Telcos and the Small Medium Business. Quantifying the Relevance.

Much is made of the Telco’s natural fit in delivering IT Solutions to SMB (Small Medium Business), and hence the much touted Cloud Service Broker opportunity for telcos.  I am a small business, and this assumption doesn’t ring true.  Telcos in my experience struggle with the SMB segment because they are structured to sell pre-packaged solutions (e.g. voice and data services) or expensive custom IT solutions to large enterprise / multi-nationals.  SMB need support with IT, and telcos are not structured to provide the necessary support at a price point most SMB can afford. is a good example of what it takes reach the SMB segment, with a dedicated site, lots of how-tos, and community tools: self-help, the support most SMB can afford.

I ran a survey last year across 1200 SMB in Western Europe, targeting the CEO of those organizations.  The results are shown below for 2 questions: Which is your preferred supplier of IT Solutions? and Why?

From these results it is clear telcos are not the top choice of SMB for IT solutions, generally telcos are used for communications services: voice and data only, which was asked in another question.  There are some regional variations, for example in Spain Telcos have a stronger role.  This analysis also does not capture the use of channels, e.g. O2 UK and Vodafone UK have been quite effective in empowering national and local system integrators / value add resellers to deliver their solutions.

Reviewing the reasons for the SMB’s decision, a “trusted personal relationship” is clearly important.  Put simply, there is nowhere to hide in a SMB, there is no group decision making, there is often only one person with IT decision making responsibility, and generally they have a day job as well.  This means they need a guide, someone who understands all the acronyms / hype and can help them do what is necessary and no more for their business.  After trusted personal relationship price / value is next.  That is because for most SMB, IT is perceived as a commodity.

Given the hyped times we live in, such reliance on trusted personal relationships and viewing IT as a commodity appears like something from the stone-age, but outside the technology world, in the world of building contractors, restaurants, corner shops, lawyers, doctors, and pet groomers their perception is reality if you want to make that IT sale.