The enterprise service market is waiting for the “ferryman”

Overcome the three “life gates” of cost, efficiency, and trust.

The enterprise service market is waiting for the "ferryman"

Is the spring of the enterprise service industry here ?

This question does not seem to be difficult to answer. In the three years from 2018 to 2020, corporate services have always been the most active track in the capital market. In 2020 alone, there were 621 financings disclosed, with a total financing amount of approximately 63.2 billion yuan, and most of them entered the A round and Above stage.

At the same time, there has been a popular argument: Just like the reshaping of lifestyles by the mobile Internet, as the corporate service market maintains an average annual growth rate of 30%, the digital wave will bring subversive efficiency to human production methods. The revolution will be a huge market opportunity in the next 10 or even 20 years.

But the reality is a bit surprising. There are hundreds of unicorns in the enterprise service market, but there has never been a tens of billions of “giants”. The market share is highly refined and fragmented, coupled with the unmet needs of a large number of companies, the problem of mismatch between supply and demand has almost become a common topic.

01 The “Life Gate” of the Enterprise Service Industry

The embarrassing status of the domestic enterprise service market is not without reasons.

Perhaps in the eyes of the capital market, corporate services are a super track that cannot be missed. From the perspective of SMEs, this market is far less sexy than imagined. If we focus further, there are still two visible “defects” in the corporate service track being pursued by capital.

The first “defect” is dispersion. Taking transactional services such as registration, registration, and bookkeeping as an example, there are approximately 180,000 agencies in China, densely scattered near industrial and commercial institutions in different cities, there are chain agencies operating across regions, and there are also small workshops for several people. Even “mom-and-pop shops” that don’t even have a business license.

The second “defect” is single. The most representative of the corporate service market is IT services, which is also one of the few market segments where multiple listed companies have been cultivated. However, most of these companies can only provide a single service, and other needs of the company will take time. There are very few comprehensive players looking for and connecting with other service providers.

This is the “fate gate” of the enterprise service industry.

Because of the fragmentation of the industry, unified standards and service transparency are difficult to popularize, the services of large service providers have prices that SMEs cannot afford, and the services of small service providers are often at risk of stepping on thunder. Many corporate customers have experienced unacceptable resistance after experiencing one or two bad experiences. In order to protect their rights and interests, service providers frequently change service providers, and service providers have made a lot of investment in the process of recruiting new customers and acquiring customers.

In the United States, where the corporate service market is relatively prosperous, the customer retention rate of many excellent service providers has remained close to 100% for many years. Even if the expansion of new customers in a year is not smooth, the contributions of old customers can guarantee the annual income. , More “sustainable” in the business model, and then have enough energy to focus on product and service innovation.

The disadvantages of low industry concentration in the domestic enterprise service market are relatively obvious, and long-term battles have led to serious internal roll-outs. It is not just the problem of mismatch between supply and demand. The “small and beautiful” scale restricts market pricing power and bargaining power. Service providers’ energy is used too much to grab customers from competitors, and indirectly sacrifices product and service innovation, thus entering Into the endless loop of lack of vitality.

Reflected in the choice of customers, a single service has further exacerbated the mistrust in the market. The corresponding manifestation is that domestic companies tend to pay for one-time payments instead of continuous payment subscriptions. Taking CRM management software as an example, the penetration rate of the subscription system in the United States is about 73%, but it is only 22% in China.

With reference to the evolution of the OTA market, the early stage was also a disordered and scattered market. However, when the platform represented by Ctrip occupied more than half of the market share, some unresolved industry ailments were gradually eliminated, and the entire industry was back on track. In other words, a high market share is a necessary factor for big water to produce big fish, and it is also the only way for the enterprise service market to emerge from difficulties and move to a new level.

02 Dividends from imbalance between supply and demand

The problem in the corporate service market is very explicit. Why does capital still favor it?

The formation of a new business ecology is often inseparable from three elements, namely sunlight, moisture and soil. Switching to the corporate service track corresponds to technology, capital, and social identity. Different from the tentative exploration around 2014, the enterprise service market gradually has the soil for a second upgrade.

One is the favorable policy direction.

In the “14th Five-Year Plan”, there is a lot of space mentioning corporate services. For example, the “14th Five-Year Plan” proposes to deepen the reform of simplifying administration, delegating power, combining decentralization, and optimizing services. This is undoubtedly a signal to continuously optimize the business environment. Correspondingly, there is continuous optimization of business registration and industrial and commercial services. “It is already the norm in many provinces; another example is the requirement of “speeding up digital development and building a digital China”, which indicates that digital transformation has become the general direction of the transformation of production methods, lifestyles and governance methods, and business operations also need to move towards Digitalization moves closer.

