How's this for size: A customer segment that's highly productive, export driven, and digitally dependent. Interested?
This description fits what's known as the Mittelstand – literally "middle class" in German – a cluster of midsized firms that punch far above their weight.
Germany is the poster child for such productivity powerhouses, but this is a global phenomenon. Take the UK, where midsized firms represent barely 2% of B2B demographics, but contribute a fifth of economic value.
Mini, but globally mighty
"Mini-multinationals" in emerging markets are also key contributors in the evolution of global trade routes, notably the rise of "south to south" business between Asia, Africa, and South America.
So why do midmarket firms struggle to get attention, particularly when they're looking for help with their global operations?
About a third of Mittelstand firms have international assets, according to Ovum analysis. But the scale is usually petite: they may only operate in half a dozen countries with hundreds of employees overall.
On paper, they're an excellent fit for cross-border SD-WANs and managed workspace and security services. In practice, what's on offer isn't fit for purpose.
Perhaps the difficulty lies in the interactions that such firms often demand. Many are privately held and family owned, with an ethic of quality and accountability they also expect from their suppliers. It's a degree of intimacy that challenges digital service providers trying to automate mass-market B2B operations while keeping their expensive human assets for "blockbuster" accounts.
New kids on the block?
Certainly, midmarket firms tell us they're not happy with the service they receive. This is a particular shame in emerging markets, where the number of mini-multinationals is growing. Telcos' global enterprise divisions aren't really interested, and domestic service providers aren't adept at cutting ad hoc deals outside their geographic remit. The economics are usually poor for all involved – particularly in global IoT deals, per recent enterprise interviews.
There are signs that supplier options for mini-multinationals could change. Potential examples include submarine cable operators such as Angola Cables, MainOne, and Seacom, which now offer enterprise services; managed services provider Claranet, which recently expanded into Brazil; the SD-WAN carrier alliance Ngena; and acquisitive GTT, which bought Europe's Interoute in February 2018.
For service providers seeking opportunities in digital services, the B2B revenue growth trajectory remains strong – but only if they can balance the need for automation with client intimacy.
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