In conversations about telecommunications, moods can easily turn sour. The golden age of the first mobile networks have faded somewhat. Data, once seen as a sideline and a potential revenue channel, has exploded forth and caused havoc with voice and messaging revenues. It’s a shift in the market that cannot be reversed. Digital connectivity is not only becoming all pervasive – the world would be worse off if it didn’t.
Digital connectivity is not only becoming all pervasive – the world would be worse off if it didn’t.
This is not sweet music to an industry that saw its revenues shrink violently. Whether a telco is an incumbent or a fairly new arrival in the industry’s various tiers, they all face the challenge of finding more revenue in the seemingly infinite supply of bandwidth the world holds today. Those invested in infrastructure also have the pressure of continually improving their holdings, often under the expectation of providing better data services. The succession of 3G, 4G, 5G and beyond is not slowing down, because large consumer appetites demand more. Even modern investments of fibre are under pressure to perform on a margin that will be tougher to find as more bandwidth becomes available.
Industry has the Infrastructure that Drives Digitization
But as bleak as it looks, the telco industry has a big advantage: it sits on all the infrastructure that drives the digital era. Data centers, connectivity and user devices all fall under its domain. When studying the plight of telcos a few years ago, Accenture noted that the sector has “established billing relationships, large network infrastructures and a significant amount of customer and usage data [and] existing trust.”
Those are valuable advantages and places teleco companies at a rare inflection point. The going is tough, but the juiciest fruits are growing on telco trees. The question is how to go about picking those. In the short term some telcos have been targeting over-the-top providers, the ecosystem of services that have sprouted on those same digital pillars the sector owns. But this is not a long-term solution, especially when considering the brand damage when trying to curtail a popular service.
Telcos to Become the Hubs for Collaborative Business Models
Telcos need to get more assertive about the two-sided business model presented as Telco 2.0. They are ideally placed to become the hubs around which new and collaborative business models revolve. It’s a frustrating place: telcos have the means and tools to take a front row seat in the 21st century, but their legacies make it hard to turn and set the new course. To get there requires a new degree of leadership and internal co-operation. Traditionally telcos have two different technology branches: network and operations. They are normally independent, but the rise of data culture has created many overlaps. The same usage data on the network can translate to behavioural data for the business.
This is just the tip of the iceberg, a vast mountain of information telcos typically sit on. Mining that data is possible thanks to the very infrastructure telcos happen to own. Modern agile infrastructure creates a new fabric in technology. Today computational power can scale to mind-boggling degrees, allowing for the creation of new platforms that chart the way ahead. On these platforms companies can purchase or build a new species of fast, resourceful and elastic services that deliver the gamut of business applications. It’s a concept often narrowed to the cloud world, but in truth it speaks to the unleashing of connected data centers. A correctly assembled grouping of computers are now the engines increasingly driving the 21st century economy.
Creating Services on the SAP HANA Platform
Telcos own a lot of those engines, as well as the pipes connecting them and the indulgence of consumers relying on their output. But big ships are hard to turn, so how can telcos make the jump? They start small. One way is to create an independent development team to explore a platform technology, uninhibited by the larger company culture and superstitions. A mobile operator in the Middle East did just this when it formed a splinter group to create services for the enterprise market on SAP’s HANA platform. This attracted a lot of new business from the region’s established and startup companies.
Another approach is to simply make a platform and its services available for the telco’s customers. There are several national network providers in Africa and across the globe that offer SAP HANA’s cloud service in collaboration with a skilled solution provider. Over time the telco learns from the experience, gains more skills and begins incorporating SAP HANA into its own practices – all while tending to a lucrative revenue stream of business customers also engaging the same platform. If you own the data centre infrastructure, you can have your cake and eat it.
Once such a platform is in place, the opportunity arrives for internal departments to reach across traditional silo walls. The data providing business efficiencies and insights flows more uniformly. Through the unifying power of platforms built on distributed, in-memory computing, the data era’s potential finally comes to fruition.
The platform era is already with us and defines the foreseeable future of all technology. Its shift in company ideology and investment thinking is profound, creating a massive challenge for companies and their leaders. But the telecommunications sector is in a better position than anyone to get the most out of it. It’s not a question of fighting change, but how to be best positioned to lead it.
As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable approximately 310,000 business and public sector customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.
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