Last week Ericsson and Cisco announced a “next generation strategic partnership” that will enable collaboration and cooperation in the definition, delivery and support of business services in the enterprise. In the interest of full disclosure; the briefing that was given to analysts didn’t emphasize enterprise services as the impetus for the partnership but the speakers did share the elements of the agreement and from what I’ve seen this arrangement clearly puts the partners in a position to target the enterprise.
Even the agreement, not an acquisition or a merger but a partnership, speaks to the desire to accelerate time-to-market for new business services without having to wade through lengthy regulatory reviews or the painful merging of assets. These companies want to go to market now.
And the market is enormous.
McKinsey predicts that the combined market for B2B telecoms and IT services will be worth US$1.67 trillion and those revenues will ultimately exceed the market for consumer services by as much as US$500 billion. And ICT Intuition research reveals that enterprises are tired of waiting. Every one of the 1003 enterprises that were surveyed around the world want to buy digital services, yet only 14% are actually buying those services from traditional telcos or network operators. Buyers are looking everywhere and so far are settling for IT vendors because they deliver the applications and then there is usually a system integrator that pulls it all together. But businesses don’t want that. They want to buy a fully formed service that includes everything they need – no IT, no expensive integration, no infrastructure to maintain and no hassle.
To date, the challenge for enterprises is that the communication service providers that they trust (98%) aren’t offering what they want and they are getting tired of waiting. So here comes Ericsson and Cisco with a real alternative because they understand scale:
- The companies have global scale for operations, sales and support
- The companies understand how to scale both the network and IT elements necessary to build end-to-end digital services
- The companies already manage large scale IT and network operations as-a-service
- The companies are well established and well regarded
- The companies have agreements in place with nearly every network operator, data center operator and systems integrator required to create a global partner ecosystem
Granted, these are not the only two companies that can put together an alliance to sell business services but since they come from the network discipline they pose the most immediate threat to legacy service providers and network operators. And the other big IT and network companies aren’t far behind. Want to read more about Cisco and Ericsson getting into the game?