Digitalization As An Advantage In The Telecom World
6 Differentiators To Success & Growth
Every a few years the Information and Communication Technology (ICT) industry comes with a buzzword that accurately defines an era or even a shift in the market. Digitization is one of those terms that today, is having a global impact on the way business is done.
Digitization is not a new concept, around since Bell Labs introduced the world to the transistor in the middle of the twentieth century. Today we live in a digitized world and it’s hard to imagine not having access to the ease and efficiency that this technology brings to every aspect of our lives, including how we do business.
So if digitization has been around for so long, what is really new?
Gartner defines digitization as, “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”
Based on this definition, the buzz is not around digitization as a concept, but rather in how enterprises use the technology to develop competitive services to lure customers away from their competition; how it is being used as a disruptor.
Digitization, Telecom and OTTs
Let’s look at how digitization is changing the face of the telecom service provider market.
Carriers went digital a long time ago when they transformed the old analog central offices into innovative ones, based on digital technology. This move opened the door to the creation of new services (e.g. 800 numbers), some of which they were able to convert into new revenues streams. This was soon followed by the IP revolution, bringing a multitude of changes all at one time to this stalwart industry. Very quickly, relatively speaking, carriers found themselves under threat from so-called Over The Tops (OTTs). An OTT is a service that is on top of those provided by the service provider. Think of apps or other such services that a consumer doesn’t necessarily pay for.
There are two main reasons why are OTTs such a threat:
- Carriers struggle to bring new service to the market in a competitive timeframe compared to the fast consuming world we live in. Still today, the average time to take a new service to market is measured in months.
- Carriers have not been aggressive enough to leverage their customer intimacy to create new, effective services to run on their own infrastructure, hence maximizing not only revenues, but most importantly profitability.
It is imperative for the telecom service providers (not only for their success but their very survivability) to regain the center stage of the market. In other words, carriers have to get out of the corner (they relegated themselves) where all they do is to provide connectivity to others who profit from it.
6 Ways Digitization Can Help
How can digitalization really help with this daunting task?
If we look at little closer to what some of the OTTs offer to their enterprise customers, we see a set of simple services combined to form complex platforms (e.g. gather, store and analyse a vast amount of data).
The OTT approach is to offload enterprises from building and managing such a complexity and offer them their platforms as a basis for the enterprise to run their Business Intelligence (BI) applications. Oversimplifying, OTTs commoditize the platform complexity, leaving the true business value in the BI application rather than in the platform, the latter being multi-purpose, the former being a specialization dedicated to the specific enterprise or industry.
Apparently for a service provider, revenues (and most importantly profitability) are concentrated in the Business Intelligence application portion of the value chain, where the enterprise is capable of creating a difference, without the commitment to buy and maintain sophisticated and very expensive systems.
This is where digitalization comes to the rescue of the good old telecom service providers, but only if they are capable of leveraging the technology at their disposal to:
1. Build a portfolio of Business Intelligence (BI) application services to bring value to customers in a cost effective way then market them appropriately not only to the large enterprises, but also to small and medium business with a tailored offering.
2. Become fast and nimble in building and bringing to market such services in a matter of hours and not months, by focusing on:
- Virtualisation – To once and for all turn network functions virtualization (NFV) into a reality by gradually transforming their legacy, complex, cumbersome, costly infrastructure into a set of platforms that are capable to effectively support their market and business requirements.
- Orchestration – To gradually but steadily transform their operation support systems (OSS) and business support systems (BSS) to allow end-to-end visibility of their services and customer experience.
- Open Source community – To start participating consistently and structurally to enrich the portfolio of open source applications that are tailored for the telecom service providers and their customers.
This is a new frontier, but also the opportunity for carriers to take back the leading position in the communication market from their unusual competitors by:
3. Providing connectivity and control through customer behavior
4. Leveraging someone else (could be an OTT) or build their own digital platform
5. Selling a value proposition based on BI application services on top of such platforms
6. Managing all of this seamlessly, end-to-end
Does it sounds like a dream? Perhaps, but the technology and the capability offered by the virtualization and potentially by leveraging the open software community constitute a solid basis on top of which carriers can significantly revive their business for many years to come.
The opportunity is up for grabs for those who are brave enough to leverage the virtualization in an effective way, but most importantly exploit the opportunity presented by the open source philosophy. Easier said than done. Carriers face unsurmountable obstacles to take this journey – organizational, financial and operational.
Platforms Serve As A Commodity
Platforms are a commodity. One of the biggest examples of this is Google. Google offers a set of functionality, pulled together in a neat architectural framework to gather, store, process and analyze massive quantities of data. What is notable in the architecture provided by Google is the small number of BI applications that would truly make the difference for an enterprise between buying a very capable platform (and do not know what to do with it) and buying an ad hoc application that knows what to do with the massive number accumulated.
So the platform becomes commodity and the difference is made by the BI application.
If we apply the definition of digitalization, we’re facing a once in a lifetime opportunity for the carriers to take the center stage back from the Over The Tops (OTTs), but only if they can address the challenges they currently face, as mentioned above. Service providers will need to focus on providing competitive services in the shortest time possible in order to have a chance.
As the best opportunities come from the road less traveled we will witness a new order in the industry where only the bravest – and fastest – will survive.
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