What keeps you up at night?
Today’s service providers are confronted by radical changes to their business environment, and while they have been largely working to create leaner operations, the mechanics of doing business has changed in the past three years leading to transformations in the business model.
The world is moving into the age of ‘Wikinomics’ and this means that tomorrow’s world is all about collaborative working enabled by digital transformation, and not the siloed type of business environment of the past.
Hence, communication service providers need to open up their platforms to enable mass collaboration. That platform could be a product (e.g. voice), a software module (e.g. Google Maps), a transaction engine (e.g. Amazon), a data set (e.g. Customer Profile), or countless other things.
The convergence of IT and networks is opening doors in all services strategies of operators – whether it is about complementing traditional telecom services with cloud service wraps, or influencing service execution by decoupling network intelligence and placing it within the control of business policies.
The emergence of OTT providers shows us that services development has shifted from traditional networks to devices and applications. Clearly, IT is becoming the way that even traditional services will be modelled and operationalized, and Users are evolving from mere consumers to active participants.
‘Born Digital’ organizations are not restricted by legacy technology, business process and thinking, and are disrupting traditional business models through innovations in customer experience and engagement, service management and delivery, and product structures; whereas, traditional CSPs - given the complexity of their estates - are finding it difficult to make the tectonic shift because not all of them are invested across the maturity curve to improve their connectedness with the business ecosystem.
For service providers to succeed in the future, they will have to participate in every transaction that involves communication and collaboration. That is only possible if their assets are broken down as a service and made available for third parties to consume. The future revenue model is a two-sided one – from innovators consuming Operator assets (as services) to produce mashups and services, and from consumers using those mashups and services.
Challenges for the Industry of Tomorrow
Retail Operator Strategies & Challenges
The days of organic revenue growth from subscriber growth are coming to an end. Communication Service Providers operate in an industry that is undergoing a paradigm shift - the rules of the game have changed considerably:
- With increased Freedom of Choice due the proliferation of Social Networks– multi-channel integration, Customer retention and protecting wallet share are today’s top challenges
- SMAC based developments with its increased ‘connectedness’ possibilities are opening up new business models and therefore changing the landscape for both traditional and new players in the market
- Competitors are able to Better segment customers by stressing more on the use of Big Data and Analytics
- Operators are facing extreme capital pressure due to increased usage of its infrastructure which is enabling new OTT Providers to create revenue streams due to increased Smart phone usage
- Monetizing the Quad-Play investments in Broadband topologies has become the #1 business problem most Operators face today – leading to investments in Premium Content & Service Convergence
Retail is already reaching its inflection point in several markets and a newer set of market demand have been created by the new developments in Cloud, IOT, Mobility, and IP and these are forcing CSPs to explore a ‘beyond connectivity’ value statement for their Enterprise customers [SME, Large Enterprises, and Government].
ICT Operator Strategies & Challenges
However Enterprises want ICT Operators to be more than agents for network equipment providers - They want them to be seen as Business partners:
- Enterprises believe they are able to extract greater value if an ICT Operator is able to bundle solutions over and above the traditional Connectivity based services
- ICT Operators core competencies being Networks and Connectivity are unable to offer the additional value on that Enterprises are seeking
- To do this proper ICT Operators must double up as a IT Services Company, a Networking Company, an expert in multiple domains, and a Managed Services Provider
- We believe the market dynamics will require operators to consider inorganic strategies to differentiate, grow, compete, and execute profitably.
Financial and Funding Implications
The rapid change in environment has created a capability gap in the business [who has been hitherto investing in rationalizing and optimizing the technology assets] to address the challenges and opportunities alike but they are also finding it increasingly challenging to fund the required transformations:
- CAPEX to Sales Ratio running north of 15% on account of Broadband Investments when the Industry average was 12%-13%
- Tapering or Flat Growth in traditional services due to Headroom Less Market and OTT Impacts through Google, Skype, Facebook, Netflix
- Reducing Wallet Share and Margins due to Increased competition due to regulatory directives for Equivalence, Unbundling, and increased number of License award
- Increasing S & M Spend (north of 25%) due to complex market conditions arising out of Social Media, OTT Influences
It is clear that ICT Operators must find innovative means to fund their growth. by exploring new engagement models with their strategic partners.
Know more how HCL is addressing these challenges
Why should you consider HCL?
HCL is best suited to manage your telecom services owing to the following reasons:
- Transformation enabler. 3 of the top 7 Fortune 500 CSPs, 5 of the top 7 OEMs, 4 of the top handset manufacturers, and the top 3 VAS solution providers have partnered with us for transformational and support services that enable them excel in today’s highly competitive market.
- Industry recognized. HCL is positioned as a Leader in Gartner’s Magic Quadrant* for Communications Outsourcing and Professional Services (4 November 2014, by Christine Tenneson, Eric Goodness, and Bjarne Munch)
- Innovates to excel: HCL has a SDN Test Lab dedicated to creating solutions that can uniquely apply to all client problems, addressing the problems of tomorrow, today.
Let's start a conversation today to address the challenges of tomorrow