Differentiating for Long-Term Growth in a Commoditized Networking MarketDifferentiating for Long-Term Growth in a Commoditized Networking Market
Jump on networking and cloud opportunities to offer in-demand connectivity services.
April 14, 2021
By Mark Daley
It’s undeniable that more businesses are making digitalisation a priority. This also means more opportunity for network and managed service providers to capitalise on these demands. However, many will first have to overcome a series of challenges such as scaling their resources and demonstrating technical skills and knowledge.
The continuing increase in the adoption of public cloud services has placed real pressure on businesses to formally adopt a digital approach to managing their business, and how they present their services. According to Gartner, the worldwide public cloud services market was estimated to have grown 6.3% in 2020 to total $257.9 billion, up from $242.7 billion in 2019, and it will continue to grow.
A digital world means more and more remote applications and data transfer. These are trends that are bringing real growth opportunities for network and managed service providers. Finding the right network partner can set this opportunity up for success. But first, choosing the right partner to enhance your connectivity portfolio is the critical first step.
Competing on Experience
Remaining relevant and profitable is becoming increasingly difficult in a commoditised market. Commoditisation occurs when consumers consider “price points” as the most important factor when making a purchasing decision. Devising strategies to accommodate this shift will define the future of partnering.
Within the current market, the commoditisation of networking services is an evolving situation to which network and managed service providers need to react. It’s essential that businesses differentiate their offering to remain relevant and profitable in an increasingly commoditised market.
For example, demands for direct connectivity to the cloud are driven by the need for fast and secure access to cloud services, particularly those that have become mission-critical. Network and managed service providers need to quickly adapt their solutions to out-feature competitors or risk being dragged into a pricing race to the bottom.
When it comes to differentiation, network and managed service providers need to also look at the entire end-to-end offering. They could lose out to competitors for a variety of reasons, including customer support and service. Poor customer support not only impacts the customer, it also can negatively impact a business’ entire ecosystem in the long term. Failure to provide a solid level of customer service risks losing customers, reputation and profits.
The need to follow leading trends in terms of how technology is impacting business needs, objectives and its associated connectivity requirements is keenly important. Understanding that a key challenge to IT these days is enabling the interworking of applications and delivering a great user experience means that enabling mission-critical networking between remote application and cloud locations must be available. It must be on-demand, self-configurable and fully visible – as well as super reliant and secure.
In addition, how network companies and MSPs present services to businesses is becoming extremely important. Cloud services such as user interfaces are an expectation and how they are presented will always have an impact on the user experience. Nonintuitive interfaces and complex platforms often result in poor ROI and user adoption. To maintain customer retention, network and managed service providers must …
… deliver a user-friendly interface to have an edge over their competitors.
In terms of network reach, having a wide geographical footprint also is vital. Without access to global networking, it can be difficult for these service providers to meet new requirements due to a lack of network presence in some places. With the right network partner, they can scale and meet the needs of more customers across the globe and stay competitive in the market.
Trust is critical in choosing who to work with in terms of networking. After all, no network generally means no work! Partnering with companies that bring a true global networking experience over time, who are members of industry standard bodies and who operate a tried and tested networking approach to redundancy and interconnectivity is just as important as price.
Network companies and MSPs also must understand what customers expect. This allows them to develop a strategy within a commoditised market and benefit from the growing opportunities in networking and cloud.
Differentiating for Success
The channel model is key for service providers looking to acquire new products and services and accelerate the delivery of their go-to-market strategies. It’s also a great way to extend their capabilities with local market knowledge as well as global expertise. In the technology industry, 64% of all dollars flow indirectly, with the channel model contributing $2.26 trillion, according to Forrester.
Networking underpins transformation. As more and more businesses embark on their digital transformation journeys, the underlying network becomes increasingly important. Service providers must be able to keep up with the pace of change and build new capabilities that can help them scale and meet the changing needs of customers across verticals.
With the right network partner, it can be simple to expand service capabilities, reach new global and local markets and offer guaranteed quality of service and experience to boost customer loyalty. It’s important for service providers to understand the benefits of partnership and how they can deliver strong outcomes for their customers.
Transformation – Transform your service capabilities and play a critical role in your customers’ digital transformation.
Innovation – Push networking into the future with on-demand connectivity platform and remove limitations on customer innovation.
Customer loyalty – Drive stickiness through excellent service levels and serve more of your customers’ needs.
New revenue streams – Create new revenue streams to support cloud-based services and applications with global network reach.
An Adaptable Future
Leveraging the right expertise enables service providers to create a differentiated experience and grow their margins in a commoditised market. They need to highlight not just the connectivity of the network but the customer experience of using the network. This is the key to transforming the value of the offering.
Network service providers should consider channel partner models that enable them to:
Expand service capabilities.
Reach new global and local market.
Offer guaranteed quality of service and experience.
Deliver complete solutions.
Own the customer relationship.
Gain the support of connectivity experts.
For channel partners to remain competitive in this era of on-demand connectivity, they need to go beyond traditional network services. It is vital that they future-proof their service portfolio with connectivity services that can solve the challenges of today and meet the demands of tomorrow.
Mark Daley is director of digital strategy and business development at Epsilon Telecommunications, a provider in the network-as-a-service (NaaS) market. You may follow him on LinkedIn or @Epsilontel on Twitter.
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