CSPs Need to Offer Bundles of Traditional and Cloud Services

View from the Cloud

CSPs Need to Offer Bundles of Traditional and Cloud Services

By Peter Bernstein, Senior Editor  |  June 06, 2014

Conventional wisdom has been that small and mid-sized businesses (SMBs) are the “low hanging fruit” for cloud services. In fact, the market has validated this. However, an interesting question has been whether or not SMBs would be willing to use their existing communications service provider (CSP (News - Alert)) for some combination of traditional and cloud services.

New global research done by Coleman Parkes Research for customer experience systems and services solutions provider Amdocs (News - Alert) sheds some interesting insights on this subject. The findings are encouraging for CSPs if they recognize the opportunity and act.

Plenty of opportunity if bundling is done right

The research surveyed 1,311 SMB decision makers from North America, Europe, Latin America and Asia Pacific. Key findings include:  

  • 66 percent of respondents said cloud-based services are very important to their business
  • 57 percent already use cloud-based services
  • 44 percent of those not yet using cloud-based services are actively considering them
  • They consumed cloud services for storage and backup (72 percent), computer networks (48 percent) and office software (41 percent)
  • SMBs engage three different vendors on average for cloud-based services
  • Only 45 percent said they get cloud-based services from their primary CSP
  • 74 percent prefer to receive cloud-based services from their primary CSP
  • 41 percent believe they can get better deals from independent cloud vendors
  • 32 percent did not ask for or receive information about cloud offerings from their primary CSP
  • 31 percent do not believe their primary CSP offers cloud-based services
  • 68 percent said they are more likely to select a service provider that offers cloud-based services over one that does not
  • 44 percent said they will switch from third-party cloud services providers to their primary CSP if offered bundles of traditional and cloud services
  • 80 percent said they want to receive one bill for all the communication services they consume

“The research validates that there is increasing need and adoption of cloud-based services by SMBs,” said Ian Parkes, managing director at Coleman Parkes Research. “The research identified that service providers are considered a viable and even preferred source for cloud-based services, representing a big revenue opportunity for service providers who choose to capitalize on this. Those who become a one-stop-shop for all SMB communication needs, focusing on what SMBs consider essential such as bundles with cloud-based and traditional services, as well as a unified bill, will be most successful.”

The fast take on the survey is that there remains plenty of low-hanging fruit to be picked. The target audience is aware of and interested in cloud-based services. There is also an inherent call to action to traditional CSPs that if they have not gone into the cloud business, or if they have not upgraded their OSS and BSS systems to be able to bundle traditional services with cloud services as SMBs migrate more and more to the cloud, this is the traditional CSPs’ market to lose. 

In fact, the two last findings are the most important. SMBs do have a comfort level with their primary CSP but it only goes so far. They would switch if enticed with a reasonable value-proposition. Plus, a big driver of the willingness to stick with a primary CSP is the desirability of having, depending on your perspective, “one throat to choke” or “one hand to hold.”

The message to primary CSPs is clear. If you are not in the cloud-services market you are late. This is not fatal. However, there should be some sense of urgency on action. The window of opportunity for consideration is closing. 

Edited by Maurice Nagle
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