Despite SMEs representing the main part of the world’s businesses, the SME 5G services market estimated to be worth $433 billion by 2025 remains untapped with the majority of communications service providers providers (CSPs), according to a new study commissioned by BearingPoint//Beyond and conducted by Omdia. The report highlights the potential of small and medium-sized enterprises (SMEs) as a major source of future 5G revenue for CSPs.
The study conducted by Omdia reveals that, despite SMEs representing 99% of the world’s businesses, the market segment remains vast and untapped. The majority of CSPs would focus 70% of their resources on the 1% enterprise market.
Currently CSPs identify large multinational enterprises as the segment that will drive 5G revenues, but the large enterprises surveyed do not regard CSPs as their primary 5G provider. In fact, the report finds that 72% of enterprises will prefer to work with a service provider that is not a CSP. Findings show that 31% of large multinational enterprises will choose cloud service providers to execute their 5G strategies and 34% even favor taking a D.I.Y. approach.
“SMEs are aware of the benefits 5G can bring to their businesses and already view CSPs as their trusted 5G partners,” said Camille Mendler, Chief Analyst, Enterprise Services, Service Provider & Communication, Omdia. “It’s 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 programs that are capitalizing on the SME opportunity. Vodafone Spain offers an all-inclusive value proposition providing SMEs with compelling mobile-first productivity tools. 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. These types of collaborative approaches demonstrate how CSPs can marry 5G capabilities and other assets with ecosystem players to deliver profound value to SMEs.”
5G Opening New Opportunities for CSPs
The report emphasizes that CSPs should not squander the opportunity to support SMEs in realizing their 5G ambitions, as SMEs digitalized their business amidst the deeply transformational impact of COVID-19. CSPs are encouraged to consider the business needs of SMEs and assess how 5G can improve productivity and efficiency or enable them to grow their business. Yet today, most 5G offers for SMEs are ‘Consumer Up’, re-sleeved consumer offers. 5G’s real value for this lucrative market would lie in the creation of partner ecosystems to aid them in achieving significant strategic shifts to sell more services and reach larger audiences.
“CSPs are still trying to approach 5G the same way they approached 4G, with a clear focus on consumer and enterprise. However, 5G opens new opportunities for CSPs and one of them is the SME segment,” said Angus Ward, CEO of BearingPoint//Beyond. “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, and boost sales. In fact, our previous research highlighted that on average 73% of global SMEs see 5G as important to their business. However, it’s 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.”
5G Partner Ecosystems
CSPs orchestrating the right partner ecosystems appears 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.
“We’re looking at a new type of SME, one that is seeking a partner that will orchestrate comprehensive partner ecosystems to co-create solutions to provide them with a better service,” added Mr. Ward. “For CSPs, this is a unique opportunity, especially considering SMEs see them as a strong candidate to fulfil this role. However, to realize this opportunity, CSPs will have to address the different types of SMEs out there, their unique needs and the vertical context. This will mean gradually developing a growing number of solutions with an increasing number of technology partners and vertical specialists. 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.”
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