Study Reveals Growth Opportunities And Potential Pitfalls Facing Communications Service Providers Post COVID-19
By The Editors of AGL
- July 12, 2021
CSG and Analysys Mason have released the results from their research collaboration examining how well-positioned communications service providers (CSPs) are to meet future enterprise demand for communications and IT services post COVID-19. Key to the report was the finding that a significant 80+ percent of the largest global enterprises surveyed will consider buying edge, 5G-slicing, and private network services within the next five years.
The report – Large Enterprises’ Demand for Communications and IT services – surveyed 16 CSPs and more than 200 multinational corporations between February and May 2021. The report focused on three core areas: identifying changing patterns of enterprise demand for communications and IT services; the opportunity for CSPs; and the role of billing and invoicing.
Key report findings include:
- CSP revenue from IT is increasing, but not as rapidly as enterprises are increasing their IT spend. This suggests that the CSP share of this spend is falling. Only a quarter of CSPs surveyed report selling services other than voice and data connectivity to the majority of their enterprise customers.
- Enterprises rated the importance of technical solutions in supplier selection significantly higher than CSPs at 4.4 vs 4.1 on a scale of 1 to 5. This disparity could be a limiting factor that impacts the number of enterprises choosing to buy more IT services from CSPs if CSPs don’t continue to invest in broadening their products and services portfolio.
- More than 60 percent of enterprises reported using at least three different suppliers for their core communications services with nearly all enterprises expressing the desire to reduce this number. The most common reason (69 percent) cited for multiple suppliers was the need for additional services, suggesting an opportunity for suppliers with a wide portfolio to upsell add-on services.
- Billing and invoicing are considered to be very important in supplier selection by many enterprises – more so than by CSPs. 77 percent of enterprises rated it as very or somewhat important as compared to only 58 percent of CSPs. This gap could lead to customer churn as poor billing and invoicing were cited by 21 percent of enterprises as a reason for not renewing their contract.
- The proliferation of cloud and as-a-service models is creating demand for more flexible billing, and this trend is only likely to increase in the future. Many CSPs currently use workaround solutions for new services, which is unsustainable. Automation will be key for CSPs to scale and grow for the future.