Beyond Connectivity - Accenture · 2018-11-02 · THE GLOBAL . TAILWINDS DRIVING CSPS TO NEW ENTERPRISE GROWTH This is a critical time for communications services providers (CSPs)

Strategic plays to help Asia Pacific’s Communications Service Providers capture new growth in B2B markets

BEYOND CONNECTIVITY

ENTERPRISE MARKETS MATTER MORE THAN EVER FOR CSPS

THE GLOBAL TAILWINDS DRIVING CSPS TO NEW ENTERPRISE GROWTH

This is a critical time for communications services providers (CSPs) all around the world. And in Asia Pacific (APAC) in particular, challenges abound on all sides. CSPs’ traditionally profitable consumer markets for voice and data services are rapidly commoditising, creating huge pressures to maintain revenues while reducing costs. Moreover, digitisation is reducing or eliminating the barriers to entry for their industry across the board. Digital disruptors and OTT providers – Amazon, Apple, Google, WhatsApp, Skype, and the rest – are moving in and capturing the new opportunities created by the digital revolution. Meanwhile, consumer expectations and options just keep rising, breaking down longstanding loyalties between brand and customer.

In suc a challenging environment, enterprise markets matter more than ever. However, with the majority of APAC CSPs principally focused on retail domains in the recent past, many companies are starting from a low base when it comes to B2B. As a result, some still have a modest sales proposition for their enterprise customers, or a poor understanding of vertical segments in target industries. Others have been slow to recognise that rising expectations are not limited to retail segments, and that enterprise customers now expect the same standards in their business transactions that they’ve become used to in their consumer experiences.

With the digital disruptors ready to move into the B2B domain with force, APAC CSPs face a potentially existential risk. If they fail to inject enough urgency into their operations and cannot adjust to these disruptive headwinds with enough speed and agility, they will likely end up as pure connectivity providers in commodity markets—for enterprise customers as well as consumers. And that, ultimately, means a race to the bottom on price, with only the very leanest operators emerging victorious.

However, all is not lost. A collection of industry and societal trends, fuelled and accelerated by digital transformation, are offering a potentially vital pivot opportunity to CSPs. These trends open up a series of strategic plays that can help navigate to new growth in enterprise and B2B markets. Tough choices will be required, of course. Today’s business models, capabilities, and workforce competencies will have to be radically upgraded. But if APAC CSPs can look beyond pure connectivity, take their digital transformations to the next level, and start extending their reach into customer ecosystems and value chains, they have the chance to enable a true step change in productivity and growth.

The world is becoming ever more connected in ever more ways, creating completely new means of serving enterprise customers through mobile and embedded connectivity business models. Gone are the days when those customers simply wanted a limited number of laptops, PCs, smartphones, and tablets connected to the network. Now, we’re witnessing nothing short of an explosion in the number of connected enterprise devices – and in the vast volumes of data transferred between them. Industries will be using anything up to 30 billion connected sensors and 25 billion connected devices by 2020, for instance. 4G networks will make up 53 percent of mobile connections in 2018, helping fuel massive growth in mobile data traffic (set to reach a staggering 49 exabytes a month globally by 2021).1

Advances in network technology are bringing vastly enhanced agility, efficiency, and cost-effectiveness to CSPs’ networks. For example, Software-Defined Wide Area Networks (SD WANs) provide a significant value-creation opportunity. By shifting enterprise networks from proprietary hardware to the cloud using flexible and open WAN technologies, CSPs can create omnichannel experiences for their enterprise customers, with pervasive automation and self-service capabilities baked into the core. That helps make the days of inflexible and slow responses, long lead times, and high CAPEX and OPEX a thing of the past. Instead, enterprise customers can benefit from on-demand requests, fast and simple provisioning, and anything up to a 30 percent reduction in total cost of ownership.

Other technology advances are also opening up new opportunities for CSPs. Policy-driven networking and multi-access edge computing (MEC) are creating new kinds of high-bandwidth low-latency network architectures that vastly increase user access at the network edge. That kind of access is becoming ever more essential

A key partner for CSPs in delivering SD WANAccenture has built an extensive portfolio of experience helping clients deliver SD WAN products for their customers:

• A global telco was looking to launch SD WAN, focusing on offering unparalleled user experience. We helped them create a disruptive B2B portal, encompassing analysis, conceptualisation, design, and delivery, enabling the launch of an MVP with vRAS (Virtual Remote Access Service) and WAN2Cloud included.

