As 5G deployments continue to roll-out globally, questions still loom over how 5G will be monetized. Many have voiced the view that the enterprise segment is where 5G will make its money, with potential use cases across a breadth of verticals including the automotive, manufacturing and utilities industries. The promise of 5G is there, but without action it remains just that: a proverbial promise without tangible results.
The surprising reality for CSPs is that many large and multinational enterprises do not see them as their preferred partner for 5G strategy execution. According to recent research, just 16% of enterprise 5G projects are currently led by CSPs, down by 5% on 2020. In many cases, enterprises are investing in their own private 5G networks, favoring a D.I.Y. approach to 5G strategy and execution, and in some cases are partnering with cloud service providers like AWS or Azure.
Data from a recent joint report with Omdia released this year also revealed that the majority of CSPs focus a whopping 70% of their B2B resources on less than 1% of the enterprise universe comprised of large businesses. Small and midsized enterprises (SMEs) have typically not been in their line of sight and as a result, they’re overlooking a vast opportunity to grow 5G B2B revenues right at their fingertips. With SMEs accounting for 99% of the world’s businesses, they could be a critical asset in the 5G landscape, a market that Omdia recognizes as a $433 billion revenue opportunity.
The SME conundrum
Traditionally, CSPs have struggled to address SMEs in the right way because they were not a consumer, but also not a large organization. Consumers represent repeatable solutions with high volume for a relatively low price, whereas large enterprise have very tailored solutions for a higher price tag. SMEs fall somewhere between; some have a need for enterprise solutions but cannot afford it. The way for CSPs to bridge this gap is by adopting a digitalmarketplace which provides the automation and ability to build the scale needed to drive profitable business solutions, as opposed to designing costly, one-off products that fit the needs of a sole customer.
This will mean gradually developing a growing number of solutions with an increasing number of technology partners and vertical specialists. This marketplace needs to allow CSPs the high speed, repetition, automation and the scale to grow from selling a few SME solutions, to selling multiple solutions as more partners and customers come on board.
CSPs and SMEs: A new frontier
If 5G is going to spur transformation in the form of reinventing the traditional telco business model, CSPs will need to harness the power of their ecosystem by leveraging partnerships with vertical specialists and technology experts, facilitating service experimentation across a range of applications and use cases. To capitalize on the benefits of 5G and make it a fruitful source of revenue, CSPs should also focus more on delivering 5G business use cases to SMEs.
However, CSPs are still trying to approach 5G the same way they approached 4G, with a clear focus on consumer and enterprise. There needs to be a clear shift in approach with service providers often just treating SMEs more like consumers rather than a distinct market that has very specific needs. Digitalization and COVID-19 have transformed the needs of SMEs and their awareness of the impact that new technologies such as 5G, IoT, and AI can have on their business to enhance productivity and efficiency, while boosting sales.
What they need is a solution that is simple to buy, easy to implement and solves those real issues that SMEs are faced with. For example, a restaurant that requires a smart kitchen solution to enhance business processes and workflow. It is not looking for cloud or connectivity; its focus is to run an efficient service, attract regular trade and keep on top of a complex supply chain. The opportunity for CSPs here lies in building solutions that are outcome based and solving these real business problems.
CSPs need to take away the complexity and harmonize the disparate elements, orchestrating an ecosystem that connects the technologies to form the outcomes that SMEs require. This can be achieved with the co-creation of attractive, pre-integrated, joint solutions that address an SME’s unique needs through a combination of several technologies and applications, including anything from connectivity, to IoT, sensors, drones, cloud and AI.Both types of solutions can hasten transformation; however, most SMEs won’t understand or have the resource to get a grip of all the nuts and bolts of the technology. Using a 5G digital marketplace will automate the orchestration and the monetization of these multi-partner solutions, while also simplifying the complexity for the SME user.
Harness the lucrative power of the SME and expand your service portfolio
CSPs mustn’t neglect SMEs. Their business needs can be just as complex as large enterprises and 5G will play as pivotal a role for both in increasing productivity and efficiency, while creating new opportunities across the value chain. What’s promising for CSPs is that ultimately SMEs believe in 5G’s value generation, making them ideal partners to rapidly test and roll-out new 5G services across multiple verticals, expanding both the CSPs’ addressable market and service portfolio.
5G represents a critical inflection point for CSPs characterized by their need to drive beyond connectivity. Moving forward, they need a vision in order to create an outcome-based value proposition that a typically non-technical client will understand and be enticed to buy. To be successful in the SME arena, CSPs must not only make a dollar investment but an investment in understanding SMEs’ business needs within their most common working environment and industries, from construction sites to cafes, to retail stores, small offices or businesses. CSPs must consider how 5G could improve SMEs’ productivity, sales, and marketing outreach, while also helping them secure and analyze their rising volumes of digitized intelligence.
To unlock this coveted market, CSPs need to address the different types of SMEs out there, their unique business needs, and their vertical context. There will not be one “killer” use case for 5G that addresses all needs. Conversely, 5G services and solutions will need to be uniquely curated, differing from use case to use case, with vast potential for repeatability and scalability. At the heart of 5G’s real value lies the higher tiers of the value proposition, which often involve more ecosystem partners and can be deeply transformative to help SMEs achieve a significant strategic shift.
As the SME market continues to grow, the list of 5G use cases grows with it. To put 5G to the test, CSPs need to understand the value of this untapped market and offer a new set of solutions tailored to their specific, and dynamic requirements. We’re already seeing some CSPs take on the challenge to address this 5G SME gap by orchestrating a partner ecosystem. Vodafone Spain offers an all-inclusive value proposition providing SMEs with compelling mobile-first productivity tools. In addition, SK Telecom is partnering with the Korea Smart Factory Data Association and software developer, BISTel, to offer a 5G-based big data analysis service to manufacturing SMEs.
Delivering profound value to SMEs in 2021 and beyond
If heeded, this opportunity for CSPs to help SMEs reinvent their business models and grow at scale can be deeply transformational. These types of collaborative approaches demonstrate how CSPs can marry 5G capabilities and other assets with ecosystem players to deliver profound value to SMEs in 2021 and beyond. However, to realize this opportunity, it’s going to take a village. CSPs will have to address the different types of SMEs out there by gradually developing a growing number of solutions and marrying them with an increasing number of technology partners and vertical specialists. Leveraging the value that a digital marketplace can bring will enable the orchestration of these multi-segment solutions, while also greatly simplifying the complexity for the SME user. This marketplace will deliver on its value by allowing 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.