One is the dividend of the industry.

With the continuous rise of labor costs, the widespread popularity of mobile Internet, and the impact of the new crown epidemic, more and more companies are turning to online collaboration. The efficiency of the entire industry is getting higher and higher, and the traditional enterprise service model is getting worse. The bigger the challenge. A direct example is invoice management. Traditional paper invoices have made many small, medium and micro enterprises prefer local service organizations when choosing fiscal and tax services. However, the popularization of electronic invoices and the piloting of electronic special invoices are actually breaking the geographical position in corporate services. Due to limitations, the traditional service format has the potential to break.

These benefits have already released signals that corporate services are about to take off, and they are also in line with the objective laws of the evolution of China’s business.

Many people compare e-commerce with corporate services, trying to prove the potential of the corporate services industry with the prosperity of the e-commerce market, but ignore an obvious difference: E-commerce is an industry where social division of labor and digitization proceed simultaneously. There is no generational difference in thinking; and corporate services belong to an industry in which the division of labor predates digitalization, and digitalization on the supply side will inevitably run into a wall. A series of favorable external value, it is the demand side of the enterprise service brought the number of the character of the track, there is a window of opportunity for attractive supply-demand balance in the process.

The benchmark that can be used for reference is the US market where supply and demand are relatively balanced. Intuit, which was born in 1983, launched a cloud strategy as early as 2013, migrating its applications, services, and support tools to the cloud, and its business model shifted from software sales to subscription services. It is now a giant whale with a market value of more than 130 billion U.S. dollars; Similarly, Salesforce, which provides SaaS services for enterprise management software, has a market value of more than $220 billion, and once surpassed market leaders such as Oracle.

The differences between China and the United States are destined to not copy foreign ideas. But to seize the new round of opportunities for Nuggets , the enterprise service industry still needs to find a way to overcome the “fate gate”.

03 some positive signs

The smartest thing about Chinese entrepreneurs is their flexibility in thinking.

When the corporate service track became the darling of the capital market, in addition to entering the gold rush, some people began to “build bridges and repair roads” in an attempt to break the deadlock of companies’ distrust of service providers and drive the corporate service market out of the quagmire of their own battles.

For example, Fengxian District, Shanghai, has made a useful attempt in the process of deepening “decentralization, management and service” . It has built a regional online intermediary service platform based on Shanghai’s ” One Internet Service” platform, and invited local qualified service organizations to settle in. The service quality, service timeliness, service attitude, etc. of intermediary agencies can be evaluated on the platform to improve the efficiency and service level of third-party services. At present, 20 intermediary agencies have submitted “voting certificates.”

There is also the commercial query platform Tianyancha , which launched the trusted enterprise service platform “Tianyan Enterprise Service” in March . Based on corporate credit and strict system design, such as setting strict access standards for service providers, standardization and visualization of service processes, transparency of prices and a public evaluation system, Tianyan Enterprise Service provides a platform ecology that can be fully trusted by both supply and demand parties. At present, it has covered more than 300 services in 9 categories, including industrial and commercial finance and taxation, intellectual property rights, brand design, qualification licensing, IT software, e-commerce services, marketing and promotion, and personnel and social security.

The government-led service platform focuses on government services. If you want to have deeper and diversified credible services, and build a service system that can fully meet the existing market needs, it is very necessary for market entities to participate in the construction of the trust mechanism. The SkyEyes Enterprise Service is an important help that can realize replenishment and build a credible market order.

These actions can be regarded as a positive signal.

The long-term barbaric growth of the corporate service industry has brought about the consequences of stigmatization, and invisible market education is by no means a day’s work. The window of opportunity in the enterprise service market is an indisputable fact. If the barriers of trust cannot be broken and the “pit” lacking a sense of trust cannot be filled, it is tantamount to building tall buildings on the beach, and the entire market may be in uncertainty.

