Research has shown that small and medium-sized businesses (SMBs) today prefer buying managed network services in bundles from recognizable brands and from a single carrier due to the convenience, price benefits, and accountability inherent in working with one vendor. This creates a significant opportunity for providers to increase revenue, lower customer turnover, increase the average deal size, and create well-defined and replicable service offers.
Cisco has developed an approach to service bundles that incorporates highly integrated instead of loosely stacked services. This solution overview summarizes how to create targeted, replicable service bundles for the SMB market. It includes an overview of current SMB IT goals, managed services benefits, market segmentation strategies for better understanding SMB prospects, and sample service bundles.
Challenge: Addressing the Goals of the SMB
SMBs are looking for vendors that understand their business and provide clear and competitive pricing, easy-to-understand contracts, and guarantees mapped to realistic performance expectations. Contracts should be flexible enough to upgrade to different classes of service or service-level agreements (SLAs) as needed. Services should span a range of national or international connectivity options. And products and technologies should be scalable for the long term, allowing easy, low-cost upgrades to support evolving application needs.
A 2008 Forrester Research study found that the top technology goals of IT staff in SMBs for 2008 were security, disaster recovery, and IT consolidation. Beyond 2008, respondents said they would focus on collaboration and information management. All of these technology goals represent potential openings for service solutions that can increase the relevance of the network as the platform for small businesses.
Service offers should be promoted as solutions that contribute to meeting business challenges. An SMB that is facing stiff competition, for example, may look at a multifaceted strategy that includes cost control, increased advertising, the introduction of new products and services, investment in new technology and branding, and broader distribution. The goal of IT, and by extension the service provider, is to help achieve some or all of these goals through technology solutions. In selling managed services to the SMB customer, service providers should understand which combination of goals is most important to each individual prospect and tailor marketing offers accordingly.
Business Benefits
Various research reports have shown that SMBs are interested in buying managed services in bundles instead of buying individual services. A 2007 Forrester Research study found that in the United States and Europe 80 percent of SMBs preferred buying services in bundles. A 2008 study by Ovum showed that in Asia Pacific, delivering a strong and clear price benefit to the SMB gets the service provider's foot in the door but even more important in closing a managed services deal are supporting features such as other integrated services and the convenience of obtaining support from a single vendor. These benefits of bundling and single sourcing also enable service providers to differentiate themselves from competitors and to provide SMB prospects with a compelling alternative to deploying and supporting network services and applications themselves.
Therefore, the value of bundling managed services for the SMB is clear. For growing SMBs seeking the latest business solutions to achieve greater efficiencies, cost savings, and higher revenues while letting employees focus on their core competencies, managed network services based on Cisco® solutions deliver an array of new capabilities once only available to large enterprises and at prices that SMBs can afford.
Cisco technology-enabled managed services allow SMB customers to boost their business performance with enterprise-grade business features and a high degree of service quality while reducing IT-related administrative time and responsibilities. Service providers can gain new revenue by offering managed service bundles to an underserved market. Unlike "do-it-yourself" implementations of solutions from multiple vendors or service offerings from multiple providers in separate silos, Cisco technology-enabled managed network services for the small business allow end customers to enjoy minimal business disruption, reduced in-house IT responsibilities, and consolidated technical support processes due to integrated and scalable service solution bundles managed by an experienced service provider.
Solution
To create an effective go-to-market bundling program, service providers must approach the creation of bundles in a structured way that addresses real customer needs. Given the many different types of SMBs and their varying stages of technology awareness and adoption, Cisco has adopted a strategy to create bundles with a focused technology direction that can be effectively targeted to the most receptive customer prospects. Cisco has incorporated insights from the SMB cluster analyses of leading research firms and created six SMB customer "personas" to help providers of managed services to more successfully segment their target customers and package their service bundles, Figure 1.
Figure 1. The Persona Framework for Identifying SMB Prospects
Building Bundles - An Evolutionary Process
Creating a single bundle is not sufficient to establish a long-term relationship with an SMB customer. Instead, service providers should develop a progressive roadmap of bundles that can meet changing needs and business growth over time.
To help determine the appropriate services for a particular bundle, service providers can map a customer's persona to service-bundle categories, consisting of basic, enhanced, and premium offerings, to accommodate the prospective customer's technology adoption. Figure 2 shows an example of bundles that could be proposed to an SMB with the "communications driven" persona.
Figure 2. Sample Service Bundles for a "Communication Driven" SMB Prospect
The sample service bundles in Figure 2 help SMBs to evolve their offering through the following phases:
• Foundation: A wireless LAN, SIP trunking for IP telephony, and security services
• Growth: A portfolio of business application connectors that integrate industry-leading business applications with Cisco Unified Communications solutions to provide customers with desktop productivity features such as click to dial, screen pops, and call tracking, as well as advanced security
• Optimization: A migration from a TDM PBX to an IP PBX, optimized security services, and Metro Ethernet bandwidth services for advanced storage and video surveillance applications
The Cisco approach to managed service bundles incorporates highly integrated services instead of loosely stacked services, which are difficult and expensive to scale and harder to support than integrated services. Integrated Cisco service bundles have been tested for service interoperability, high availability, simplified support, operational efficiency, and investment protection:
• Service interoperability: Services bundles are developed and tested for service compatibility on the Cisco integrated services router, for example, which also synchronizes security, encryption, quality of service (QoS), WAN optimization, voice, and other features.
• High availability: Service platforms are designed for carrier-class operations, delivering the scale, performance, and architectural flexibility required by service providers.
• Simplified support: Customers have a single focal point for all support requests, and receive system-level support instead of per-device support.
• Operational efficiency: Service bundles require fewer devices, reducing interoperability gaps and operational issues and simplifying troubleshooting, configuration, and setup. For example, the Cisco integrated services router can provide a 70 percent savings in operational expenses (OpEx) per office, per year as part of an integrated bundle as compared to competitive bundled solutions with five or six separate appliances.
• Investment protection: Many new Cisco service modules enable next-generation services to be delivered to the customer's existing platform.
Why Cisco?
Diverse, integrated managed service bundles built on Cisco products and technologies accelerate time to market and revenue for service providers and support the full breadth of SMB customers. No other company offers the depth of features and applications available with Cisco solutions. Additionally, Cisco products accommodate multiple deployment options, such as partnering with VARs and system integrators, to reach customers more efficiently and effectively.
For More Information
For more information on Cisco managed service bundles for SMBs, contact your Cisco representative or refer to:
