Most telecom companies operating in the enterprise market often alternate between verticalized and horizontal sales strategies. While verticalization aims to deepen sector-specific partnerships and boost B2B sales, it often leads to unrealistic expectations and strategic recalibration. To achieve sustainable growth, telcos should adopt a pragmatic approach, focusing on their core horizontal strengths—such as connectivity and data services—while targeting specific sectors, reveals GlobalData, a leading data and analytics company.
Gary Barton, Research Director for Enterprise Technology and Services at GlobalData, comments: “Over three decades of working with telcos, GlobalData has seen many ambitious statements about building up expertise in specific verticals either in house or through building up ecosystems of partners. However, while there are examples of telcos being successful in certain industry verticals, often success is built on opportunism rather than developing a deep relevance to that vertical.”
Robert Pritchard, Principal Analyst at GlobalData, said: “There are examples of point solutions in areas such as IoT in certain verticals, and co-developed solutions, but these remain the exception rather than the rule.”
The growing complexity of the technology landscape is driving the need for greater specialization in many verticals including manufacturing, banking & finance, healthcare, pharmaceuticals, and transport & logistics. This need for specialization is a reason for telcos to be drawn to a vertical approach through fear of seeming irrelevant to enterprises in these sectors. But the level of specialization required is also a reason for telcos to be cautious of this approach.
Barton continues: “It is tempting to believe that all enterprises in a given vertical buy technology in a similar way and have similar requirements, but there is a growing number of sub-verticals, which all behave differently. Telcos cannot realistically develop the depth of understanding to address all these highly nuanced needs. Furthermore, doing so will lead to targeting increasingly smaller numbers of businesses thereby reducing the total addressable market or excessive go-to-market expenditure.”
Telcos’ core capabilities in connectivity and data networking make them naturally horizontal. This can make it more difficult for network operators to be vertical specialists as they work with enterprises of all kinds. However, this broad appeal is as much a strength as a weakness. Telcos are selling solutions that almost all enterprises need. The challenge for providers is to nuance their messaging around the business benefits of their solutions. Barton concludes: “Telcos should be aware that services such as internet/cloud access and SD-WAN/SASE are essentially horizontal. Instead of seeking deep vertical relevance in their core portfolios, telcos should demonstrate how their solutions will be the crucial enabler for an enterprises wider transformation journey as they seek to embrace technologies such as cloud and AI.”
