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Telco Transformation: Bold Moves for Big Opportunities

April 29, 2015 by Rick Costanzo 1

What’s an industry that’s been shaken up and remolded supposed to do? Adapt, of course. That, and have the confidence to make bold moves. And that’s just what communication service providers (CSPs) around the globe in the telecommunications industry are doing.

The question is, however, are they acting quickly enough to retain market share and profitability in order to live long and prosper?

It’s time to be bold

In my last blog, I provided a quick overview of the enormous potential that exists for CSPs, if they choose to move up the stack of opportunities that the connected world presents. However, for the majority of CSPs, this will require some reimagining of their business – from people skills, to IT infrastructure, to business processes.  It’s an incredible opportunity to make some bold moves.

That said, the transformation that this industry is experiencing is not going to go away. So to be able to thrive throughout it all, CSPs are going to need to roll up their sleeves, adapt, and have the tenacity to drive transformation within their own organizations.

What the path looks like

To fully understand where CSPs are in the midst of this industry shift, SAP recently surveyed executives in this industry. The survey took a look at what CSPs believe to be the biggest opportunities for revenue in the future, along with where they are now in their journey and how their business will be changing. Here’s a quick overview of what the data revealed.

It’s about new digital services. Just over half of the people surveyed think that greater than 25-75% of their revenue in the next three years will come from new services. A small minority of CSPs think more than 75% of their business will come from services they don’t offer today, which begs the question – are they the leading edge thinkers – or simply grabbing at straws? Time will tell, but in my opinion, these will be the CSPs in the forefront.

It’s about context. Not surprisingly, the top three services CSPs are considering in terms of value potential, as depicted in the chart below, are all largely based on understanding customers and providing contextually relevant services and interactions.   Location-based services leads the pack, followed closely by cloud services, data monetization, mobile commerce, and the Internet of Things. It’s clear to me that unlocking the power of context is what will drive the most value in this industry.

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Where are they now?

The reality is that most (60% or more) are not fully as prepared for this transition, but they are making concerted efforts, as the chart above shows. Mobile commerce and location-based services are in the most advanced stages of offerings, followed closely by data monetization, the Internet of Things, and cloud services. Nearly an equal number are in the planning or proof of concept stages for each of these services as well.  The good news is that CSPs are taking action. But, the kind of changes that are needed take time to implement, requiring big moves now to create a competitive market advantage going forward.

Can the pace quicken?

It’s obvious from the data discussed here that CSPs understand where they need to go, but I think we’d all agree we that, as an industry, they could be moving faster. Many CSPs are still figuring out how to shift their business in terms of skills and infrastructures so that they can put into place the new business model that they’re envisioning.

In the final blog of the series, I’ll take a deeper look at some of these skills and infrastructure changes as well as look at some examples of telcos that are taking bold and necessary steps forward in this journey.

To understand more about the telco transformation, watch this video and see what the people in the trenches – the CSPs – say about the changes in this industry.

Or follow me at @rickcostanzo on Twitter to join the discussion.

This story originally appeared on SAP Business Trends.

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