Operators are missing out on a potentially huge market opportunity by under-serving the millions of small and medium-sized businesses around the world waiting to use 5G networks, according to a new global research.
Telcos and communication service providers (CSPs) around the world must do more to address the needs of small and medium sized enterprises (SMEs) if they are to see a return on their 5G capital investments, says a new report, published by BearingPoint/Beyond, in collaboration with Omdia that highlights the potential of SMEs as a major source of future 5G revenue for CSPs.
It indicates that SMEs represent 99% of the world’s businesses, with a services market estimated to be worth $433 billion by 2025. However, operators are focusing largely on the 5G needs of larger multinational customers.
With needs often as complex as those of larger businesses, SMEs stand to benefit from the implementation of 5G services just as much. “5G’s fundamental core is about scalability. It could be a game-changer to help SMEs increase productivity and efficiency and create new opportunities across the value chain,” the report said.
Further, a previous Omdia report revealed that nearly half of SMEs trust that 5G can support critical business activities and assets, such as creating an online business and protecting intellectual property.
An additional aspect to this discussion is the faith that SME have in CSPs. The report noted that many SMBs are looking to 5G as one of the key technologies that will help them grow and expand, and are looking to CSPs and operators to help enable this, with nearly half (42%) prioritizing them to execute their 5G strategies.
Conversely, the report argues that many larger enterprises actually prefer to work with a partner that is not a CSP to help deliver their 5G strategy – with the report finding that nearly three-quarters (72%) of big firms saying this was their preferred option. Nearly a third (31%) of large multinational enterprises will choose cloud service providers and 34% even favor taking a D.I.Y. approach.
Despite this, the majority of operators focus as much as 70% of resources on a section of the enterprise market that accounts for only 1% of global businesses, said the study.
The study is important in the context of the India market too as creating 5G solutions is seen as the next big thing for Indian IT firms – both large enterprises and vibrant startups – after cloud computing, as it allows them to expand their scope of work across sectors, even the traditional ones that were .
Speaking to CXOToday, Angus Ward, CEO, BearingPoint/Beyond says, “While India is still driving 4G adoption, it’s already clear that 5G will have transformational impact, especially on businesses and verticals. The GSMA estimates an overall contribution of approximately $450 billion to the Indian economy by 2040. Out of all the business segments, SMEs represent a massive opportunity with 60 million SMEs, 30 million small merchants, and 120 million farmers across the region.”
He therefore emphasizes that CSPs in India have the potential to capture the lion’s share of this opportunity if they position themselves at the center of an evolving 5G ecosystem and build 5G digital markeplaces for SMEs.
“Our research shows that CSPs in Asia are confident leading on 5G technology. But they are less confident in pioneering 5G business models and new ways to unlock the potential of 5G by experimenting and innovating with new, more advanced B2B services. In fact, our previous research highlighted that just 17% see themselves as end-to-end actors facilitating an ecosystem of providers. CSPs in this region must heed this call, shake off their doubts and act quickly to create a digital marketplace that will enable the orchestration of multi-partner solutions, whilst also simplifying the complexity for the SME user,” Ward Says.
Asia-Pacific is expected to witness the highest growth rate in overall 5G during 2020-2023, as per studies. Touting 5G as a game changer for hundreds of SME/startups in the country, Ram Mohan Natarajan, Senior Vice President – Business Transformation, HGS, says 5G will pave roads for many long-held technology goals, including real-time augmented reality (AR) and IoT, among others. 5G will also transform the underlying architecture in core networks and will promote virtualization, AI and Automation.
Natarajan sees, 5G will also boost other industries such as online education; healthcare applications like remote surgery, patient monitoring, telemedicine, etc.; smart farming with sensors in crop monitoring, online market places, etc.; smart homes and cities with sensors; smart utility meters and mobile applications; Sensor-based building management, video surveillance and many more – and many other areas currently dominated by small and mid-sized entities.
Good news is, SMEs are aware of the benefits 5G can bring to their businesses and already view CSPs as their trusted 5G partners, mentions Camille Mendler, Chief Analyst, Enterprise Services, Service Provider & Communication, Omdia.
“It’s therefore critical that CSPs enable 5G to triage SMEs’ business context and industry solutions with outcome-based value propositions, to reap the rewards of this customer base,” says Mendler.