The Transformation Imperative: Finding New Business Models to Adapt in the Next Era of Connectivity
Communications service providers must transform and find innovative ways of delivering services to establish new revenue streams while driving costs out of the business.
Change in the telecom sector tends to happen gradually, and then suddenly seemingly all at once.
In many ways, not a lot has changed since the 1990s. The Spice Girls were touring, Aladdin was a hit in theaters and South Africa won the Rugby World Cup. And just like today, many in the 90s doubted the impact of nascent mobile telephony technology, pointing to the pervasiveness of fixed networks and local exchange as an insurmountable hurdle to adoption.
But as we all know, mobile technology spawned a new wave of innovation that led to mini computers arriving in the pocket of nearly every consumer.
Three decades later, the mobile telecom market — albeit now a multi-billion dollar sector — is again primed for disruption. Telcos are no longer competing with themselves, but a broad range of enterprises and over-the-top providers like Google, Facebook and Amazon — many of them more nimble than the typical communication service provider (CSP).
With transformational technologies such as 5G and edge computing on the cusp of widespread adoption, CSPs need to rethink how they are positioned for the next generation of connectivity. In turn, they must give greater focus to innovation and differentiating themselves from the increasingly competitive field.
Avoiding a race to the bottom
Transformation is typically a net positive for industries. Services are commoditized and cutting-edge technologies that would have been prohibitively expensive become subject to economies of scale, which drives down costs.
We’ve seen this in hardware — i.e. mobile devices and wearables— but software is also at risk of becoming commoditized as innovators experiment with new business models and ways of increasing customer penetration.
But for CSPs, this process threatens sustainability by moving innovation to the application layer, relegating their bread and butter — network connectivity — to the status of a dumb pipe.
Responding to change
To avoid a race to the bottom, CSPs must transform themselves, finding innovative ways of delivering services to establish new revenue streams, all while driving costs out of the business.
Service providers must consider the entirety of the value chain to determine their own value proposition.
What do CSPs have that the industry challengers don’t? The answer: an ability to combine infrastructure and platform. They can lay the infrastructure, such as fiber or edge services, then build their own services on top. It’s a unique advantage CSPs have over large enterprises and over-the-tops.
CSPs need to move beyond generic, horizontal platforms. They must instead invest in emerging technologies while building vertical knowledge to develop business solutions that will enable them to thrive in an age of hyper connectivity.
New alliances and partnerships will prove to be key, helping to foster innovation that leads to new differentiating products and services.
Innovating the telecoms experience
Innovation is not only about technology. CSPs must transform their entire go-to-market approach, demanding organizational change at both the cultural and process levels. In doing so, CSPs will gain the ability to prototype, incubate and sell new solutions to accelerate their ability to monetize emerging technologies, and quickly spot and respond to market demand to offer the right product at the right time to the right customer set.
World Wide Technology (WWT) has worked on intricate projects with several CSPs for decades, collaborating with both IT and business leaders to establish new areas of value.
For example, WWT worked with an S&P 500 communications and network services provider to create a managed IoT solution that led to new sources of revenue while enabling new types of partnership.
To do this, we developed the IoT platform, integrated the software and hardware in our state-of-the-art testing and validation lab and deployed the platform at scale via one of our global Integration Centers.
By capitalizing on their existing network infrastructure and adding a custom-built software component, we helped transform the CSP into a more nimble organization, able to quickly deliver next-generation services to their end customers and monetize them.
Further, the reference architectures we created to support a CSP’s edge computing platform helped the customer partner with mobile operators worldwide, enhancing the reach of its services and building truly innovative new offerings.
Making the transformation
Transformation is innately complicated, as it requires new processes to be established to achieve specific business outcomes.
It’s important to remember that digital transformation doesn’t mean simply digitizing existing processes. It means re-evaluating those processes and looking at how they can be done better — both for the customer’s experience and for the business’ bottom line.
WWT takes an innovative approach that works iteratively and emphasizes constant communication to ensure transformation is achieved as quickly as possible.
Such transformation creates a more proactive CSP that can swiftly explore new opportunities and meet underserved market demand while establishing a reputation as a company that is pushing boundaries.