Hewlett Packard Enterprise: Unlock revenue for communications service providers - Bala Thekkedath
Global communications service providers (CSPs) are facing challenges on multiple fronts and can expect to see a huge drop in revenues between now and 2020 without a course correction. Bala Thekkedath, director of portfolio marketing, telecommunications at Hewlett Packard Enterprise, explains how CSPs are looking to digital transformation to help them ascend the customer value chain.
For years, the largest communications service providers (CSPs) have relied on wireless service to offset declines in landline voice technology while still providing modest revenue growth, but those days might finally be coming to an end. It is indeed ironic that in a world that is increasingly becoming hyper-connected, the very providers of that connectivity risk being marginalised. Connectivity isn't as valuable in monetary terms as it used to be and research firm STL Partners estimates that global telecoms service revenue will drop from roughly $1 trillion in 2013 to $700 billion by 2020. CSPs must change the way they do business or risk losing more than $300 billion in potential revenue.
Despite the challenges facing CSPs, incumbency brings its own formidable advantages. CSPs are able to leverage their strengths - their pervasive presence, ability and reputation to deliver reliable service, and extensive customer intimacy - to propel their transformation. By using their existing understanding of ,and established relationships with, customers, CSPs can optimise their current connectivity-based offerings and create value from innovative operating models and service offerings. The majority of CSPs have already started this transformation: a recent global CSP survey found that over 98% of CSPs have already defined their digital transformation strategy. Additionally, 49% expect their strategic goals to be realised within the next two years, and 70% within the next three.
By moving beyond connectivity and becoming digital service providers (DSPs), CSPs open a wealth of new revenue opportunities. Some of the new revenue areas CSPs are targeting include improving customer experience, expanding enterprise services, pursuing new verticals and partnering with over-the-top (OTT) content. CSPs have high expectations for their digital transformation, expecting that these new services will generate an additional 25% of revenues by 2020. The most anticipated new services enabled by this transformation target the delivery of managed IT services and infrastructure.
To reach the DSP nirvana, CSPs have identified a number of network requirements that need to be met in order to fulfil their strategic DSP vision. 51% of CSPs surveyed said they needed to transform their network infrastructure to enable their DSP transformation. And according to the Open Networking Foundation, 64% of CMOs and CTOs/CIOs are working to incorporate cloud-based technology into their OSS/BSS systems in 2016. To meet many of the requirements driven by the need to offer rich, context-aware digital services, many CSPs are looking to the new Telco Cloud operating model and network architecture.
Telco Cloud, in a nutshell, is all about transforming the CSP infrastructure to be highly programmable and its operations to be highly automated - resulting in the ability to offer highly personalised services to the end consumer and enterprises. Another key enabler is to have a partner to guide you on this journey with experience in IT/cloud and its adaptation for Telco environments. 49% of CSPs surveyed preferred to partner with IT players, network equipment providers, and OTT players for their transformation.
A clear path
It is clear the market is in a stage of rapid transition as companies move towards greater digital service delivery in order to add additional revenue, avoid marginalisation, maintain customers and create a truly competitive position. Companies that are slow to embrace change now are likely to find themselves struggling to catch up as the pace of change will intensify. Digital transformation is not easy; however, the expected rewards in significant additional revenues and reduced time to market for innovative services are considerable and powerful motivators.