• A large cable operator in the US wanted to disrupt the market with a national launch of SD WAN. By working with them on the product vision and roadmap, digital experience design, and business process and operating model development, we helped them launch SD WAN products as a key enabler for growing revenues and improving customer experience.

• A major European operator was embarking on a significant transformation of their B2B customer operations. We combined our consulting, technology, and business process outsourcing capabilities to support them accelerate the introduction of new products and services (including SD WAN) while improving NPS, CSAT, and PM OPEX.

BEYOND CONNECTIVITY2 3

in industrial networks comprising large numbers of connected devices. This gives CSPs a critical opportunity to embed themselves ever more deeply into their enterprise customers’ value chains and claim ownership over vital connection points in the industrial cloud networks of the future.

5G connectivity is another key part of the equation. With the proportion of enterprise-generated data processed outside the data centre or the cloud set to grow more than seven-fold between 2017 and 2022 (from 10 percent to 75 percent), the hyper-fast network connectivity enabled by 5G will become ever more important. Indeed, over two-thirds of CSPs think 5G will be the most significant factor in driving incremental revenue from their business customers.

Furthermore, as Industry X.0 continues to transform industries with smart, agile, connected, living technologies, CSPs have the opportunity to create the vertical-specific platforms that will put them at the centre of the enterprise ecosystems of tomorrow. In areas like manufacturing, healthcare, retail, and more, enterprises are connecting together their workers, offices, and factories in new ways and on an unprecedented scale. Those ecosystems of connections call for new levels of hardened network security, new self-service tools, new marketplaces, and simplified and consolidated reporting and billing.

So, whether it’s in creating ecosystem platforms centred around the industrial IoT, or in establishing the pervasive, analytics-enabled, software-defined networks of the future, CSPs have numerous opportunities to capitalise on true digital transformation and provide new solutions for their enterprise customers in the digital age.

DIGITAL TRANSFORMATION: THE SIZE OF THE PRIZEThere is a huge amount of potential value for CSPs to capture. The digital transformation of telecommunications is high stakes – for the industry and for society alike. CSPs can develop networks that are self-optimising, self-healing, and self-securing. Increasing digitalisation means they can reimagine connectivity using the IoT, machine-to-machine communication, and augmented and virtual reality. And new kinds of user experience can deliver truly effective, delightful forms of customer service, and match the very best experiences offered by the digital giants. The total size of the prize? An extraordinary US$2 trillion opportunity for both the telecommunications industry and society over the period 2016-25.2

Of this $2 trillion, the value to the telecom industry could exceed $1.2 trillion in cumulative operating profit from 2016 to 2025. Society and consumers could benefit from more than $800 billion in value – the majority of which will come from efforts to connect the billions of people still unconnected to the internet. The initiatives under Networks of the Future and Beyond the Pipe representing the largest-value opportunities. B2C and B2B business models will be repositioned as new digital services move participants beyond connectivity towards a future exemplified by cross-industry competition and collaboration.

Industry X.0 / IoE Business Market Demands

VERTICAL-SPECIFIC PLATFORMS

MARKETPLACE

MANUFACTURING

HEALTH

OTHER

RETAIL

WORKER OFFICEBUILDING

FACTORY

COMMERCE

SELF-SERVE TOOLS

SECURITY

REPORTING & BILLING

Architecturally designed to allow enterprise to develop, manage and report through simple and open standards based tools integrated into

network and platform

Simplified & consolidated reporting and billing and charging based beyond access

Connected Worker applications

• Enterprise Security• IT applications access• Collaboration• Mobile Device

Management

Other Vertical apps

• Digital Hospital• Connected Commerce/

Beacons• Connected Mine Source: World Economic Forum/Accenture Analytics 2017

Connected Building applications

• Building Access Tied to Security

• Building Automation & Monitoring

• Advanced HVAC/Lighting• Biometrics

Connected Factory applications

• Plant Air Quality Monitoring• Conn. Asset Management• Smart Manufacturing

Hardened security enabled through secured physical network elements with authentication

TELCO PLATFORM IN THE DIGITAL

B2B SERVICE ECOSYSTEM

US$2 trillion value at stake from digital telecommunications transformation (2016-25)

Network of the future

Virtualisation and abstraction of the physical hardware layer promise to change the basis of future service differentiation by creating networks that will be self-aware, self-optimising, self-healing and self-secure.

