How CSPs can mirror the success of hyperscalers – RTInsights

CSPs must emulate successful hyperscalers by selling and globalizing via an operating model that enables rapid scaling of their own and partner solutions.

Cloud Service Providers (CSPs) have two choices, do what they’ve always done and focus solely on connectivity or recognize increased competition and follow demand to create all-encompassing solutions that solve customers’ problems perfectly. Seems simple, right? That’s why it is.

The first choice is the default, and sees CSPs preparing for more sophistication of connectivity solutions by moving to consumption- and outcome-based models. However, it fails to reflect the reality: B2B customers want to buy simple solutions to problems rather than sourcing several separate components from different vendors, bundling them together, and continually updating them. They want holistic solutions from a solution provider that can ease the headache of handling multiple deals for them.

The traditional business model is broken. If CSPs are to be anything other than a wholesaling of 5G and network-as-a-service, they need to shift their focus from technology-driven innovation to business-driven innovation. They have to do what the most successful players have already done: transform themselves from a telco to a techco and try to become the solution provider of choice.

This approach recognizes the growing competition in connectivity and takes advantage of the blurring of boundaries by orchestrating an ecosystem of partners to co-create perfect solutions tailored to customer challenges. By becoming a solution provider and reacting to customer demand, these CSPs are best positioned to maintain and expand B2B customer relationships and replace connectivity revenue lost to competition.

See also: 4 technology solutions that help SMEs thrive

Shared knowledge is knowledge squared

Hyperscalers and digital startups have found the sweet spot for B2B selling by adopting multi-sided business models, which is great for selling digital solutions. And for any solution to be “just what the doctor ordered,” it will require a much larger set of capabilities than any CSP alone has. By co-creating solutions with specialist technology partners across the ecosystem, not only does this shared specialization create insight into new markets and geographies for techco, it also becomes more profitable to co-create than to sell another company’s products.

See also: Emerging trends on the cloud frontier

Mirroring the success of hyperscalers

CSPs must emulate successful hyperscalers by selling and globalizing via an operating model that enables rapid scaling of their own and partner solutions. That means moving from project-based solutions to sophisticated digital product offerings.

There are many paths to take when turning into a techco. The first option is to embrace platform-based selling and sell through multi-sided business models. Traditional linear CSP business models centralize power and decision-making by selling off-the-shelf products to the customer using commission sales and paid or wholesale marketing. On the other hand, platform-based business models are very different. By working with a multitude of partners, CSPs can offer more choice to their customers, but also generate powerful network efforts, drawing more customers into an online community and further increasing volume and scale.

Some CSPs see themselves as a venture fund acquiring software, while others create an X Division to define new ways of working with partners and customers. Actually, a winning strategy can be a combination. Regardless of the approach, CSPs need to sell online as successful hyperscalers have. That means selling sophisticated digital products that are discoverable, consumable, and configurable online with assisted selling journeys at every stage, from shopping cart to ecosystem orchestration and monetization.

See also: Move to hybrids and multiclouds: Here comes autonomous services between clouds

Keeping the customer at the forefront

Structuring the marketplace with a platform-based business model ensures CSPs can sell highly repeatable solutions online. CSPs can use product catalogs, APIs, multi-tenancy, and event hubs to develop highly composable solutions with high differentiation and customer value, such as PAYG manufacturing. This strategy allows the owner to connect to the needs of buyers and sellers and move from being a digital retailer to an ecosystem orchestrator. It allows them to build trust, a community, and network effect by removing paid marketing, lowering CAC, and increasing customer lifetime value with near-zero incremental scaling costs.

As CSPs transform into techcos, they have to come to terms with the fact that they can’t do it alone. Becoming a global marketplace requires a multi-stakeholder, collaborative business model that allows them to work together with an ecosystem of partners. Adopting this model has broad benefits, and if CSPs take the necessary steps now, they can seamlessly develop capabilities and solutions that are required across multiple industries in a global marketplace.

A successful digital marketplace is all about developing and selling solutions to meet specific business needs. The goal is to solve customers’ problems directly and, more importantly, to minimize the headaches they experience when managing multiple technologies from a variety of vendors, especially when they simply don’t have the technical expertise or economies of scale to do it themselves.