Probably it is also another reason for the resurgence of the corporate service market. At least some government agencies and third-party platforms have a deeper understanding of the corporate service industry: the market should not be a single point of assault and fighting each other, and a reasonable social division of labor needs to be gradually formed. The supply side focuses on digital transformation and scenario extension, and platform-based players are committed to setting up a stage to sing and educate the market. The atmosphere of competition and cooperation should “override” the competition

If you are more optimistic, the enterprise service market is expected to derive a reasonable three-sided structure, one is the supply of continuous innovation and upgrading, the other is the increasingly mature demand, and the middle is a platform with both efficient connections and trust relationships. If the trust problem in the enterprise service industry can be solved smoothly, under the combined effect of multiple factors such as technological innovation and market dividends, the enterprise service industry may not be without the possibility of a second round of opportunities.

04 Long-term Outbreak Opportunity

The biggest crux of corporate services lies in the fragmented business formats and low customer trust .

The gap between the Chinese and American corporate service markets is the most direct example. From the perspective of the number of companies, the gap between China and the United States is not large. Even the number of small and medium-sized enterprises in China has surpassed that of the United States, but the size of the US corporate service market is more than 10 times that of China. Among the corporate service companies listed in the past 20 years, the total market value of Chinese companies (including unicorns) is only one-ninth of the total market value of similar companies in the United States.

There are many explanations. One argument is that Chinese companies are so used to the free strategy that it is difficult for some service providers to make money from SMEs. Perhaps there is another explanation. The cautious attitude of SMEs towards service providers is essentially that they have stepped on too many pits and lack basic trust and recognition.

This is the value of third-party platforms such as Skyeye Enterprise Service. Tianyan Check, which covers 300 million enterprise users, has a unique innate advantage in the entrance of enterprise services. It concentrates the supply and demand of enterprise services on the same platform, and then strictly screens the qualifications of service providers, and standardizes the service process. The visualized system design, and a reasonable reference system in pricing and bargaining, etc., avoids the phenomenon of inferior service disrupting the price, and it will solve more than just the trust problem.

Because all the problems in the Chinese corporate service market can be attributed to fragmented chain reactions. The high fragmentation of the market has led to high customer acquisition costs and long payment conversion cycles, so that the profit cycle of the enterprise service market is too long, and many investors have gradually lost patience. At the same time, in a fragmented market, even Top-level players on the subdivisions of the track can hardly continue to grow like snowballs . Revenues are often fixed at the level of tens of millions of yuan. Companies with revenues of more than 100 million are already rare species.

Once the third-party platform can establish a standardization system for enterprise services, and help enterprises and service providers to collaborate under the framework of standards and norms, it can not only help enterprises reduce costs and increase efficiency in a credible environment, but also create a considerable amount for service providers. Room for growth.

To use an analogy, what platforms such as Tianyan Enterprise Service and others do is to converge scattered small ponds into an ocean under the logic of “credibility”, and use “big water” to raise “big fish”.

It can be proved that only the implementation of the third phase of the Golden Tax and the implementation of electronic invoices ran out of excellent service providers such as Tiaoyitong and Gaodeng Technology . In the business closed loop of ” credit investigation + enterprise service”, the trust barriers in the enterprise service market are eliminated . Each segment of the enterprise service market such as marketing, procurement, HR, finance, and legal affairs has hatched tens of billions of dollars of enterprises. Possibly, rather than being blocked under the unicorn ceiling.

The “small and beautiful” of China’s corporate service industry is destined to be in the past, but the advancement of the business model also takes time. Fortunately, the emergence of some credible platforms is integrating the market from the two dimensions of supply and demand, giving service providers, customers, and capital an opportunity to re-educate the market. When more and more participants move in the same direction, China Enterprise Service The long-term outbreak of the market, the rest is only a matter of time.

05 Conclusion

There is no shortage of investors in China who endorse the platform of the enterprise service track, there is no shortage of service providers ready to go, and there is no shortage of just-needed markets waiting to be fed, but what is urgently needed may be a market “ferryman” such as Tianyan Enterprise Service.

The business logic of enterprise services is a concrete service, and the value of the service depends on the leverage effect on the scale of the business. Only when the advantages of cost, efficiency, credibility and other dimensions are verified, this market will gradually expand and continue to prosper.

The challenge is actually left to the “ferrymen” in the enterprise service market.

After all, many domestic companies lack management knowledge and experience. They need to focus on their main business and need efficient and low-cost corporate services to improve operation and management efficiency. Whether the information gap in the enterprise service industry can be smoothed, whether a credible new market order can be built , and whether small and medium-sized enterprises can be freed from tedious work is not only a way for the enterprise service industry to get out of the predicament, but also related to Chinese enterprises. Vibrancy and undertones.

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