Redefining customer engagement

Deliver delightful digital experiences as customer now expect the high quality digital experiences they receive in one industry to be matched by companies in other sectors.

Beyond the pipe

The increased digitisation presents important opportunities to extend revenue streams beyond connectivity – through IoT and M2M, digital services, reimagining models of digital communication leveraging AR/VR.

Bridging the gap on innovation

The need for rapid innovation, greater convergence and new services means that telcos must fill key capability gaps using new innovation models and revamped talent strategies for a digital workforce.

Total valueat stake

$400 billionIndustry

$30 billionIndustry



$580 billionSociety

$2 billionSociety

$290 billionSociety

$1 billionSociety

Total valueat stake

Total valueat stake

Total valueat stake


APAC: A HIGH-POTENTIAL REGION FOR CSPSHow well positioned are APAC CSPs to capture their share of this value? Today, the B2B performance of the region’s leading CSPs is highly varied. In absolute terms, Japan’s NTT is one of the leading CSPs in terms of largest enterprise revenues in APAC by far, although companies like Telekom Malaysia derive a higher proportion of their revenue from enterprise customers.4 However, revenue growth in the enterprise space has been hard to come by, with many companies showing mid-single digit CAGR in the period 2015 to 2017. Yet some, such as Telkom Indonesia, have bucked the trend. The company enjoyed a revenue CAGR of 25.2 percent over the 2016-17 period thanks to their focus on integrated ICT, digital business and smart city solutions.5

Focus on: TelstraWith 2017 revenues of US$5 billion, and year-on-year growth of 1.6 percent, Telstra Enterprise is a key player in the APAC enterprise space. The company has operations in 20 countries, focusing on the Telstra Programmable Network, dynamic security, the IoT, and Liberate (a mobile convergence solution for enterprises). They have a growing Business Technology Services Group, covering software, mobility, and cloud services, as well as advising on implementation and management. Their success is founded on a strong push for B2B digitalisation (improving customer experiences and enabling new interactions on digital platforms) and a targeted acquisition strategy (including Cognevo in the managed network services space and Readify in application development and software-focused consulting).3

Managed security services: a key focus for APAC CSPsMost APAC CSPs now have offerings in managed security services (MSS), including, in particular, threat monitoring and management. There are opportunities to develop this space further, with managed security operations centres, managed virtual security, and advanced cybersecurity services.

NTT Communications is a leader in the Asia Pacific MSS market, offering a high level of automation, self-control orchestration, and automatic log analysis, together with cost-effective low-touch/zero-touch policy management and improved threat detection through machine learning. In February 2017, they expanded their MSS offering further with a partnership with Malaysia’s Diversified Gateway Berhad.13

Telstra have a global network of over 500 cybersecurity experts, offering a range of managed services, including firewalls, security operations centres, DDoS protection, content filtering, and gateways. In 2017, they opened two new security operations centres from which they offer a broad range of services to government and enterprise customers.14

Overall, leading APAC companies enjoy healthy revenues and solid growth. Aggregate total revenue for the major regional players was US$667 billion in 2017 and is set to grow by over 3 percent in the period to 2019.6 In terms of EBITDA margins, companies from developing APAC countries have performed best in recent years, although EBITDA growth is expected to be largely static across the board over the short term.7

Furthermore, enterprise revenues are forecast to remain mostly flat for APAC CSPs. And while enterprise data services are set to grow over the next few years, the market for voice services is expected to contract.8

Intensifying competition, revenue pressures from commoditisation, and slowing growth are driving APAC players to focus on digital offerings. These companies are laying the groundwork for a shift away from pure connectivity provision by strengthening their advanced network capabilities (such as the IoT, 5G connectivity, network function virtualisation, and software-defined networking). South Korea, Japan, and China, in particular, are leading the way for 5G commercialisation, with governments of these countries universally agreeing to work together as part of a coherent approach to foster the development of 5G networks.9 Companies are also pursuing M&A activity with increasing aggressiveness, especially in the IoT, enterprise security, and cloud spaces. China Mobile plans to invest US$300 million in subsidising IoT device makers, for instance,10 while Telstra have been expanding inorganically through their acquisitions of cloud services providers Kloud and Vmtech.11

