forward to late 2022, and Beyond Now has just published a report that aims to turn telco thinking about how to target SMEs on its head. Indeed, the report, titled CSPs: it's time to reacquaint yourselves with today's SMBs, posits that a "more proactive, bolder approach is necessary now and into the future" because SMEs have changed.

Stepping up the digital pace

It's already evident how much businesses evolved in terms of the pace of technology adoption during the pandemic. The switch to working from home required some immediate solutions to be put in place and saw enterprises of all sizes adopt digital technology at breakneck speed.

According to the Beyond Now report, SMEs in particular have evolved into more sophisticated entities that in many cases are already operating as digital businesses. As one example, it cites an analyst and consulting firm that employs 20 people and uses more than 40 ICT products to deliver its services to clients.

At the same time, SMEs can still struggle to make the right choices when it comes to their ICT needs, and face challenges in making the most of their technology investments. According to Beyond Now, communications service providers (CSPs) are in prime position to help here.

A key theme of the report is the degree to which SMEs are aware of technology and recognize its potential. Take 5G, for example. Beyond Now said its findings show that there is high perceived value of the technology and SMEs "expect CSPs to help them realize the potential of 5G beyond standard connectivity offerings."

Notably, the report says that almost three quarters of SMEs "recognize the potential value of more nascent technologies to their businesses: blockchain, AI/ML, edge. Only robotics lags slightly behind."

"For years now a lot of the offerings were focused on cloud and security, but it seems like SMBs are willing to bet big on technology," the report said. The research also found that, on average, SMEs are currently investing 8% of their annual revenues in ICT products and services.

In essence, the SME technology market "is gigantic," the report concludes. The good news for CSPs, it adds, is that SMEs view them positively as a source of ICT services, especially when linked to 5G technology.

However, it warns that if CSPs wish to really tap into this potential, they need to "adopt a change in mindset and grow beyond connectivity to address the broader technology needs" of these smaller B2B customers.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

It's worth noting that Beyond Now does have a vested interest in encouraging telcos to deepen their ties with SMEs.

Other reports also indicate that while there is heightened demand among SMEs to integrate digital technology in business operations, they still face a number of barriers to adoption such as limited availability of and access to financial resources, lack of a skilled workforce and the absence of infrastructure to support digitalization.

For example, the World Economic Forum report noted that policy makers also have a role to play in "creating an environment conducive to wider adoption and deeper integration of digital technology among SMEs."

At the same time, Light Reading sister company Omdia has already pointed to the opportunity that service providers have in the SME market as they adopt more ICT services. Earlier in 2022, Omdia analyst Hwee-Xian Tan was recommending that service providers "should get ready for a pandemic bounce."

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— Anne Morris, contributing editor, special to Light Reading