Telco networks are undergoing tremendous change. Challenged by significant reductions in their traditional service model (how many of us still use a landline at home?) and 3rd parties adding value to basic data (iMessage, Hangouts, Skype etc) they have been facing falling average revenue per user. On top of this the explosion of smart phones, video streaming etc has required continual network and technology upgrades to remain competitive.
Without exception Telco’s globally have had to reinvent themselves, their business models and infrastructure. They have had to add new revenue streams, new differentiated services and build agility into their networks that allow for fast, low cost roll out of new services to survive and continue growth. Interestingly the very same digital forces that have driven the commoditisation of data for Telco’s are threatening traditional enterprise business models.
Traditional bricks and mortar retail, transportation, free and pay TV are topical examples of where new enterprises without legacy customers, infrastructures or business models have whisked customers away from long term suppliers. IDC refer to it as the ‘Digital Age’, facilitated by an explosion of value creation based on cloud services, mobile, social and big data.
We all know (and are sick of hearing the) Amazon, airbnb, and UBER examples. Locally have a look at GoCatch, Xero, AirTasker, The Iconic and Nimble. Each of these businesses have driven down the cost of a traditional model for their industry and significantly reduced the cost of customer acquisition. The tools they have used? Cloud services for low cost, fast and efficient application development and hosting, mobile to provide customers on the go access to their services, big data to understand their customers usage/buying habits and social for advertising and customer feedback.
Of course it’s not all doom and gloom for existing enterprises. Like the Telco’s our revenue models are (or soon will be) challenged by these upstarts who are have built their businesses in the ‘Digital Age’. Like the Telco’s we will be forced to deliver new and differentiated services and build the agility into our networks that allow our businesses quickly and effectively to develop and deploy services that reduce cost and increase customer engagement. Looking for a success story? Take a look at one of the Australia’s traditional bricks and mortar retailers, Harvey Norman. Traditional only from the perspective of their investment in bricks and mortar the retailer has a long-standing tradition of innovation, not the least being their franchise system and property holdings.
In 2010 Harvey Norman’s online presence was nothing more than a store listing, opening times and their current specials catalogue competing with the likes of eBay and Kogan. In 2011 they launched their first eCommerce site and appointed Gary Wheelhouse as Head of Digital. Wheelhouse, addressing delegates of the MagentoLine conference in 2014 said “I don’t think anyone would suggest that Harvey Norman was an early adopter of online. In fact, I would say there is a last mover advantage strategy”.
The retailer presented retail options to online, such as the ability to interact with salespeople using live chat and leveraging their store network to provide easy pick up options (and upsell opportunities) via their click and collect feature. The success of the strategy is obvious with 2014 profits (excluding property) up 26.6% and 2015 profits (excluding property) up 19%.
Just as Telco CTO’s have been challenged to develop agile networks that can serve up applications, video, voice, messaging and eCommerce solutions while analysing the usage and buying habits of their customers, Enterprise CTO’s are being challenged to provide greater flexibility, speed to service and agility while continuing to drive down costs.
Want to know if you network is up to the task of providing value in the digital age? Ask us how.