Cloud is likely to be a key focus for many APAC CSPs in the next few years. The most notable global CSPs, including DT, NTT, Orange, and Telefonica, compete in the cloud market with mature global giants like – Amazon, Microsoft, Google, and Alibaba. The market is witnessing intense pricing pressures, prompting some of the players to exit the business, for instance, AT&T and Verizon selling off some of their data centres, due to severe cost basis competition in the public cloud sector. APAC CSPs continue to invest heavily in expanding their cloud portfolios and data centres to grow market share in the region and compete with other global players – which are increasing their data centre investments significantly in the region.12


FINDING FUTURE GROWTH: THE STRATEGIC PLAYS THAT PIVOT CSPS INTO THE NEWWith so much to play for, what approach should APAC CSPs be taking? How can they defend their core connectivity businesses while capturing the future high-growth digital opportunities that their connectivity enables? The first step is to recognise that scaling new growth is not a single event, but rather a deliberate and perpetual process of change. CSPs in APAC have generally been investing in their core connectivity businesses. But in a rapidly commoditising market, with increasing pressure on volumes and growing complexity in portfolios, they’ve generally seen little or no return on those investments.

Furthermore, previous cost transformation programmes have too often been focused on low-hanging fruit, such as procurement or overheads. For the most part, these programmes have barely maintained EBITDA for the players that have undertaken them, and have largely failed to make meaningful changes to the business model. Moreover, what focus there has been on B2B markets has largely been unproductive (for instance, in IaaS or SI services) or limited to add-ons. It hasn’t created the significant value CSPs are looking for.

The solution? CSPs must make a deliberate and careful choice about the strategic play they want to make in APAC B2B markets. They must be clear and distinct about their positioning. They must make a significant pivot away from familiar and conventional business models and enterprise capabilities. And they must develop the investment strategies that can transform the opportunities into concrete business value.

The four future strategic plays for CSPs

In choosing the right strategic play to make, there are four models that stand out. Ranging across both the short and the long term, each of these plays requires very different skills, capabilities, and investment priorities. And the way each creates value for the business is equally distinctive. The four plays are:

1. Multi-sided platform model. A sophisticated consumer-focused play, where the CSP creates a platform to maximise its reach into the ecosystem of partners, customers, and developers, embedding itself into the daily lives of its users.

2. Digital mobile-only attacker. A digital mobile pure play offers core digital services to enterprise customers across products and channels, building apps and ecosystems around pure mobility.

3. Vertically integrated service provider. Focused on the end-to-end provision of services, whether premium content for consumers or industry-specific connectivity solutions for enterprises.

4. Connected industry orchestrator. A long-term play, in which the CSP focuses on creating hyper-lean, exceptionally cost-effective networks and injecting ubiquitous connectivity into industrial value chains.

Each scenario needs distinctively different skills and capabilities, as well as divergent investment priorities and value creation logic.

Focus on: Telkom IndonesiaWith total 2016 revenues of over US$8 billion, Telkom Indonesia serves more than 1,300 corporate customers, nearly 300,000 SMEs, and several government institutions across the country. The company has seen particularly strong growth in its data, Internet, and IT segments, which have experienced year-on-year growth of over 30 percent. That’s thanks to their focus on becoming a leading digital mobile business and developing innovative services such as e-marketplace Xooply, big data and analytics service Xsight, advertising simplification tool Aim Right, among other IoT, network, and smart city solutions. The company has plans to expand internationally across Southeast Asia, and has entered into a joint venture with Telstra to provide services to enterprise customerstra to provide services to enterprise customers.15

Success demands a departure from today’s models and competencies. The four key plays for APAC CSPs

Long term play

Key:

SUCCESS FACTOR KEY CHARACTERISTICS

1

Multi-sided platform model

Maximise reach via ecosystem of partners, customers, developers – become an essential part of the daily digital routine of every user

• Integrated experience of own and 3rd party services, B2C, B2B2C

• Agile & open platform (API)• Device open and software managed, 3rd

party products• Subsidizing / cannibalising services

2

Digital mobile only attacker

Digital/Mobile pure play bringing Digital & Core together across products and support channels

• Mobile focused, innovative and agile service factory

• Digital-first care & operating model

3

Vertically integrated service provider

B2C superior bundling of mainly self-owned services, incorporating acquired rights to high-demand content at premium fees.

