SaaS is booming – so why can’t service providers capitalise on this?
Enterprises continue to show strong demand for SaaS products but the vast majority are not buying them from CSPs, despite clear intentions to do so. This is because CSPs are not focusing on their core strengths. Instead of a broad approach, CSPs should focus on hosted UC solutions and then invest in a more diverse portfolio.
There is a wealth of reports that highlights how sales of Software as a Service solutions (which include hosted UC) are booming. Enterprises of all sizes and in all countries are showing an ever-growing appetite to move away from on-premises models and to leverage cloud solutions for communications and a host of other business activities.
Interestingly, one recent report provides news that ought to give pause for thought to any service provider that is pinning its future strategy around an entry to this market. IDC’s Worldwide SaaS Enterprise Applications 2014-2018 Forecast, as reported here, found that 95% of respondents in the survey wanted to bundle connected digital services with other SaaS solutions.
This clearly establishes strong demand from enterprise buyers for solutions from communications service providers (CSPs). But, startlingly, only 14% of those surveyed actually bought such digital services from CSPs. This is staggering. What it means is that, despite aspirations to enter SaaS markets, CSPs are largely failing to do so.
Why is this and how can CSPs become more successful at selling SaaS solutions to enterprises? Well, one answer is that they are focusing on the wrong thing. Instead of playing to their strengths, they are positioning themselves as general SaaS players, not specialists. The reality is that CSPs are specialists – in communications service and products – and it’s far too early for most of them to play a wider role in the provision of more general solutions.
Instead, what they should be doing is matching their core competencies and skills (real-time communications and data networks) to what enterprises actually want, and then building and enhancing their offers from there. It’s clear from the report that enterprises want to reduce the amount of money they spend on on-premises solutions. If we accept this, then we can see that it must also apply to legacy communications services. In other words, enterprises are increasingly unlikely to invest in PBX infrastructure. They want hosted solutions, so why not give them what they want?
CSPs have the specialist skills to deliver advanced, real-time communications services (it’s what they are good at and what they have built their networks for). Any entry to SaaS markets should capitalise on this fact and the proven appetite from enterprises for such solutions.
But, having delivered a core SaaS-based communications solution, CSPs will then be well placed to add additional value, either through partnership with other software providers or by extending their capabilities to add new offers. It’s really simple, in fact. Enterprises want SaaS solutions and they want to get at least some of them from CSPs, but CSPs are failing to deliver.
To be successful in this market and to close that gap (86% not buying vs. 14% buying), CSPs must leverage their core skills in communications, deliver advanced UCaaS solutions and grow from there. Only by starting with something that is easy for CSPs to deliver and which meets clear demand, can they hope to succeed.
Fortunately, it’s easy to do this – and there is huge upside potential for CSPs. If you have any doubts, we can show you how to successfully deliver communications-as-a-service solutions to enterprise customers – and how to extend this offer to add further value and capture more market share. Talk to Gintel to find out how.