“Demand for SaaS enterprise applications is accelerating and exceeding the demand for on premise applications by five-times (during the five-year forecast period through 2018, SaaS revenue is forecast to grow at 17.6% CAGR while on-premise revenue growth is only forecast at 3.1%). By 2018, 27.8% of the worldwide enterprise applications market will be SaaS-based, generating $50.8B in revenue up from $20.6B or 16.6% of the market in 2013”. – IDC’s Worldwide SaaS Enterprise Applications 2014-2018 Forecast
“Everything that can be digital, will be digital” this is the mantra which has been floating about in nearly every business conversation for the past 24 months or so. Huge expectation have been placed on enterprises to move to offering fully integrated, digital services. As the IDC report quoted above shows, the business and revenue opportunity is colossal with SaaS based applications expected to be worth $50.8B by 2018. This is coupled with the estimates that there will be 20 billion connected devices by 2020 shows that the demand is there for end-to-end digital service offerings.
For enterprises it is all about maintaining the “competitive edge” which will of course drive business and profits but in today’s context that means enterprises have to become digital and take advantage of social, mobile, web, Cloud and analytic technologies. As a part of that transition it requires businesses to anticipate the customer’s needs of tomorrow and as Deloitte states “it requires integration of people, processes, and capabilities to deliver an omni-channel experience”. With this in mind, and all of the recent transformation that communication service providers have been through it seems that they are well placed to benefit and to offer SaaS services to large enterprises. Indeed service providers are not immune from this challenge so they understand the need to digitise probably more than others and in some cases are often leading the charge. A good example of this is AT&T which hopes to have eighty-percent of customer interactions happen in a digital form by 2020, up from just forty-seven percent today.
The recent “Enterprise Multi-Client Study” which was commissioned by Comptel surveyed more than 1,000 global business leaders to better understand what they want from their digital and communications service providers. The survey revealed that eighty-one percent of respondents are currently using connected digital services to “improve productivity, generate revenue or reduce costs”. This finding obviously isn’t surprising but the next part is and offers an intriguing insight into the complex world of digital service delivery. A further seventy-one percent were looking to bundle connected digital services into the products they sell and ninety-five percent of those would like to partner with a digital or communications service provider to do so, yet only fourteen percent of enterprises are purchasing connected digital services primarily from operators. This really is a surprise especially as the survey showed that business’ top concerns when buying digital services were security (coming out on top with 61%), followed by cost (58%), service quality (54%) and easily accessible support (39%). Nearly a third (29%) said ease of ordering and purchasing was a top decision-making factor. Service providers always come out on top of any survey when it comes to issues such as security and privacy and they are best placed for offering a secure end-to-end service and moreover can guarantee service quality through SLAs especially with all of the recent investment in infrastructure. Services providers should therefore come out as the “first choice” to be a provider for delivering enterprise digital services.
Something then, is clearly going wrong if only fourteen percent of those businesses surveyed are purchasing their digital services from operators especially as seventy-seven percent wanted a SaaS service turnkey option which wasn’t reliant on everything being handled in-house. Operators clearly need to up there game and be seen as being able to deliver secure digital services, which can easily be purchased, through a better buying experience with simple platforms and ease of use with a good after-care service. Services providers have to go a lot further than just worrying about connectivity and bandwidth and start packaging their enterprise services much better as they have been doing for their retail-consumer market.
Delivering enterprise-grade services certainly doesn’t come easy but the communication service providers are definitely based placed to face and solve these challenges. Volume of data, costs, congestion and business models all need to be addressed especially as all those along the digital services value fabric are all wanting a revenue share as well as either contributing and/or extracting valuable data to offer digital services. Service providers need to help enterprises put all these pieces together and offer attractive business models whereby the operator becomes the broker between the various parts thus removing the complication from the enterprise. Security and privacy will always reign supreme and will be at the forefront of the buyer’s decision when selecting a delivery partner. That one is pretty easy for operators to address especially around the collection and storage of data. What isn’t so easy is creating a turn-key solution which will give a suburb end-to-end omni-channel experience. Operators need to invest a lot more time in this as well as ensuring their product offerings are easy to understand and are easy to purchase, run and maintain.
The future of the service provider is not as a dump pipe, who only offers bandwidth and connectivity. The future of the service provider is to offer and deliver high-grade end-to-end digital enterprise services which are fully secured and integrated across a complex value-fabric giving an outstanding customer experience. There is a $50.8bn revenue market out there waiting for operators to seize. Service providers must now quickly move and be at the forefront of delivering enterprise-grade digital services. No more can surveys be conducted with the results coming back as “only fourteen percent of enterprises are purchasing connected digital services primarily from operators”.