B2B deep value chain capabilities by combining connectivity and industry solutions

• Controlling customer contracts, devices and access

• Advanced customer segmentation: focus on B2C

• Owned and closed devices• CSF: scale, synergies, superior

customer service

4

Connected Industry orchestrator

Inject ubiquitous enhanced connectivity (edge compute, security, QoS) to objects in Industry value chains to radically improve productivity and growth

• Best country network and access to superior global reach

• Focus B2B, Industry X.0 and efficient asset (Access, NFV/SDN, MEC/IaaS, Facilities)

• Devices, sensors are open, software managed and important touch points

• Hyper lean operating model, digital first channel


Each play brings its own opportunities and challenges, and in deciding which to choose much will depend on the particular circumstances of the CSP in question. The digital mobile-only attacker play calls for a truly digital-first care/operating model that can reduce operating costs while increasing responsiveness. Plus it needs an innovative and agile service factory that can adapt rapidly to changes in enterprise demand, adjusting pricing, making offers, and creating new services at pace.

The vertically integrated service provider route is likely to be relevant for the larger, more traditional CSPs, not least because of the significant capital investments required. For consumer-focused businesses, this play means acquiring or creating the high-value content that can be sold at a premium through multiple digital channels, as well as investing in the advanced analytics that can drive hyper-personalised effective customer experiences. In the B2B space, it means embedding connectivity services right across enterprise customers’ value chains, developing exclusive or proprietary industry-specific solutions.

Adopting the multi-sided platform model is a sophisticated approach for the long-term success of a CSP. Here, the company creates a platform which extends its reach right out into the ecosystem of partners, customers, and developers, ranging across traditional sector boundaries and regional borders. By integrating their proprietary services with those of third parties using APIs on an agile and open platform, these players can effectively “own” the customer – and the network through which they access the digital world. Most instances of this play have focused on the consumer market to date. Comcast’s X1 service and Liberty Global’s One Video platform show the possibilities a platform model opens up.16

Connected industry orchestrators, in contrast, take the same flexibility and openness and apply it to creating and enhancing ubiquitous connectivity in industrial value chains. Using edge-computing, advanced network security, and high QoS, these players aim to create the hyper-lean operating models and digital-first platforms that ensure premium network performance and the efficient use of Industry X.0 assets for their enterprise customers. Take AT&T’s Indigo platform, for example. The company is bringing together wireless technologies like 5G with big data, machine learning, cybersecurity, and software-defined networking to create a hyper-fast, secure, and private next-generation network.17

Focus on: Softbank CorpJapan’s Softbank Corp. has been a leading CSPs in optimising their network operations with a next-generation mobile IP core network and developing a portfolio of advanced IoT solutions. Their focus is on connecting the huge volumes of data embedded in IoT devices, and using artificial intelligence to read, analyse, and then commercialise that data. They have adopted a network convergence system to support the bandwidth demands of those IoT services and have launched the world’s first commercial service using MIMO spatial multiplexing (a powerful core technology for 5G connectivity). In further additions to their IoT capabilities, they acquired leading UK semiconductor designer ARM Holdings in 2016, and selected the Affirmed Mobile Content Cloud (MCC) to deliver IoT services and mobile connectivity to enterprise customers in 2018. An embedded subscriber identity module (eSIM) platform is also under development to promote IoT solutions.16

THE CONNECTED INDUSTRY OPERATORFor B2B markets, the connected industry operator is a potentially high-value, high-growth strategic play for CSPs focused on long-term success. The ultimate goal: to inject ubiquitous enhanced connectivity into industrial value chains, to become the backbone of Industry 4.0 and beyond, and thus to radically improve productivity and growth.

In both this play and in the multi-sided platform play, exploiting the pervasive network is the key to success. This pervasive network, which combines existing network technologies with wireless computing and digital services, is an environment in which the connectivity of devices is embedded so broadly and so deeply, that it’s ‘always on’ but never noticed.

The potential advantages in reorienting to digital are thus clear. But for most CSPs in APAC, capturing the real value on offer means embarking on a journey. It means starting as a simple connectivity provider, becoming a fully-fledged digital B2B player, moving through a “connectivity ++” offering, to eventually orchestrating entire connected industries.

