Videos
IBM on the SME Opportunity, Digital Services, and AI Adoption
Insights
- SMEs trust telecom providers to deliver digital services but often turn to cloud and IT providers when they need them.
- Cybersecurity, managed services, and AI-enabled capabilities represent significant growth opportunities in the SME segment.
- Success in the SME market requires outcome-based offerings, stronger ecosystem partnerships, and new commercial models.
Rakhee Chachra of IBM discusses new research exploring the growing opportunity for telecom operators in the small and medium-sized enterprise market. She explains that while SMEs trust communications service providers to deliver integrated digital solutions, many continue to purchase security, cloud, and managed services from alternative providers. The conversation highlights a significant disconnect between what SMEs value and what many telecom operators prioritize, particularly around ecosystem partnerships and digital business services. Chachra also shares insights into the rapid adoption of AI among SMEs, noting that many organizations are already using AI in daily operations and expect usage to grow significantly in the coming years. Looking ahead, she argues that telecom operators must evolve their mindset, talent strategies, and commercial models to deliver outcome-based solutions that help SMEs achieve measurable business results.
Samad Masood:
We're here to talk about some research that you've published, really interesting research about telco companies and targeting the SME market, a sort of market that's long been challenging, not just for telcos, but for others. But I think your research uncovers some sort of misperceptions around SMEs and I'm really keen to hear you walk us through that. Tell us a bit about the research and why you felt it was needed.
Rakhee A. Chachra:
Lots of interesting things but I'm going to maybe share a few. The first being that 58% of SMEs very clearly state that they trust their CSPs to provide them integrated digital services and they're also willing to pay for them. But the interesting part is when these SMEs actually need security or integration or managed digital services, they go to their IT and cloud service providers twice as often as they go to their CSPs. So the fundamental question is why? You have the trust, they have the money, they want it, but the CSPs are not the front and center in terms of recall.
Rakhee A. Chachra:
82% of the SMEs have experienced a breach last year, and they're willing to pay extra for it, for things like AI-enabled threat detection, proven ROI, and so on and so forth. And if you bundle all of this, they're ready to pay 30% more. So in different domains, when we ask them, are you okay with what you have and versus what is it that you really need for you to be able to function more efficiently or effectively? They've always come back with a value. And I think that's the value that we see there.
Rakhee A. Chachra:
We haven't done quantification of the actual SME price, because again, all CSPs are at different stages of maturity. And some of them already offer some parts of it. Some of them are not even looking at this market. They're actually more focused on the larger enterprises. So it is the 95% of the B2B business is this 0 to 250. And that's why they're very, very valuable for us to be focused on.
Rakhee A. Chachra:
Most of them think they're doing a pretty good job. And they also, when we asked them what they thought were the biggest barriers, the difference between the two responses is what gave it away.
Samad Masood:
Just to kind of set this in context, ecosystem partnerships, right?
Rakhee A. Chachra:
SMEs rank this as their most top priority in terms of driving digital adoption. And when we ask CSPs for this, they only 51% thought that this is a very important requirement.
Rakhee A. Chachra:
SMEs are not actually waiting for telcos to bring AI to them. So they’re also on their AI adoption journey. 78% already use, I mean, our data shows that they use it in their daily operations. And they expect it to go to up to 93% in the next three years. So again, it is not about whether the client is ready. It's about whether a CSP’s proposition is meeting them in providing solutions which actually matter to them. I think that's where we've seen a little bit of disconnect and those who have got it right are actually reaping the benefits.
Rakhee A. Chachra:
When we did our research, what came across very clearly was SMEs want outcome-based results. So if you link outcomes to SLA tiers or success based on the managed services that you give them, dashboards that you provide, they are more interested in that. So in summary, they need to change their mindset. They need to change their talent model. They need to change their commercial architecture to be able to evolve.
