After walloping up the ISPs (Internet service providers), overseas telcos are now going into the software retail market, offering software-as-a-service (SaaS) via the Internet.

According to London-based analyst firm Ovum, national and regional telcos “at least in the overseas market” are increasingly picking up applications with localized content to cement existing relationships with SMEs and differentiate them from global SaaS providers.

“The goal is to be the preferred “one-stop shop” for ICT services for SMEs, combining applications and services from local developers and global providers. However, some of these partners will eventually also be competitors,” said Claudio Castelli, senior analyst at Ovum.

In the Philippines, telcos have not yet taken the strategy adopted by its foreign counterparts. At the recent CyberPress Forum held at the Coffee Bean and Tea Leaf at A. Venue in Makati City, Smart Communications spokesperson Ramon Isberto said the PLDT-owned operator currently does not have any plans of offering software online. Globe Telecom, who was also at the forum, did not say if it has plans of providing SaaS to its customers.

The Ovum report observed that with software delivered as a service from virtually anywhere, telcos entering the SaaS game will increasingly face competition from global players in their own backyards.

“With much smaller scale, telcos will need to be creative in finding ways to differentiate in their marketplace. Existing customer relations and good knowledge of their particular needs will be key to telcos’ ambitions to maintain a broader role in the value chain and avoid the risk of becoming only connectivity providers,” Castelli said.

An increasing number of telcos are launching services focusing on SMEs’ local needs, the report said. Telstra, for instance, launched its SaaS proposition in April, with offerings including Workforce Guardian, an HR service that helps SMEs in Australia to create compliant employment contracts.

Recently, it unveiled Xero, a hosted accounting tool that provides SMEs with access to bank transactions, invoicing reports, and tax data. In both cases, applications will run based on local requirements. This is expected to provide a competitive advantage against global players, Ovum noted.

One factor going for operators is that SMEs normally want to have a single provider for their ICT requirements.

Ovum’s research showed that 65 percent of SMEs globally prefer to purchase all their fixed and mobile services from a single provider.

Telcos, the research firm said, are listening to their demands.

“An important value that telcos can add is integrating multiple services into end-to-end offerings. They normally have relationships with the majority of small business customers, which in many cases extend beyond billing. Their reach and understanding of SME pain points might attract the right ISV partners,” the analyst firm said.

Ovum cited SingTel as another operator that is working hard to build an end-to-end ICT proposition for SMEs in Singapore. The operator, it noted, released a range of ICT packages for SMEs, and recently launched an Innovation Exchange program to bring application developers into the service provider’ SaaS offerings.

The aim is to combine solutions from global players such as Microsoft, Google and Salesforce.com with local ISVs. Like Telstra, SingTel included HR applications in these initial offerings, the report said.