From simple connectivity …At the outset of that journey, a connectivity provider will look to both radically digitalise their operations and offerings and manage total cost of ownership with a new level of effectiveness. So, they’ll create digital omnichannel strategies, they’ll embed intelligence and data-driven decision-making in their operations, they’ll introduce new product lifecycle management capabilities, and they’ll establish Network-as-a-Service, SDKs, and APIs to onboard industry-specific applications. They’ll also take steps to simplify product portfolios, decommission legacy infrastructure, and reduce technology complexity through double-decoupling.


… to digital B2B player …As they become a truly digital B2B player, the CSP will be transforming their touchpoints with their enterprise customers, building end-to-end omnichannel propositions covering the entire customer journey from quotation, to order, to provisioning, to maintenance and assurance. They’ll be enabling digital service management, just like the very best OTT providers do. They’ll be applying analytics extensively (including machine learning and other forms of artificial intelligence) to customer experience, service management, and network automation. They’ll be improving security and cyber-resilience across their networks, applications, and devices. And they’ll be adopting network virtualisation and making plans for a future dominated by 5G and multi-access edge computing.

… to connectivity ++ provider …As their digital maturity grows, the CSP will now be offering “connectivity ++” services like cloud, cybersecurity, SD WAN, multi-access edge computing, and multiprotocol label switching (MPLS). They’ll be pivoting their digital services to the platform economy, expanding their B2B partner ecosystems, and bundling connectivity with third-party digital and industrial applications. They’ll start integrating digital twins, augmented and virtual reality, blockchain, and other Industry X.0 technologies with internal operations (supply chains, field service, network simulation) to create new assets to serve ecosystem needs. And they’ll embrace concepts like the “living enterprise” and “applied intelligence” as they create rapid delivery capabilities, intelligent digital processes, and deep-rooted cultures of innovation

… to connected industry orchestratorFinally, the CSP takes on a role as the mainstay of the connected industry, whether that’s in healthcare, manufacturing, insurance telemetrics, transportation fleet management, Device-as-a-Service, or any other field. They’ll be rotating to the new in everything they do, adopting mindsets of continuous innovation, testing, and monetisation. They’ll be extracting value from assets embedded in connected industry value chains, offering vital interoperability and interfaces for the markets they serve. And they’ll be engaging in value-based transactions built on contextual awareness, policy controls, and trust within their ecosystems, fortified by network security, network resilience, and the traceability of network data.

In this new era, the CSP’s revenue model shifts away from one characterised by the provision of standalone single products to one in which numerous diversified communication services are enriched by the partner ecosystem.

Consider the possibilities in a field like connected vehicles. In the years to come, vast numbers of sensors will be embedded in transportation fleets, enabling data to be gathered from vehicle components in real time and then analysed instantaneously with intelligent analytics. As in-service insights into performance are continuously fed back to manufacturers, a radically new kind of improvement feedback loop is created – and CSPs are at the centre.

Shifting to a revenue model based on transactions in an expanding ecosystem

FROM stand alone, one-product service provider TO one to many, diversified communication services enriched with Partners offer

SERVICE

SERVICE

SERVICEFEE

SERVICEFEE

Key Value Elements

Service Access

Recurring charges (per service and contract commitment)

Number of transactions

Value per transaction

MARKETPLACEPARTNER

ECOSYSTEM


Connected industry orchestrator or vertically integrated B2B service provider?The connected industry orchestrator play shares some of the characteristics of the vertical integration play in the B2B space. But the former has a far more flexible asset model, and a much more open ecosystem:

• Value proposition. The vertically integrated provider combines digital connectivity and targeted, industry-specific services to create deep capabilities across enterprise customers’ value chains, whereas the connected industry orchestrator injects enhanced connectivity in devices right across the whole ecosystem to radically improve productivity and growth.

• Performance measurement. The vertically integrated provider measures success through vertical penetration and depth, ROI/ROCE, portfolio expansion, and growth. In contrast, connected industry orchestrators measure the utility return on assets (ROI/ROCE, quality of service, coverage) as well as the strength of key partner/supplier plays, with a focus on ecosystem reach and transaction monetisation.

• Customer engagement. Vertically integrated providers look to create personalised and controlled omnichannel experiences (both high and low touch) with end-to-end project capabilities, while connected industry orchestrators combine digital and high-touch channels to create embedded experiences that also include the partner ecosystem.

