Open Mic - Realizing the potential of the enterprise market
With consumer revenues flattening, service providers are looking to the enterprise segment more than ever before to satisfy their growth and revenue goals. Revenues from business customers exceeded $600 billion in 2011, according to Yankee Group, and it now accounts for almost a third of all service provider revenue, with this figure set to grow.
Not surprisingly, many service providers are therefore honing their services and bundling strategies to appeal to a greater range of small-, medium- and enterprise-size businesses, and they are making strategic investments in data centers to expand their cloud-based services strategies, as well as launching business application stores.
In going after the enterprise market, service providers need to acknowledge that business customers are very different from residential subscribers. The acquisition process for business customers is different in its nature, length and dynamics. The products and services mix offered is often more complex and rich, and orderings tend to be more complicated to fulfill and deliver.
The bigger the corporate customer, the higher its communication expenses, and so businesses expect their service providers to supply them with smooth, error-free processes; a high level of support; fast response time on technical issues; and empowering management tools to control and manage their communication expenses in a cost-effective way.
And this is where we’re seeing a disconnect between service providers and their enterprise customers. A recent Frost & Sullivan survey conducted for Amdocs identified key gaps between business customers’ expectations and the services they are receiving. For example, although service providers believe that less than 5 percent of orders fall out, 30 percent of enterprise customers said order fallout was experienced “fairly often,” “very often” or “always” – clearly a mismatch.
When it comes to large corporations (more than 1,000 employees), numbers go as high as 90 percent breaches. Worryingly, less than half (45 percent) of service providers have automated systems to keep track of their contractual commitments regarding order fallout.
Just as unhappy residential consumers churn, so do enterprise clients. Dissatisfaction with customer service (63 percent), recurring order problems (59 percent), lack of service quality (45 percent) and poor customer service (36 percent) were cited as the major reasons for enterprise customer churn. Interestingly, according to the survey, larger corporations seem to be more forgiving: 85 percent of them tolerate service-level agreement (SLA) breaches, compared with “only” 45 percent of the smaller enterprises (up to 100 employees).
One size does not fit all
Service providers need to take into account that enterprise customers have unique needs. Fulfilling enterprise orders is complex and takes a long time. As the Frost & Sullivan survey revealed, order processing errors are sky-high, resulting in revenue loss. Bill disputes and write-offs are costing service providers as much as $20 million a month. Contract and SLA breaches are common across the board. In fact, customer support has become a (sometimes painfully) hot issue. How can service providers remedy this situation?
To develop profitable, long-term relationships with enterprise customers, service providers must differentiate on customer experience and provide a service that is tailored to business needs. Service providers need to recognize the unique needs of business customers and develop OSS, BSS and CRM strategies that support complex business customer hierarchies and vertical industry offerings; offer scalability for high numbers of users and process volumes; and allow them to meet stringent SLAs.
At present, business customers are also too dependent on assisted channels for receiving information and handling disputes, tech support and billing control, which places a heavy load on the call centers, leading to reduced service provider margins and, as far as the customer is concerned, an annoyingly high average handling time.
Most importantly, since no organization is identical to the other, service providers need solutions that can identify and address their business customers’ specific needs with a high degree of flexibility through all business processes, despite the complexity this involves.
It’s not all bad news. A new breed of enterprise-specific solutions is emerging that will enable service providers to remain competitive and grow revenue with shorter order-to-cash cycles, enhanced customer experience and accelerated time to market of new enterprise offerings – all the while reducing costs. Many support both enterprise and residential customers on a single, converged system.
On the customer management side, this latest generation of enterprise solutions empowers enterprise customers to self-manage and self-monitor their accounts; reduce average call handling time and increase first-call resolution; reduce support costs and field service visits; and provide real-time SLA jeopardy identification to reduce penalties and improve customer satisfaction.
In terms of operations, the most advanced service fulfillment solutions utilize a single enterprise product catalog to integrate ordering and fulfillment processes and reduce time to market and delivery lead times for complex enterprise services (e.g., multi-site VPN); to automate service fulfillment, including the ability to amend orders “in-flight” without interrupting the process; to significantly reduce the failure rates common to complex orders; and to converge, automate and vastly simplify network configuration across all lines of businesses and media types.
Business customers expect their service providers to understand the way they do business, their organizational structure and their motivation. Service providers need to ensure that they have the solutions that enable them to do so.
Next month, Jeff Brooks, vice president of business development at Arris, will write about targeted advertising on IP-connected devices.