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The SME bundling strategies for operators: building an ICT portfolio for SMEs

Operators are in a unique position to sell ICT services with traditional connectivity, but are currently doing so with limited success. Operators will need to carefully select opportunities, form partnerships and make acquisitions to gain the necessary capabilities and reform sales and support channels to be able to capitalise on this considerable opportunity.


Executive summary
REPORT OVERVIEW
ICT services give operators the opportunity to offset declining legacy revenue with new and growing forms of revenue, but there are challenges
Operators will need to carefully select opportunities, partners and acquisitions, and address the challenges in sales and support
Recommendations
PRODUCT SELECTION
Almost all growth in revenue from SMEs will come from ICT services
Operators’ approach to ICT services will depend on their overall strategy; for many, ICT services are simply a way to differentiate connectivity
Security, UC, co-location and hosting, cloud and basic SaaS products are the most attractive ICT services for operators
Operators have struggled to gain a significant share of most ICT services; bundling may help them to grow their share
Operators must improve the quality of their traditional connectivity services to encourage the take-up of ICT services
ACQUISITIONS AND PARTNERSHIPS
Operators are using an ecosystem of partnerships with ICT providers and resellers to gain the capabilities and reach to sell ICT services
Acquisitions can provide a direct route into ICT services with specialist technology and sales and support teams
KPN has used an acquisition and an extensive partnership network to build its ICT bundle for SMEs: KPN&ÉÉN
SALES AND SUPPORT STRATEGIES
Operators’ approach to selling ICT services, as with connectivity, should be tailored to each segment accordingly
Basic ICT services may help operators to migrate micro enterprises from consumer packages to enterprise grade bundles
Operators should adjust the incentive schemes for their third party channels to drive the sale of ICT services
Operators should adjust incentive schemes, acquire new sales personnel and explore vertical strategies to sell ICT services to medium enterprises
The use of enterprise portals is currently limited despite their benefits and interest from operators
APPENDIX: OPERATOR CASE STUDIES
Telefonica’s sales structure and ICT services are standardised and adapted to each SME segment

TDC is one of the few operators pursuing tight or direct bundling, where ICT and connectivity services are packaged together for one price
Vodafone uses a vertical approach to bundling, and differentiating, its ICT services for SMEs
ABOUT THE AUTHOR AND ANALYSYS MASON

List of figures

Figure 1: Levels of interest for operators in ICT services
Figure 2: Breakdown of operators’ revenue from SMEs in terms of the share of the total revenue, 2017, and CAGR, 2017-2022, Western Europe
Figure 3: The benefits of bundling ICT and connectivity services for operators
Figure 5: Analysis of operators’ approaches to ICT services
Figure 6: Table analysing the value and interest of ICT services for operators
Figure 7: Percentage of SMEs using ICT services, by service type and provider
Figure 8: Percentage of SMEs purchasing security solutions from their operators against the; corresponding satisfaction score given to these operators
Figure 9: Operators’ NPSs from SMEs that did or did not purchase security solutions from their operators
Figure 10: Examples of providers of products resold by telecoms operators
Figure 11: Selected ICT acquisitions by telecoms operators
Figure 12: Structure of KPN One
Figure 13: Hypothetical sales structure of an operator
Figure 14: Operators’ sales approach to bundling ICT and connectivity services
Figure 15: Operators’ sales approach to bundling ICT and connectivity services
Figure 16: Operators’ sales approach to bundling ICT and connectivity services
Figure 17: Features of an enterprise portal
Figure 18: Telefonica’s sales strategy
Figure 19: Overview of the structure of TDC Business One
Figure 20: Examples of Vodafone’s vertical bundling approach

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