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Service Providers

Enabling Service Providers to New Revenue Streams: Enterprise Buying Behaviors

by Doug.Dunbar on ‎08-22-2012 02:46 PM (1,131 Views)

Throughout my past 5 blog posts, I have reported on enterprise demand for new infrastructure services. IPv6 translation, SAN extension, server load balancing-as-a-service, and hosted desktop services are all emerging IaaS services in which service providers can invest to generate new revenue streams. Now what happens when a service provider actually offers these new services? What about enterprise buying behaviors? What do enterprises expect? And more importantly, how should service providers sell to these businesses? Again based on research by Wavelength Market Analytics, today’s blog discusses these important subjects.

Well, to be quite frank, service providers should expect a great deal of scrutiny. Purchasing new infrastructure services is a tremendous, non-trivial purchase and large enterprises find nearly all purchasing aspects equally important. When asked about the importance of each of the seven decision-making criteria in the chart below, only 3% separates the least important (service level agreements at 79%) to the most important (larger discount for larger deals ranks at 82%). Obviously, there is little difference among all purchase criteria in the eyes of large enterprises. Medium-sized enterprises, on the other hand, are not as demanding. At 54.9%, range of service and support options and proactive alerts of system availability, production issues, scheduled downtime and pending updates are most important to medium-sized enterprises.


Investing in a broad product portfolio is another important service provider requirement. This is because nearly 75% of large and more than half of medium-sized enterprises list outsourcing their IaaS services to as few vendors as possible as a top objective. The more services an enterprise has to choose from, the more likely they are to buy from a particular service provider to minimize the number of vendors.

Finally, service providers need to market to top business management, as well as to IT management. Sixty-seven percent of large and over half of medium-sized enterprises list top business management being very involved in the IaaS services decision, so purchasing IaaS services is likely a strategic one for many enterprises. As such, service providers should expect a long sales cycle and marketing/sales need to reach many purchase influencers.


To close out this blog series, using a two-layer data center network for improved performance and open standards for flexibility are increasingly important for service providers. Why? It’s because these are increasingly important to a service provider’s customers. As the graph below shows, nearly three-quarters of large enterprises prefer providers that use a two-tier network and support open standards. Nearly 41% of medium-sized enterprises prefer IaaS and other cloud providers that use a two-layer data center network and 27% prefer providers that support open standards. Finally, messaging to enterprise customers should highlight a two-layer network and opens standards support. Since there is a high awareness of Brocade’s Virtual Cluster Switching (VCS™) as an Ethernet fabric-based data center solution, some service providers may find it beneficial to mention that their flatter data center network is based on Brocade solutions.