New Year brings with it splendid new opportunitiesJanuary 4, 2016 10:46
Telcos can ring in profits from the business sector
In the MENA region, this business segment is yet to generate profits for telco operators even though the regional enterprise ICT market is sizable.
October 11, 2011 3:27 by shafeer
The number of enterprises in the MENA region will increase, and so will their spending on ICT, until it approaches that of their peers in Europe and the US. And, operators can leverage their strengths to grab a share in this rapidly growing SME segment, lock-in key large accounts and large-scale digitisation projects, and benefit from converging consumer and enterprise offerings.
The spending increase by enterprises is driven by a sea change in mobility and cloud computing needs, as well as the desire for unified and collaborative services such as enterprise social media, as smart phones and tablet PCs have gained popularity.
Competition will be intense; business communication equipment vendors, systems integrators, software and online service providers all will seek to grab a share of the MENA region’s fast-growing enterprise ICT opportunity.
Telecom operators can capitalise on core capabilities to secure a share of the enterprise opportunity. Their multiplatform network infrastructure, established relationships, wide reach, reputed brands, and access to capital will be key assets.
“Despite those advantages, MENA operators will not automatically win enterprise customers. Operators will need to approach the business market in a fundamentally new manner and create a new value proposition. They will need to refocus efforts to capture the opportunity presented by the creation of millions of new small and medium-sized enterprises (SMEs) over the next several years. They need to expand their offering to lock in key accounts and leverage their incumbent position with government agencies. If successful, regional MENA operators will tap into a growth area, fuelling substantial gains for years to come,” said Bahjat El-Darwiche, Partner, Booz & Company.
A GROWING ENTERPRISE OPPORTUNITY
As many MENA consumer telecom markets approach saturation, MENA operators hope to continue growing by putting new emphasis on their efforts in the enterprise segment. The ICT segment for enterprises in the MENA region is significantly underserved. Although enterprises account for as much as 6.5 percent of all mobile SIMs in some European countries, they average less than 1 percent in the MENA region. Yet, the MENA enterprise ICT market is growing rapidly. It will almost double within five years, from an estimated $14.8 billion market in 2010 to $26.1 billion in 2015.
Increases in both the number of enterprises and the expected ICT spend per enterprise will drive that rapid growth. According to Booz & Company, an expected number of enterprises in the MENA region will grow at a 10 percent annual rate through 2014: this will add almost 4 million new businesses to the current base of 8.25 million. That growth substantially outpaces the growth rate of businesses in both Europe and North America. Nevertheless, ICT spending per MENA enterprise, currently one-fifth that in western Europe and one-tenth that in the US, is bound to increase.
TAKING ADVANTAGE OF OPERATORS’ STRENGTHS
Telecom operators can capitalise on six core capabilities to secure a share of the enterprise opportunity. Each of these six core capabilities provides MENA telecom operators with an edge over competitors in approaching the enterprise business. A combination of some or all of these capabilities adds up to a potent competitive advantage with enterprise customers:
1. Multi-platform network infrastructure • Telecom operators can use their multi-platform network infrastructure to deliver services on a variety of devices.
2. Established customer relationships • Through their current offerings and interactions, telecom operators have access to an established enterprise customer base.
3. Wide reach • Telecom operators use a variety of sales channels and have a strong presence across the geography they serve.
4. Large-scale programme management experience • Many established telecom operators have broad experience in managing large-scale infrastructure deployment and service delivery programmes with many stakeholders and interdependencies.
5. Trusted brands • Many telecom operators enjoy established brand recognition, typically in the consumer market where they have ample experience.
6. Access to capital • Particularly in the MENA region, telecom operators are cash rich and have the means to invest in long-term, capital-intensive projects.
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