Telcos Strategic Positioning in the new world: The revolution will be Digital (Xi'an, China)

© 2013 IBM Corporation

IBM Institute for Business Value

Telco’s strategic positioning

in the new world:

The revolution will be digital

Rob van den Dam

Global Telecommunications Industry Leader

IBM Institute for Business ValueXi’an, 17/18 Sept 2013

Innovation &

Transformation

Summit



What will be the Telco’s role in the new world?

2

Your theory is crazy,

but it's not crazy

enough to be true.

― Niels Bohr

Prediction is very

difficult, especially if it's

about the future.

― Niels Bohr

The ‘mega’ market and technological trends are

creating a very new world for consumers,

businesses and markets as a whole.

In this new world, Telco’s strategic positioning and

response relies on major growth plays



Trends evident today are driving re-evaluation of business strategy

3

Economic

Regulatory

Market

ICT

IndustryTechnology

Slow long term growth outlook,

shifting wealth and urbanisation

Change in Global Hierarchy

Demographic shifts

Rise in power of the smarter

consumer

Social media explosion driving

new behaviours

Structural separation

continuing

Increasing roles of

regulators especially in

privacy

Going global for growth

Accelerated pressure on

revenue/costs

OTTs and new

competitors

disintermediating

Network technology

investment and change

Mobile saturation extending to M2M

Hyperdigitisation and Big data

The 3rd platform – Cloud Internet of Things

Mobile first as a design point



In addition to the trends, however, a number of high-impact variables

exist with outcomes that are, as yet, uncertain

4

OTT vs. Network optimized content

Silo vs. unified communications

Demand for Voice communications

New Verticals

Addressable Market/

Growth Areas Industry /

Integration Model

Premium /Enriched

Connectivity

Vertical vs. Horizontal Integration

Network sharing vs. Outsourcing

Open versus closed devices

User vs. 3rd Party / ad funded

Regulatory Uncertainty

Ultra-fast Broadband Availability

Dominant Industry / integration model

Concentrated/ Vertical

Fragmented/ Horizontal

Addressable

market

Declining/

Stagnant

Expanding

Telecom SCENARIOS

SCENARIO 1

SCENARIO 3

SCENARIO 2

SCENARIO 4

13 high-impact uncertainties that can

have 2, 3 or 4 alternative outcomes

Machine-to-machine (M2M) communications

Service Pricing Model



Mapping the extremes of the possible outcomes related to the

uncertainties reveals four contrasting scenarios

5

Telecom SCENARIOS

Dominant Industry / integration model

Addressable market

• Reduce Spending

Consumers

• ARPU Erosion

• Investor Loss of

Confidence

• Cash Crisis

Concentrated / Vertical

Declining / Stagnant SURVIVAL

CONSOLIDATION

• Disaggregation of

Carrier Assets

• Involvement Govern-

ment, Municipalities

• Fragmentation

• Driven by Brands

Fragmented / Horizontal

MARKET

SHAKEOUT

Expanding CLASH OF

GIANTS

• Carrier collaboration

and alliances

• End-to-end Vertical

Market solutions

• Mega Carriers

• Emerging Carriers in

Mature markets

• Co-op of

infrastructure

providers

• Open & Affordable

connectivity to

any person/object

GENERATIVE

BAZAR



Regardless the scenario that will evolve, there is a set of common

critical success attributes

6

Telecom SCENARIOS

Concentrated / Vertical Fragmented / Horizontal

Addressable market

Declining / Stagnant

Expanding

SURVIVAL

CONSOLIDATION

CLASH OF

GIANTS

MARKET

SHAKEOUT

GENERATIVE

BAZAR

Cost-effective ultra-fast

broadband strategy

Cost containment

Agile, flexible, reconfigurable

processes & infrastructure

Network /customer insights to

optimize experience & cost

Common Critical

Success Attributes

Effective Digital

Transformation

Culture of innovation and

collaboration



The 2020 Consumer: Connected life

7

Contextual New contextual services

to improve lives

Everything ConnectedInternet of Things, Multiple

devices controlling multiple

devices (TV, heating, car

kids, etc.)