• Enabling technology. Vertical integration rests on optimised IT solutions and networks, with bundled capabilities for connected enterprises, and APIs/SDKs for proprietary IP/OS. Industry orchestration, on the other hand, is founded on the pervasive network, enhanced with advanced software and operations capabilities.

• Investment profile. Vertical integrators are capital asset heavy, thanks to their proprietary industry-specific solutions. Industry orchestrators invest in differentiating assets, but acquire access to non-differentiating or commoditised assets through operating expenditure

• Control points. Vertical integration offers closed, contract-based channels, using as-a-Service models through a one-stop-shop, while industry orchestration embeds control points deeply into industry value chains, using connected objects, policy topologies, network slices, and APIs/SDKs.

For CSPs intent on the vertical integration play, the acquisition of systems integration or industry-specific software companies could be a sensible next move. Open source initiatives should also be used to drive de facto standards. In contrast, for CSPs looking to become connected industry orchestrators, the immediate focus should be on acquiring 5G licences, rolling out dense fibre, and creating joint ventures and industry initiatives for specific markets.

MAKING IT HAPPEN: PIVOTING WISELY WITH THE RIGHT INVESTMENTSWhichever strategic play or plays a CSP chooses to make, the same fundamental questions arise. How can we make such a major shift in our business quickly enough to capture first-mover advantage? How do we fund the necessary investments? Will our digital-first programmes generate enough value to do so? Or will they simply sustain what we’re already doing?

Sustaining the status quo won’t be enough. CSPs must adopt investment strategies that can both future-proof their business models and find growth that exceeds shareholder expectations. But many lack the available capital to transform their businesses quickly enough.

Fortunately, there is a proven methodology to help. By understanding the transformation S-curve, and how it can be exploited to both grow the core business and build a new business, a CSP can make the investments necessary to both transform their back office and enable the fundamentally new capabilities needed for the successful strategies of tomorrow.

Exploiting the S-curve to make the right pivot at the right time

S-Curve of transformation

ENTE

RPR

ISE

VALU

E

TIME

TRANSFORM THE CORE

Traditional Business

New Business

GROW THE CORE

WISE PIVOT

BUILD THE NEW

YOU ARE HERE


The methodology calls for a phased approach:

1. Transform the core business. A CSP must take stock of its existing technology landscape and look for changes in its operating models that could generate the cost savings to fund investments in future growth. Here, automation plays a key role, and for many there will still be low-hanging automation opportunities that can be picked off with relative ease (such as billing or call-centre processes).

2. Grow the core business. Through the use of advanced analytics, the CSP can develop a much more sophisticated understanding of its core business. Then generate the actionable insights that can help monetise underutilised assets, as well as maintain and grow the customer base.

3. Build the new business. Thanks to its newfound efficiency and growing core business, the CSP will have additional funds to invest in its new business model, whichever strategic play or plays it has decided to make. It can thus start scaling the new business with targeted investments, whether that’s developing a new ecosystem to support a future platform business, or investing in hyper-lean, hyper-fast premium networks and Industry X.0 technologies to support its enterprise customers.

4. Make the pivot to the new. At some point, the CSP must make the shift away from its existing business to focus on the new. Doing so at the right time is critical. A careful consideration of available funding, fluctuating market conditions, and stakeholder expectations is the key.


By understanding the key global and regional trends in enterprise telecommunications, and then making a deliberate and distinct strategic play to capture growth in those markets using a phased investment approach, APAC CSPs have an opportunity to pivot away from low-growth, fast-commoditising pure connectivity services and find new roles at the centre of the connected industrial ecosystems of the future.

In deciding which play to make, taking advice from experienced industry expertise can be invaluable. To find out how Accenture can help in every aspect of a digital transformation, tying consulting to product planning and integration, using design thinking, scaled agile principles, and an analytics-driven approach, please get in touch with us.

The digital disruptors are closing in. Now’s the time to make the right strategic play. A high-growth, high-revenue future awaits.

