Johannesburg, 31 Jan 2014
Over the past few years, service providers have faced increasing competition from not only traditional players but also new competitors, such as over-the-top players. As a result, many operators are searching for ways to remain relevant and stay ahead.
Lured by high growth, investment into African telecoms is flourishing with global telecoms operators racing to seize market share.
Realising the value of mergers and acquisitions (M&A), forward-looking operators are looking for ways to rationalise their business, consolidate their networks, integrate their offerings, develop new services and better prepare for the competition, says Michal Harris, Director, Market Insight & Strategy at Amdocs.
But even industry giants are finding that preparing for and coping with the trends that will define the future - such as omni-channel, big data, virtualisation, small to medium-sized enterprises (SMEs), video and TV, and connected devices can be a comprehensive undertaking.
Customers want multi-channel access
Identified as crucial for their customer relations and management strategy, service providers have identified omni-channel (successful integration of multiple channels) as a top priority. With millions of smart devices, billions of applications and unparalleled growth in data consumption, omni-convergence, together with encouraging customers to embrace online channels, such as self-service and mobile apps, has become all-encompassing.
In fact, Gartner predicts that by 2015, businesses without an all-channel customer engagement strategy will lose 15% to 20% of their premium customers to competitors.
It's important to note that successful omni-channel integration can't exist without a proactive customer relationship. A recent Amdocs consumer survey found that subscribers are 84% more likely to be service provider advocates if customer care issues that impact them are proactively identified and resolved.
Big data becomes even bigger
And with the growth in proactive customer care, big data is going to get even bigger.
Data accumulated from customer touch-points, both structured and unstructured, will provide service providers with amazing opportunities for new business models and partnerships. Informa notes that big data currently represents 10% of the total IT budget of service providers who are implementing it, but that this figure is expected to increase to approximately 23% in the next five years.
What may surprise service providers is how quickly they will have to transition from merely managing big data to realising its value. Another surprise may be that the secret to realising that value will be internal initiatives, such as using the data to gain more insight into customer segments (especially high-value customers) and using new types of data to create improved KPIs.
Going back to my comment about the relationship between proactive customer care and big data, internal data monetisation will lead to advanced personalisation, including proactive customer care and marketing, as well as network optimisation and planning. But, for the moment, external data monetisation is still the hotter topic, and we can expect to see many service providers leveraging existing data assets to create new revenue sources, such as mobile ads.
More than efficiency, virtualisation matures
Initially promoted as an efficiency play for service providers, we expect the virtualisation trend to expand to include network functions virtualisation (NFV) and software-defined networks (SDN) - which refers to implementing a network function on a virtual machine that can run on industry standard server hardware.
As an industry, we are seeing a shift towards open, more flexible, efficient, highly programmable and elastic network infrastructure solutions. By replacing costly proprietary hardware with standardised, less-expensive servers, service providers can save huge amounts of capex. Opex will also be reduced, perhaps even more dramatically. Due to management centralisation, SDN and NFV make services and infrastructure more agile and scalable, and thereby less costly to maintain, reconfigure and upgrade. While full SDN deployments may be a bit premature in some markets, SDN infrastructure support should be a key decision-making criteria.
Both concepts (NFV and SDN) create a virtual control layer for the network, allowing service providers to save costs and to manage their networks more efficiently. But that's not all they can do... A consensus is growing that an even more significant impact of virtualisation is in helping service providers to drive new revenue streams and improve the profitability of old streams.
Enterprise and SMEs won't be small
Don't look now, but the enterprise and SME sector is becoming indispensable. The worldwide market for enterprise cloud-based services will grow to $31.9 billion in 2017, according to Analysys Mason, and by then, service providers will be responsible for 18% of that worldwide revenue, via services like fixed-mobile convergence, enterprise communications and advanced video services.
Service providers are increasingly merging network and IT to provide their SME and enterprise customers with complex, cloud-enabled services, moving from being a network solution provider to a true information and communication technologies (ICT) player providing more cloud-based, M2M and software services on top of network and mobile access, where the service provider takes on the role of one-stop-shop for all telecoms and IT needs.
Informa estimates that connectivity alone might already account for 15% of an enterprise's total ICT budget. But with cloud-managed applications and device and computing services, up to 80% of the enterprise ICT budget will soon be in play, and it will happen sooner rather than later.
New trends, new opportunities
Taking advantage of all these opportunities, and succeeding in the realms of omni-channel, big data, virtualisation and enterprise, isn't going to be straightforward. As the industry continues to evolve and service providers consolidate to embrace new challenges, expect to see plenty of M&A and an abundance of opportunities.
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