How can you succeed in the enterprise segment?
If you’re a communications service provider (CSP), you’ll know that the enterprise segment is a driver of future monetization and growth opportunities. It is, therefore, imperative to understand the key factors for succeeding in this space. With this in mind, we conducted an analysis of the most successful CSPs, or as we’’ll refer to them, frontrunners, in the enterprise segment to identify the key factors leading to their position in the market. The 2023 analysis focused on how these frontrunner CSPs are developing the new capabilities described as beyond connectivity solutions or advanced enterprise services towards the enterprise segment.
"Identifying the common factors frontrunners have employed in building their business provides a roadmap for CSPs who want to leverage the Enterprise segment as a growth engine in their business."
– Dennis Beilby, Ericsson Consulting
Study findings
The study findings are a result of a series of in-depth firsthand interviews with the frontrunners combined with an analysis of the available market information, input from analyst reports and our internal knowledge. They are split into five pillars and indicate how you can develop a strategy that leads to success.
Key insights
1. Strategic positioning
- CSPs are looking to move up the value chain, beyond being a connectivity provider to offer advanced enterprise services. The revenue potential increases with each upward move in the value chain but with increased time and effort to build end-to-end solutions. As a result, CSPs are also exploring partnerships while remaining as a connectivity provider.
Which option best describes your role in the enterprise service ecosystem?
CSPs have considered three options – (a) Remain as a connectivity provider and work on their core strength, or (b) Evolve to be a platform provider and create an enterprise-specific solution through their platform, or (c) Become an end-to-end solution provider and act as single point of contact for the enterprise customers.
- When developing solutions, both horizontal and vertical based use case strategies have their own merit and frontrunner CSPs are focusing on both strategies. A horizontal-based strategy enables CSPs to offer a solution like video analytics to a range of industry verticals, whereas a vertical-based strategy allows CSPs to develop and offer an end-to-end solution for a targeted industry vertical like manufacturing.
- A horizontal strategy is a better option to start with as it provides better scaling of solutions. Revenue opportunity per deal is lower for CSPs in a horizontal-based strategy, but this can be offset by scaling. A vertical strategy is the best option when CSPs wish to move up the value chain and can provide higher revenue and better margins. However, this strategy requires detailed expertise in specific industry verticals. In general, key drivers for selecting targeted verticals include market analysis as well as existing relationships. The industries that are in focus by most of the CSPs are healthcare, manufacturing, energy utilities, mining, public sector, transportation and logistics.
Which industries are you focusing on for advanced enterprise services solutions?
"Our current focus is vertical but in the future we would want to focus on horizontal solutions; however each industry has specific requirement hence horizontal solutions is more challenging".
– North East Asia CSP
2. Offering
- Frontrunner CSPs are exploring a range of technologies like cloud/edge computing, private networks, network slicing, SD-WAN, and so on, but also offering a wide range of professional services that are packaged with their enterprise offerings.
- Managed services is the most important professional service provided by frontrunner CSPs, followed by system integration and consulting, enabling accelerated sales of advanced enterprise services.
Which type of professional services are packaged with your enterprise offerings?
3. Commercial model
- Most frontrunner CSPs use traditional fixed fee and as-a-service fee charging models, but new revenue share charging models are now being deployed regularly for advanced enterprise offerings. Frontrunner CSPs are also providing wholesale connectivity offerings to their ecosystem partners.
- Frontrunner CSPs are moving away from traditional billing and offering outcome-based charging for enterprises.
- CapEx heavy enterprises like mining, prefer capex-oriented charging models, whereas OpEx based sectors like logistics are inclined toward as-a-Service models.
What charging models are you using for enterprise customers?
4. Capability buildup
- Majority of the frontrunners have identified the need-for-speed as the driver for capability build-up through partnerships and/or acquisitions.
- Co-creating solutions in collaboration with enterprise customers and offering pre-configured/pre-tested products through their portfolio are some of the ways frontrunner CSPs accelerate sales.
- Scale is an important factor for achieving success and most frontrunner CSPs are struggling to scale due to non-standard solutions. Therefore, there is a drive to move toward preconfigured products to improve time-to-market and reduce cost of sales.
Which capabilities have helped you accelerate sales for advanced enterprise services?
"We have banned proof of concept and moved to proof of value to show the value of the solution to the enterprise".
– European CSP
5. Business and structure
- Frontrunner CSPs have established dedicated business units to engage with enterprise customers effectively and tap into potential business opportunities for advanced enterprise services.
- Frontrunner CSPs have realized that product development, implementation, partner management, presales, and sales need to be redefined for enterprise customers.
- An enterprise focused operating model is essential. Frontrunner CSPs are modifying their operating model in most areas for advanced enterprise services. Drivers include removing silos and enabling agility in the organization.
Which parts of operating model have you evolved for advanced enterprise services?
"We recognized the need to be agile for execution and selling complex solution".
– European CSP
