A recent IDC article stated that “There’s a $100B cloud in our future.” On paper, this looks like a huge opportunity and it’s backed up by big trends such as the distributed enterprise, the proliferation of devices needing to access enterprise networks, IT assets being managed remotely and big data and apps to mention just a few. While these opportunities are obviously real, when service providers try to sell to SMBs, the situation is not that clear-cut.
The Future of Cloud Communications Is Bright
According to Parallels SMB Cloud Insights™ Reports, the overall cloud market is estimated to reach US$95.7B by the end of 2015, growing at 28% CAGR. Parallels categorizes the cloud market into the following:
- Infrastructure as a service (IaaS) – dedicated servers, VPS, managed hosting and databases
- Web presence & web applications – website hosting, domain registration and site-building tools
- Hosted communications and collaboration – hosted email and hosted PBX
- Business applications – file sharing, online CRM, payroll and HR etc.
VoipNow sits clearly in the hosted communications and collaboration group, specifically hosted PBX. For this segment, the market is expected to reach US$14.3B in two years, nearly triple in size compared to 2012.
The growth, however, is not equally spread across all regions since markets differ in their adoption rate. This difference comes mainly from the state of economic development, IT market development, and internet penetration rates. Countries such as US, Canada, and Australia stand to grow the most, with Latin America, Russia, and parts of Europe coming in second, while Africa, China and India lag behind.
In business, especially in non-core business areas, change only happens when something breaks. The explanation is pretty simple: humans seem to react faster on losses than on possible gains.
A Game of Appeasing Fears, Showcasing Rewards, and Catching the Tide
When it comes to communication, even though every single business relies on it, things don’t get broken that often. It’s more the case of undeniable benefits that must spur the change from traditional PBX to hosted solutions. As a hosted communications service provider, it is your job to address the fears that SMBs have and reframe the cloud benefits into missed opportunities that look like losses if not acted upon. It’s also important to popularize the hosted PBX concept. Parallels mentioned that 26% of US SMBs reported to never have heard about hosted PBX.
By and large, there are two types of companies that you might target as a service provider. They differ in the way they make decisions related to hosted communications:
Small companies with no IT staff must be approached through the business owner. Talk to them about:
- Improved cash flow – The monthly telephony bill is typically 20-30% lower and there are no up-front costs.
- Saving up on IT costs both material and manpower – The SMB does not need specialized technicians or contractors to manage the system.
- Happier customers – State-of-the-art features reserved in the past to big companies are now affordable. For example, VoipNow allows the business owner to be in complete control on how employees interact with customers.
Medium and Large SMBs
Medium & large SMBs (20-999 employees) usually have specialized IT staff. While direct contact with the business owner is possible and desirable, the influencing power moves towards the IT personnel.
It’s beneficial for the IT staff to understand the economics of the offering, but it’s even more important to understand the benefits related to system management and time savings. IT professionals need more reassurance on the feasibility, redundancy, and security of the proposed solution. They need clear documentation, technical background, and support during and post evaluation.
VoipNow is clearly a winner in this space since it’s the first solution built specifically for the cloud and providing enterprise level telephony features.
Next, after understanding the context in which the business decides, you have to keep your eye on changes that can spur the adoption of cloud communications. In other words, keep in mind their purchase triggers. Understanding these will help you develop a customer buying cycle and approach them with the right information at the right moment.
- Business growth – Many SMBs, when questioned, reported that a sudden business growth is the most powerful trigger to consider when purchasing hosted PBX. Do keep an eye on industry sectors that are growing faster, such as the healthcare sector or e-commerce.
- Lease expiration for PBX equipment – This is a very powerful trigger for change. While these might imply a longer buying cycle, use that time to educate the client. Point out business benefits as well as more advanced technical features such as Unified Communications that have provable benefits on employee productivity.
- Outdated equipment – Find out when the traditional PBX vendors that your prospects use are planning to cut off support. The end of support frequently turns out to be a crossroads moment when you can make the case for cloud communications.
- Office expansion – 30% of SMBs in US report willingness to switch in-house PBX with hosted PBX when they expand or relocate. Remember that businesses with more than one office are ideal customers.
- Remote workers – See if the business allows its employees to work remotely, as there are clear signs more and more businesses are open to this change. Studies support this movement. A recent HBR study (Jan – Feb 2014) carried out by Nicholas Bloom and graduate student James Liang showed that in a call center, employees working from home completed 13.5% more calls than the staff in the office. Also, look into companies with a distributed workforce such as utility companies, which have around over 50% of their workforce in the field.
- Seasonality – As reported by Spiceworks, the leading social business platform for IT, in their “SMB IT Spending: How IT pros are Creating and Managing 2013 Budgets” – 53% of SMBs worldwide decide on next year’s budget 1 to 6 months in advance. So, it looks like summer and early autumn are hot moments for service providers to approach SMBs.
As mentioned in the beginning, businesses do not easily replace communication systems. While this is obviously an issue in the sales process, it’s also an opportunity due to the high customer retention. The move to the cloud is irreversible and businesses will act sooner or later. As a service provider, it’s your job to seize the opportunity and work with the prospect to provide a nice and smooth migration. As indicated above, there are plenty of moments when businesses are more receptive to taking action.
Stay tuned for more insights in how to better market your services to SMBs.
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