The service provider (SP) industry is at an inflection point. During the past couple of years, SPs have dealt with the economic downturn by focusing the majority of their attention on cutting costs -- to the point where there’s very little left to cut. Despite continued economic uncertainty, there is a shift underway to revitalize revenue growth. SPs are eager to identify and execute on new sources of revenue growth -- however, there is also clear recognition that revenue growth cannot come at the expense of profitability. Growth under such conditions means taking advantage of market transitions as they are happening, creating new platforms for growth.
One key opportunity for SPs lies in providing a more expansive set of services to small and medium sized businesses (SMBs)—particularly leveraging cloud-based capabilities. Based on our estimates, the SMB communications and IT infrastructure market collectively represents more than $120 billion in spend for 2010. SPs currently address 60 percent of this spend. By extending into cloud services, much of the remaining 40 percent becomes addressable.
Cisco IBSG Service Provider Director, Tine Christensen, addresses this opportunity in this video:
Chris Osika, U.S. Service Provider Lead for Cisco’s Internet Business Solutions Group, just returned from CTO Telecom Summit where he gave the keynote speech and I want to share with you some of his inside observations from the event. In his keynote, Chris addressed “Platforms for Growth in the SP Industry,” in which he highlighted thatnow is the time for SPs to seize the opportunities arising from market transitions, launching a new phase of growth that will position and differentiate their organizations in the rising market to come.
Chris captures the mood of the conference from last year’s laser-like focus on cutting costs to this year’s renewed focus on reinvesting in platforms for profitable growth. In workshops and one-on-ones, attendees were talking about revitalizing and growing topline revenues. Chris explores trends from the show in the areas of virtualization and cloud, mobility, and consumer video. Attendees were focused on cloud services from the enterprise to SMB to the consumer, but the area that really stood out was the SMB segment. Another area of conversation was how can we fuse virtualization and mobility - especially in collaboration solutions -- and use that to drive new levels of productivity within businesses? Discussion around video was also front and center. With networks being loaded and taxed with a lot of heavyweight, content-rich video traffic, attendees considered how SPs can monetize this.