Few people in the telecoms industry will have heard of Pax8, a marketplace for companies to buy, sell and manage cloud-based services – including, significantly, small, and mid-sized businesses (SMBs). Given that this has, for decades, been a customer type that telecoms providers have struggled to serve well, do they have a model telecoms service providers can learn from? 6GWorld spoke with EMEA CEO Robert Belgrave about the world of small business, risk, and service provisioning.
“We help businesses by provisioning and managing all the different software that they need, and these days that’s predominantly SAAS based,” he explained. “These days, everything is per user per month, or per seat per year, or whatever. And that’s everything from the extremely ubiquitous Office 365 through to more complex specialist tools.”
The company is a known quantity in the USA but has only been building its presence in Europe since 2021. It flies below the radar because it tends to operate through Managed Services Providers (MSPs).
“Our perspective is through the SMB lens, because that’s where MSPs play. For most MSPs that core business is SMB. And what that means is we have quite interesting insights into the perspective of the buying journey and what SMBs are doing.”
Time for SMB digital transformation?
While it has been a buzzword for years in large enterprises with major dedicated IT teams, the “long tail” of smaller companies is starting to come around to the potential that digital services and high-quality connectivity can bring. However, this is starting to change, according to Belgrave.
He gave the example of the MSPs that serve companies in industries such as construction – not traditionally the most “digital” of players.
“At first the conversation is just ‘Give everybody access to that collaboration software in a way that is sophisticated.’ But then they go a bit further and start to talk about how digital twinning is a really interesting concept. Making those types of capabilities available to people when they’re on site looking at project work – that is genuinely quite sophisticated and is built upon artificial intelligence, machine learning, sophisticated cloud and connectivity.”
In other words, the customers are focussed on understanding what’s possible and the outcomes they can deliver, rather than the technologies themselves.
“Ultimately, it’s all about software and how that comes together to enable new business models, better customer experiences, to make us more competitive,” Belgrave explained.
Perhaps it’s inevitable that SMBs should be engaging with digital transformation, as a natural extension of what’s been happening in the large enterprise context. However, for smaller companies there needs to be not just economies of scale but simplification to the point where non-specialists can use technology. The role that COVID-19 has played in SMB adoption of services is hard to understate, though, according to Belgrave.
“Everybody’s expectations suddenly accelerated, and so things that people were forecasting as ten-year trends became twelve-month trends,” he noted.
The reason for this, though, comes down to risk appetite.
“I think it was the CIO of Barclays who said that some of the changes they made during COVID, they would never otherwise have made. It would always have been considered to be too risky to make those changes in normal times but having now done so it’s dramatically improved their business.”
In the same was as for large companies, SMBs too were placed in an environment where the nature of risks to their businesses had drastically changed.
“Businesses were forced to take urgent action with very little downside if it went wrong, because the company wasn’t working anyway in a lot of cases, or they had some major disruption they were trying to overcome,” Belgrave explained.
The types of services needed in many cases were far from revolutionary, but managing employees, processes, projects and clients in ways that were secure, could be managed by remote IT staff and met compliance requirements is not necessarily straightforward. Collaboration tools, back-office systems and more all needed updating as well as changing the processes and mindsets to deliver services and goods.
“It went off in all these different directions, but the net result is that those businesses are now irreversibly changed for the better,” Belgrave summarised.
Cracking the SMB code
With an SMB expert on hand, it’s impossible to avoid the question of where telecoms providers fit into this, and in particular how they haven’t yet been able to break into the SMB market effectively. Belgrave, a veteran of the telecoms industry, unsurprisingly has a view.
“It’s a resourcing thing as much as anything. I’ve never seen a telco really commit to building SMB as a separate segment,” he noted. “The reality is it’s a different kind of customer. I think the mistake that I’ve seen telcos make is they treat SMB like consumers. The buying patterns are different. The different SMBs technical requirements are often pretty nuanced and, in some cases, fairly sophisticated. The purchase might be smaller, but the needs aren’t different really to the needs of an enterprise.”
There are two possible ways forward as a result, according to Belgrave.
“The telco that wins, if anybody ever does, will be the one that really figures out a pure SMB proposition. Probably acknowledging it’s going to have to be at a loss leader in the first three to five years, so it is going to need some visionary leadership to see that the goal is worth it.
“The reality is probably that you’ll see more strategic partnerships happen in the future with people like us, because of the same problem we solve for our vendors. They can’t sell services themselves because the customer acquisition cost is too high. They need someone like us as that cost-effective way to reach the SMB.”
What’s Next for SMBs?
While the SMB marketplace may have very different needs from that of consumers, Belgrave sees a striking example of convergent evolution taking place.
“Procurement software is moving towards a consumer-style model. What you’re doing when you install an app on your iPhone is quite a sophisticated set of things. There’s a lot of cryptography involved. It’s highly secure. You’re doing purchasing in real time, just in time provisioning, there’s loads of integration into loads of third parties, and it’s all just invisible to the user,” he observed.
“And I think the way businesses consume software is moving in that direction, which means enterprises might start buying software like consumers do today. If that was to happen, businesses like Pax8 will suddenly be extremely relevant to enterprises in a way that we’re not today for the way they buy software.”
This question of service provisioning and the business customer experience is developing rapidly. Belgrave likens it to an app store or catalogue approach, which in some ways seems intuitively sensible – if people are increasingly working remotely, having easy-to-use services that don’t require a specialist to purchase and integrate has an appeal. Belgrave highlighted that this could extend beyond simply software, giving the example of a company called Firstbase.
“It’s like a hardware distribution business. They’ve taken a catalogue approach to remote working; they can send you your standing desk and your Mac and so on, and it’s all delivered as a service on a monthly basis.”
While the telecoms players may not yet have cracked the SMB market, this approach to a more dynamic way to build and provision services may offer service providers a fresh opportunity to combine the transport of data with additional services, such as security, prioritisation or service level guarantees, software and more in a way that is digestible for customers all the way down to single-person companies. Belgrave sums it up.
“This whole idea of marketplaces, this kind of app-store experience, coming together with software feels like the future.”
Alex Lawrence is Managing Editor at 6GWorld. His mission is to bring together stakeholders from across industries, countries and disciplines to make sure that, as technology evolves in the coming decade, it’s meeting the changing demands of society, government and business.
He has been involved as a professional nosy person in the telecoms sphere since 2004, with short detours through industrial O&M and marketing.
If you’d like to talk to Alex about your ideas or projects he’d love to hear from you. @animalawrence or firstname.lastname@example.org.