Ammon News -
• One third of business users are already taking hosting, security and conferencing services from their telecoms suppliers

• Half would not consider telcos for IT help desk, business consulting or cloud services


AMMONNEWS - Despite making inroads in the enterprise market beyond legacy connectivity services, telecom operators face a tough time convincing business customers that they can be trusted providers of information and communication technology (ICT) services. More than half of respondents believe that the telcos should stick to their core business, rather than being all things to all people, according to a new survey by Ernst & Young in conjunction with the Economist Intelligence Unit - Beyond connectivity: can telecoms operators offer new services to business customers?

Although over 20% of enterprise customers say they would consider taking cloud computing and business consulting services from operators over the next 12 months, telcos still face a challenging task of positioning themselves in certain areas of ICT. Nearly half of the survey respondents say they would not consider using their telecoms service provider for data backup and retrieval. In addition, many business customers rate services such as network installation and security, as well as conferencing and web-hosting, as ‘highly valuable’ services, and ones which at least half of respondents are already buying, or would consider buying, from operators.



The report showed that innovation and not past relationships affected future growth indicating that one contributing factor to ‘customer loyalty’ could be the difficulty of changing providers, but it isn’t the full explanation. For most survey respondents (60%), the difficulties that may be associated with switching providers are not seen as big stumbling blocks to making a move. Telcos might take heart from the 36% of respondents who say they are perfectly happy with their telecoms services. However, the survey shows that there is no correlation between offering a reliable core service and the propensity of enterprises to take on additional services from their telecoms service provider. Incorporating real-time IP-based voice and video into Software as a Service (SaaS) or unified communications propositions may be one way, that telcos (along with IT partners) can bring innovative service propositions to the attention of enterprise customers and generate incremental revenue.

Wasim Khan, MENA Telecom Leader at Ernst & Young, says: “To move successfully into non-core service areas, telcos will have to emphasize more of their network strengths, explore further strategic partnerships with IT vendors and heed warnings from enterprises about their shortcomings. It is worth mentioning, that relevant partnerships and acquisitions that could strengthen the position of telcos are in general not widely spread across MENA, in comparison with some other regions. Enterprises recognize that maintaining a high-performance network, allied with software infrastructure investment, is vital to increasing business productivity. This should give telcos a head start in gaining a stronger foothold in the market for non-core and more IT-centric services. However, outsourcing initiatives and trends practiced by some operators in MENA impose some challenging operational constraints on those operators who plan to take on more non-core or IT-centric activities.”

Over one third of businesses worldwide are now purchasing web hosting (41%), network security (40%), conferencing (39%) and network installation and maintenance services (36%) from their telecoms supplier. “Telcos would be in a better position if they showed a greater understanding of individual business requirements, and tailored their service propositions accordingly, rather than promoting a wide range of services that enterprises don’t want,” adds Wasim.



The time for VoIP may have finally arrived and many enterprises appear to be embarking on a significant network transformation. Wasim explains that “regulations in some MENA countries might impose a challenge in this direction but it is definitely worth the efforts.”

According to the survey, opinions are mixed on the benefits of integrated providers of both fixed telecoms and mobile services, when it comes to deciding on non-core services suppliers. 39% agree that it is important to buy fixed and mobile services from the same supplier. Of those, 62% see telecoms spend increasing over the next two years.

Larger companies are putting more emphasis on mobile internet, with 61% giving a higher priority to mobile internet spending (compared with 41% of smaller companies) as workforces are increasingly on the move. The growing use of smartphones also means IT departments are facing much bigger network security and device management challenges, which creates other potential opportunities for telcos.

“The recent pressures exercised by some MENA regulators, raising security concerns with one of the smart phone vendors, has further increased the challenges of those IT Departments. As trusted providers of network security — and in partnership with device management software vendors — telcos could offer to either manage this increased complexity on enterprises’ behalf, or give enterprises the tools to do it themselves, perhaps on an SaaS basis. Network know-how is the telco’s trump card, but they must play it wisely,” said Wasim.

Smaller companies more scepticism than their larger counterparts toward accepting non-core services from telcos. Smaller companies (with annual revenues below US$500m) also see less intrinsic value in non-core services than larger ones (annual revenues above US$5b). “One might have thought that smaller companies would have seen more readily the cost and productivity benefits from SaaS and cloud computing. Perhaps a reason why many do not is because neither telcos nor software companies have managed to adequately sell the benefits, or have failed to make them attractive to companies with smaller budgets,” concluded Wasim.