• Entering the SME market is not easy. It is a major challenge for all operators; many SMEs do place a high priority on technology investments. Vodafone had to focus on the business benefits: simplicity, flexibility, and reduced costs.
• Vodafone faced potential resistance to hosted and shared voice. The first generation of Centrex has not been particularly successful in Europe. It needed to avoid being associated with the poor flexibility of early implementations.
• Building credibility in the fixed market was also a challenge, because Vodafone has little heritage in the fixed market outside Germany. It needed to do a lot of work in building its credibility and brand in the fixed market and use its mobility expertise to advantage, a major sales and marketing exercise.
• The existing channel was focused on mobile, and a substantial training exercise was required. In addition, Vodafone needed to expand the channel to include fixed resellers.
• With SMEs, Vodafone was entering a crowded market, including not just fixed operators, but also small voice resellers, voice over IP (VoIP) providers, and customer premises equipment (CPE) solution vendors. It needed to differentiate its offer from all of these competitors.
• With the objective to grow average revenue per user (ARPU), Vodafone needed to streamline service delivery. Customization is not an option; a mass market approach that is easily repeated is essential for profitability.
• Vodafone has the opportunity to leverage its established leadership position in the mobile services market to build its presence in the wider SME market and to differentiate against other mobile operators through its offer of more advanced enterprise mobility services.
• It can expand its offerings into the broader enterprise communications market locally, that is, serving SoHos and SMEs with shared platforms and services, supported by its local sales forces.
• By expanding beyond its core mobile offering into fixed voice and data services, communications infrastructure, services, and applications, Vodaphone would greatly expand its opportunities in the business market. Such an expansion will help drive up Vodafone's ARPU and improve customer retention through more "sticky" services.
• Vodafone has not disclosed its partner(s) for the One Net platform specifically. Cisco is a strategic partner for UC and is a supplier of CPE for One Net and is expected to play a key role in future service announcements, for example, for larger customers.
• Vodafone is also working with Microsoft, Avaya, Alcatel Lucent, Polycom, and Mitel.
• Systems Integrator (SI) partnerships are essential in the corporate market, and Vodafone will work with customers' SI partners as required.
• The acquisition of Central Telecom has been an important enabler of its move into SME FMC. Vodafone used the resources acquired through its purchase to support the SME operation in its early phase in the United Kingdom, although as it builds scale, it is expected to move to a more automated approach.
• Vodafone has limited fixed network assets, which vary country by country. To bridge this gap, it has entered into partnerships with fixed-access providers. The wholesale relationship with BT underlies its One Net offer in the United Kingdom, and it will be reliant on other fixed-access providers as it deploys service across its markets.
• Channel partners: Vodafone has invested considerably in building its indirect channel. The Vodafone Partner Programme, established in the United Kingdom in September 2010, is aimed at supporting and rewarding its channel partners under a tiered structure. VP Services are provided through its acquisition of Yes Telecom. Similar programmes are supported in other markets.
Figure 1. Vodafone One Net
• Vodafone does not publish figures on revenues from One Net (or business revenues in general), but has released some customer numbers. It recently (October 2010) announced that it had signed up the 1 millionth user of Vodafone One Net and indicated that its sales had exceeded expectations.
• Vodafone's continuous expansion of this service in several geographies is also an indication of its increasing traction in this market.
• Vodafone has built its UC proposition around its mobile advantage. It has had success in promoting mobile functionality and with user acceptance of traditionally "fixed" features on mobile devices. The recent launch of One Net Express recognizes this success. One Net Express is a mobile-only version of One Net aimed at smaller customers of >10 employees, which removes the need for customers to change their fixed service provider.
• Success is also measured in pull-through of other services, and Vodafone says there is good take-up of broadband services by One Net customers.
• Vodafone is also measuring success in terms of the percentage of sales achieved through its indirect channel. The early focus was on direct channels, but through the buildup of its partner programmes, it is increasing its indirect sales proportion.
• Read Vodafone overview
Case Study Source: Cisco sponsored research developed by Ovum