News article

Pipe Dreams: Next Generation Business Models are Here to Stay

Author
Adhish Kulkarni
SVP-Solutions
5 Feb 2019

News article summary

As digitization changes the landscape for telcos, how do they move 'beyond the pipe'?

As we know all too well, network evolution presents both opportunities and challenges for the mobile Communications Service Provider. Furthermore, as not all generational leaps are created equal, some shifts are more extreme than others. 

Digitization-what the industry is experiencing at present-is an example of this, with the arrival of new ways of doing business, the launch of innovative services, and the requirement to develop far more impactful relationships with customers all based on the emerging evolved network architecture.

The impact of digital has been significant on the “traditional” telco business: data usage has been commoditized, standard voice and messaging services have largely “disappeared” into bundled offerings, and many of the more lucrative commercial opportunities related to 4 and 5G have migrated away from the telco, to Over-the-Top players. Put succinctly, what telcos have years of experience delivering no longer delivers the goods. Unprecedented revenue and profitability declines, widespread industry consolidation, and a worrying downward shift in Average Revenue per User (ARPU) underline this. And while the extent of these challenges differs from region-to-region, the broad problem is global.

In this context, two questions become central. The first relates to understanding how the Digital Service Provider differs from the CSP, the former being what the latter is generally striving to become. The second is how to evolve operational infrastructure to enable telcos to flourish in the new commercial landscape. Legacy IT infrastructure, designed to support increasingly outdated ways of doing business, can clearly be a barrier to digital success.

Why? Because new and older applications often don’t work coherently together. Data centres as a result become mired in code spaghetti which impedes commercial performance. Operations management infrastructures become isolated siloes which results in untapped data leading to churn problems.

The question for telcos, of course, is what to do? While a lot of isolated decisions form part of the updating of network IT and infrastructure for digital success, these should be made with three core provisos always in mind. In our view, they are:

Pro-active engagement is the new black! Dynamically monitoring real-time customer events and behavioural patterns for personalized customer engagement and offers. For the successful DSP, being able to succeed in this area of business will soon be table stakes.

Scale is still a headline. Scalability has always been a technical requirement but its demands are still expanding; even exploding. DSPs have to process billions of engagement transactions daily, and then find new ways to monetize the information they generate, in real time.

Measurement is the key to improvement. Competing more effectively starts with greater knowledge of how you’re competing. Getting performance transparency on offer update, revenue, and other metrics in real time is the key to optimizing sales and marketing efforts.

Reinventing how telcos compete in a digital marketplace will clearly involve a mutli-stranded transformation.  In our view a good starting point would be a focus on three areas of business:

Digital Consumer Engagement is critical, achieved through a combination of emotional (brand-led) and transactional (spend-led) active engagement concepts designed to create brand-attachment (stickiness), higher Net Promoter Score (NPS) and extended consumer lifetime (reduced churn). In the new telco, sales and marketing teams (animals which as little as two and a half decades ago barely existed) are now moving center stage.

Partner Service Monetization is an urgent need. However telcos individually tackle the shift to “beyond the pipe” partners will be central to digital service offerings. The notional era of “walled gardens” is surely dead and buried. Solutions and infrastructures that can manage and monetize partner relationships will be just as critical as those that do the same for consumer relationships.

Dealer Loyalty Management must be optimized. The significant dealers channel is suffering because dealers frequently lack the right tools to support their eSIM and SIM sales related activities such as subscriber activation, inventory and logistics management as well as logging and tracking trouble tickets, and sales reporting. Without a convenient integrated solution, dealers rely on paper for offers, reports and records - resulting in a host of costly problems.

It's in the above, and other, areas of their business that the digital telco will likely need to strengthen both its performance and its enabling infrastructure.  Likely, sales and marketing department leaders will equal or even supplant traditional network and IT decision-makers when it comes to deciding the solutions and approaches most likely to deliver success. There are no shortage of choices when it comes to which road to take but in many ways the market vendor landscape remains somewhat unclear. A focus on the key questions should help deliver the best answers.

Click the below link to read the full article in Vanilla Plus:

https://www.vanillaplus.com/2018/06/21/39614-pipe-dreams/

 

Author
Adhish Kulkarni
SVP-Solutions
5 Feb 2019