CONTACT US :

Gopi Kurup

[email protected]

KEY CONTRIBUTORS FROM ACCENTURE RESEARCH

Swati Vyas

[email protected]

NOW IS THE TIME TO MAKE THE RIGHT STRATEGIC PLAY

1 Mobile World Congress, 26 February 2018 https://www.mobileworldcongress.com/about/press-release/two-thirds-mobile-connections-running-4g-5g-networks-2025-finds-new-gsma-study/

Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2016–2021 White Paper, 28 March 2017 https://www.cisco.com/c/en/us/solutions/collateral/service-provider/visual-networking-index-vni/mobile-white-paper-c11-520862.html 2 World Economic Forum/Accenture Analysis 2017, January 2017 Digital Transformation Initiative: Telecommunications Industry, World Economic Forum Digital Transformation Initiative

3 Telstra Annual Report 2017 https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-e/Annual-Report-2017-singlepages.PDF

4S&P CapitalIQ5 Telkom Indonesia, Annual Report 2016 https://cdn.indonesia-investments.com/bedrijfsprofiel/201/Telekomunikasi-Indonesia-Telkom-Annual-Report-2016-Company-Profile-Indonesia-Investments.pdf

Accenture Analysis6S&P CapitalIQ, Accenture Analysis7S&P CapitalIQ, Accenture Analysis8 Gartner, Forecast: Enterprise Communications Services, Worldwide, 2015-2022, 1Q18 Update, 23 March 2018

9 Telecom Review Asia Pacific, 4 June 2018 https://www.telecomreviewasia.com/index.php/news/featured-articles/1071-china-japan-and-south-korea-leading-the-way-for-5g-commercialization

10 Internetofbusiness, 28 November 2017 https://internetofbusiness.com/china-mobile-invest-300m-iot-push/

11 Kloud website http://www.kloud.com.au/

The Australian Business Review, 16 February 2016 https://www.theaustralian.com.au/business/technology/telstras-kloud-buy-is-blue-sky-all-round/news-story/00c7599284f38283d48fc42be7a978f0

Telstra Media Release, 13 December 2017 https://www.telstra.com.au/aboutus/media/media-releases/Telstra-acquires-leading-hybrid-cloud-service-provider-VMtech

12 Analysys Mason, 14 December 2017 http://www.analysysmason.com/Research/Content/Comments/Operators-cloud-markets-REN02-REN01-RDMZ0/

Data Economy, 16 March 2018 https://data-economy.com/alibaba-cloud-opens-its-first-data-centre-in-indonesia/

Data Economy, 1 August 2017 http://www.scmp.com/tech/enterprises/article/2104988/microsoft-pushes-increased-cloud-services-adoption-asia

VentureBeat, 16 January 2018 https://venturebeat.com/2018/01/16/google-will-expand-cloud-infrastructure-with-3-subsea-cables-and-5-new-regions/

13 Bernama 27 February 2018 http://www.bernama.com/en/business/news.php?id=1439568

14 IDC MarketScape: Asia/Pacific Managed Security Services 2016 Vendor Assessment, October 2016;

IDC MarketScape: Asia/Pacific Next-Generation Telcos: Telecom Services 2016–2017 Vendor Assessment, March 2017

15 Telkom Indonesia Annual Report 2017 https://konten.telkom.co.id/cs/groups/cem/documents/document/wcc011034.pdf

Ray Sharma, The Fast Mode, “Telkom Indonesia Intros New Digital Services for Enterprise and Consumer

Market”, Dec 2017

Telkomtelstra https://www.telkomtelstra.co.id/en/insights/news/44-telstra-and-telkom-indonesia-sign-joint-venture.html

16 Softbank Annual Report 2017 and website https://www.softbank.jp/annual-reports/2017/en/

PR Newswire, 26 February 2018 https://www.prnewswire.com/news-releases/softbank-selects-affirmed-networks-to-deliver-iot-and-enterprise-mobility-services-300603776.html

The Network Cisco’s Technology News, 1 August 2017 https://newsroom.cisco.com/press-release-content?type=webcontent&articleId=1871147

Softbank Group Press Release, 30 March 2017 https://www.softbank.jp/en/corp/group/sbm/news/press/2017/20170330_04/


ABOUT ACCENTURE

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 449,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives.

Visit us at www.accenture.com.

Copyright 2018Accenture All rights reservedAccenture, its logo, and High Performance Deliveredare trademarks of Accenture.

Documents

Beyond Connectivity - Accenture · 2018-11-02 · THE GLOBAL . TAILWINDS DRIVING CSPS TO NEW ENTERPRISE GROWTH This is a critical time for communications services providers (CSPs)