In the current world situation, the business development function is becoming critical in general, but with an unprecedented importance for small companies and start-ups.

If until two years ago, companies having an interesting product could open the doors of their prospective customers alone or with a local agent, today, when we are in the middle of a very different economic situation, closing a deal with a new customer becomes almost “mission impossible”.

Starting in 2000, all the Communication Service Providers (CSPs) have been racing to launch as many new applications and solution as they were able. Their purpose was to increase ARPU from their subscriber base, while the associated costs were a secondary consideration. CSPs were looking for “best of breed” technology, thus looking for small companies, even without any installation in place. During such a period, companies could sell directly to the CSPs without any intermediary/partner. They were, even, encouraged by the CSPs to work alone, without partners, being OEMs and/or System Integrators (SI). The CSPs purpose has been to reduce expenses (it is easier to reduce the purchasing price from a small company than from a major OEM or SI).

The change in the economic sentiment has created a major change within the Modus Operandi of the CSPs. The main business objective has changed from revenue’s increase to cost reductions.

Several ways are possible for the CSPs. The main ones include: (i) outsourcing operations to 3^rd parties; and (ii) consolidation of suppliers. Both ways have been adopted by the major carriers – outsourcing, mainly for legacy services; and consolidation of suppliers whenever possible.

This change in strategy has strengthened the large companies (operators, OEMs and SIs) vis-à-vis the small ISV – Operators are buying less and at lower prices; and OEMs and SIs are the main suppliers of the operators, hence becoming the preferred solution providers to keep the number of providers at the lowest possible level.

After contemplating the new challenge facing small and medium size providers of CSPs, complemented with my experience and conversations carried out lately with the largest European CSPs, the obvious conclusion was that companies that would like to become providers of large operators need to adapt their business and operational models to the new equilibrium.

What would be, then, the preferable solution for such providers? The new paradigm will require the providers to be presented only as part of a larger portfolio of solutions under the umbrella of a larger partner that is already an established provider of the targeted operator.

The evolution needed is shifting the balance in the companies from direct, and sometimes indirect, sales, to much more profound business development function. It will have to change from a mere position for the ex-founders of the company to a powerful, experienced position, to which most of the later sales of the companies will be associated with.

In the next article, we will see the same change deriving also from cash crunch these companies are facing.