Friday, July 31, 2009

Telcos localise SaaS for the SME market

Comment by Claudio Castelli, Senior Analyst at Ovum

UK: National and regional telcos are increasingly picking applications with localised content to cement existing relationships with SMEs and differentiate from the global software-as-a-service (SaaS) providers.

The goal is to be the preferred ‘one-stop shop’ for ICT services for SMEs, combining applications and services from local developers and global providers. However, some of these partners will eventually also be competitors.

Administrative applications high on the agenda
With software delivered as a service from virtually anywhere, telcos entering the SaaS game will increasingly face competition from global players in their own backyards.

With much smaller scale, telcos will need to be creative in finding ways to differentiate in their marketplace. Existing customer relations and good knowledge of their particular needs will be key to telcos' ambitions to maintain a broader role in the value chain and avoid the risk of becoming only connectivity providers.

An increasing number of telcos are launching services focusing on SMEs' local needs. Telstra, for example, launched its SaaS proposition in April, with offerings including Workforce Guardian, an HR service that helps SMEs in Australia to create compliant employment contracts.

It has now announced Xero, a hosted accounting tool that provides SMEs with access to bank transactions, invoicing reports and tax data. In both cases, applications will run based on local requirements. This is expected to provide a competitive advantage against global players.

Telcos want to be a ‘one-stop shop’ for SMEs
Having a single ICT provider is on the majority of SMEs’ wish-lists. Ovum research shows that 65 percent of SMEs globally prefer to purchase all their fixed and mobile services from a single provider. Telcos are listening to their demands.

An important value that telcos can add is integrating multiple services into end-to-end offerings. They normally have relationships with the majority of small business customers, which in many cases extend beyond billing. Their reach and understanding of SME pain points might attract the right ISV partners.

However, some of these partners might eventually become competitors. Telstra will also offer Microsoft Online Services through its SaaS platform T-Suite. Although not broadly promoted, Microsoft also offers applications online directly to customers. We think there is potential conflict in the future.

SingTel is another operator that is working hard to build an end-to-end ICT proposition for SMEs in Singapore. The operator released a range of ICT packages for SMEs, and recently launched an Innovation Exchange programme to bring application developers into the service provider’s SaaS offerings.

The aim is to combine solutions from global players such as Microsoft, Google and with local ISVs. Like Telstra, SingTel included HR applications in these initial offerings.

Other telcos are also rolling out their SME plans. AT&T has just re-launched its small business portal; AT&T Small Business InSite now provides a library of practical ‘how to’ articles, podcasts and video resources to help small companies integrate technology into their business, with a strong emphasis on mobile solutions, remote access and wireless applications.

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