• Vodafone Business unveils 2025 growth plan with pivot to SMEs.
  • Partnerships with likes of Accenture seen as essential for expanding SME services.
  • Group consolidation card played again: services to be created once centrally, and deployed locally in matrix organisation.

Vodafone Business sharpens focus on SMEs

Vodafone Business sharpens focus on SMEs

Source: NON / Unsplash

Vodafone Business is going big on small- and medium-size enterprises (SME) as part of a 2025 growth strategy, unveiled at a recent briefing for investors.

The new strategy, marking a distinct shift for the traditionally large corporate-focused division, targets three areas for growth over the next four years: connectivity and cloud-based services for SMEs; end-to-end Internet of Things (IoT) services; and next-generation connectivity for large enterprises and public sector. The operator positioned its focus on SMEs as unique and differentiated from telco peers that typically concentrate on large enterprises in the crowded business services market.

Vodafone Business said it wants to be a “champion” for SMEs and their “trusted partner” for connectivity and cloud-based IT services. While the operator is clearly gearing up to grow revenue and market share in the SME segment, it did not specify growth targets.

The push, in turn, appears to have seen Vodafone Business expand ownership of the Group’s overall SME strategy. In the presentation slides, it was notable that both SME and SoHo sales were subsumed within an overall Vodafone Business service revenue figure of €10.3bn for the year to 31 December 2020. Within this, SME service revenue accounted for nearly a third.

Vodafone rarely provides a revenue number for Vodafone Business, so it is not clear exactly when the division took on responsibility for sales in the SME and SoHo segments, but there has evidently been a level of centralisation of Vodafone’s activities in these markets, which traditionally appeared OpCo-led.

Vodafone Business, revenue share by customer type
  Share of Vodafone Business service revenueVodafone Business market share
 Source: Vodafone Business Investor Briefing presentation.

SoHo

1–9 employees, single site, little in-house IT capability

26%

20%

SME

10–99 employees, more than one site, limited IT resources

28%

15%

Enterprise

Corporate, multi-national corporations, and public sector

46%

6%

Note: Q3 FY20–21 YTD share of total Vodafone Business service revenue. Estimated share of total addressable revenue market size.

Riding the SME digitisation wave

Speaking during the investor briefing Q&A, as transcribed by CQ FD Disclosure, Vodafone Business Chief Executive (CEO) Vinod Kumar said his division is “laser-focused” on the “often-overlooked” SME segment across all its markets. “We’re positioning ourselves as the trusted partner for SMEs beyond connectivity into all things digital. SMEs, by and large, are a lot less digitalised compared to corporate customers. And this is the rising tide that we will be able to float up with”, said Kumar.

SME take‑up of cloud-based IT services is expected to get a boost this year from the distribution of European COVID‑19 recovery funds, some of which is earmarked for SME digitisation (which Kumar estimated to be about €14bn so far).“We’ll have to wait and see how it plays out, but we believe that [the recovery fund] will definitely be a contributor to our growth and potentially creating upside too”, said Kumar. However, he noted that that the impact of the recovery fund was not yet “fully baked into the numbers” because it is only just becoming clear where the money will be allocated.

Scale advantages for SMEs

With the new strategic focus on SMEs, Vodafone Business also appears to have tweaked how it works with OpCos (and in some ways is mirroring the centralisation process being seen within Vodafone’s European technology functions as part of their own 2025 strategy).

Kumar described the division’s organisational structure as a “matrix” with centralised functions — such as product development, commercial and operations, and business support — that work with local in‑market teams. The idea is to combine the advantages of scale with local market expertise.

Kumar noted that the Group operating model has “also evolved quite a bit” and that there are established processes in place that are “continuing to get refined”. He said this will give his division “further opportunities to leverage Group scale”.

For product development, that means creating services centrally and delivering locally across geographic markets. “Scale plays a big factor here because an SME customer in Italy is no different from an SME customer in Spain or from in the UK”, said Kumar. “We’re able to build once and deploy in many markets”.

The organisational structure is also designed to allow the local sales channel teams to contribute to product and solution development. “Of course, it’s a matrix, and we have to seek the input of the local markets when we’re building products at a Group level”, said Kumar.

Partnering for new services

As it expands its SME offerings in the areas of unified communications, cloud services, security, and IoT, Vodafone Business will rely heavily on its stable of partners. It flagged the recent tie‑up with Accenture for managed security services for SMEs and enterprises (Vodafonewatch, #193), a partnership that Kumar said “has seen us really catapult our capability”. Vodafone Business offers the Accenture security services in Germany, Italy, Spain, and the UK.

Vodafone Business, key partnerships
AccentureManaged security services
 Source: Vodafone Business Investor Briefing presentation.

Amazon Web Services

Mobile edge computing

Cisco Systems

Fixed communications (cloud and on-premise solutions)

Google

Cloud and security

IBM

Managed cloud services

Microsoft

Unified communications; cloud and security; mobile edge computing

RingCentral

Unified communications

More than connectivity, more than a telco

Vodafone wants to be seen not just as a service provider but a “trusted partner” for SMEs. To support that effort, it launched in July 2020 the V‑Hub advisory service for existing SME customers in Germany, Italy, Spain, and the UK (Vodafonewatch, #191 and #192). The service provides guides, tips, and a helpdesk that users can access for advice on new technologies in areas such as creating websites, digital marketing, cybersecurity, or remote working. The service also offers guidance for accessing EU recovery funds for SME digitisation, according to Kumar.

V‑Hub has had nearly one million unique visitors and will be rolled out to ten more markets “soon”, Kumar