PersonalizedCreate own service

portfolio according to their

own needs, sourced from

multiple providers

SocialSocial media, social business – all

the time, respond, solicit, collaborate

Continued virtualizationFunctions, services, enterprises

Perfect experienceAll the time – know,

connect, serve

Alternative meExtensive use of avatars,

concierge services, virtual

interfaces

Behavioral profilingContinuously providing insights

and recommendation to the

consumer to improve their

lives, experiences and well

being

The

New

World



The 2020 Business: Virtualisation becomes reality

8

Continued virtualisation of the

enterprise, Global sourcing of

services to further reduce costs

Social business – all of the

time

Mobile first is the design

point

Use business functions as a

service (ICT becomes

virtual).

Multiple devices controlling

multiple devices, fleets,

assets, workforce etc

Two sided bus model…buys

from partners who source

from many

Systems of engagement start to

become the norm over systems

of record

Source: IBM IBV Social Business Survey

2012

Social business

62%Invest

Unprepared

Unsure

value?

74%

67%

62%



The emerging ‘two sided’ business model becomes the majority

service delivery vehicle; this is a key opportunity for CSPs

9

Developers

ISVs

Banking

Consultants/

SIs

Healthcare

Media

Social

business

Personal

comms

Security

Policy

Analytics

M2M

Etc… Etc…

Managed

customer

interface,

services,

platforms

and networks

Service providers

and partnersCSP solutions

Consumers Business

In 2020 up to 60% of today’s ICT market

is addressable through this delivery model

Example Players in the services economy today

$1.5B revenue of10K+

Affiliates

Expecting $10B

transactions on mobile

in 2012

40% total units sold by

outside sellers

40% new business

comes from non-CRM

offerings

API only company

reaches 150,000

developers and 1.5M

calls a day

4.5M API invocations

per month

Promotions and

loyalty programs



Telco’s must align growth initiatives to new strategic beliefs, incorporating

emerging trends, new technology & the two sided business model

10

Strategic beliefs

• Move the source of

value

• Deliver integration

and innovation to

clients

• Dramatic

simplification

• Take ‘stop’ decisions

early

Evolving beliefs

• Accelerate shift to higher

value

• Lead in the new era

services ecosystem

• Imperative to create and

acquire IP

• Customer experience

excellence

Growth initiatives

Strategic Operational

Play

Be brilliant at the core

Strategic Growth Play

-Create Smarter ecosystem

-Build Integrated ICT

engine of scale

Expand

internationally

1

2

3

Current trends

Future

uncertainties

Critical success

attributes

New technology



The telco must first perfect its strategic operational plays: “be brilliant

at the core”

11

1

Optimised heterogeneous network

Low cost operating model

Virtual channels

Customer intimacy

Strategic Operational Plays

Dramatic simplification

Intense personalization

Emotional connection

Examples in other industries – all (except

cablescos) with NPS > 60%



Telco’s must create a smarter ecosystem, and put themselves in the

centre of the ecosystem

12

CSP to create a

‘two sided’

business and

operating model

and partner

ecosystem to

power business,

government and

consumer services

2a

Developers

ISVs

Banking

Consultants

/SIs

Healthcare

Media

Social

business

Personal

comms

Security

Policy

Analytics

M2M

Etc… Etc…

Managed

customer

interface,

service

creation,

Open

APIs.

utilities

Service

providers and

partnersCSP

solutions

Consumers Business

Managed

infrastructur

e platforms,

Core

network

Smarter Ecosystem core

IP creation and

exploitation

Clean business

model

Partners in

control of own

destiny

CSP excels at

horizontal

Secure, open,

standardised

Specialist skill

sets

Sales

partners

Solution

partners

Component

partners

DeliverySales Sales

Smarter

ecosystem core



The integrated ICT engine of scale underpins this ecosystem

13

CSP to build

underlying

capabilities of scale

to power business,

government and

consumer ICT

needs

2b

Developers

ISVs

Banking

Consultants

/SIs

Healthcare

Media

Social

business

Personal

comms

Security

Policy

Analytics

M2M

Etc… Etc…

Managed

customer

interface,

service

creation,

Open APIs.

utilities

Consumers Business

Managed

infrastructure

platforms,

Core

network/

virtualisation

ICT engine core

Large scale,

Low cost

Integrated IP

comms

services

Partners

‘inside’

Simplified

technology

platforms

Secure, open,

standardised

Specialist skill

sets

Delivery

Smarter

ecosystem core

Service

providers and

partnersCSP

solutions



14

Thank you

Rob van den Dam

Global Telecom Industry Leader


[email protected]

www.ibm.com/iibv

Telcos Strategic Positioning in the new world: The revolution will be Digital (Xi'an, China)

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