Tell us a bit more about your research and why you decided to commission it?
2020 marks the real beginning of the 5G era. At the start of the year 33 CSPs across 18 countries had launched commercial 5G services and another 77 CSPs are set to do so this year.
As CSPs look to increase their rate of investment in 5G, they have to get real if they want to see return on investment – swiftly moving from the ‘PR’ phase to introducing effective strategies to drive new revenues. But 5G is different and according to the GSMA, is set to have a bigger impact on businesses than consumers when it comes to monetisation.
However, there are more questions than answers surrounding the 5G B2B opportunity. What are the winning use cases? Which segment represents the biggest opportunity? What’s the role of the CSP in the 5G value chain? Etc. If B2B is the ‘North Star’ for 5G revenues, no one seems to have drawn a map for CSPs of how to get there. That’s why we commissioned this research, we wanted to understand the real attitudes of both CSPs and business customers around the world towards 5G, and the potential role of the CSP in the 5G era. We did this by interviewing 250 technology decision makers from 100 enterprises and 150 SMBs as well as 90 senior executives within CSPs across Europe, Asia and North America.
Your research highlights expectations from both businesses and CSPs when it comes to 5G, can you tell us a bit more about this?
The majority of businesses believe in 5G. Seventy-five per cent of both large enterprises and SMBs across all regions think that 5G will be important to their businesses.
For large enterprises, improving network speed and business availability are important - much early 5G marketing has focused on 5G’s impressive speeds and reliability. But what is being perceived as the biggest opportunity for enterprises around the world is 5G’s ability to enable more advanced solutions combining devices, connectivity and applications.
Interestingly, SMBs a segment that is often overlooked, across all regions see 5G in a positive light too. Again, the value to them of speed and reliability are rated highly (more than for enterprises), and expectations of improved network costs are also higher. Positively, SMBs see 5G as an enabling technology for more advanced solutions.
These insights demonstrate a clear 5G opportunity for CSPs not only in the enterprise market but with SMBs too. Despite this and anticipating that 5G B2B use cases will have a significant impact on current revenues, CSPs remain very conservative when it comes to their views on the opportunities and the offerings that 5G brings to their businesses. Most CSPs still believe the 5G opportunity is for connectivity services. In Europe for instance, CSPs seem to think that 5G opportunities look much like those of 4G.
What about the benefits of 5G – do all parties have the same view?
Higher speed is universally regarded as the greatest benefit among Enterprises and SMBs. Enterprises also see 5G as more of a cost saving than a revenue generating opportunity. 5G will certainly be faster than any previous generation and can clearly play a role in driving efficiencies, however, it is 5G’s potential to open-up entirely new, revenue-generating possibilities that is most exciting. That message is being lost.
New thinking needs to be brought in. This starts with much deeper collaboration between CSPs and enterprise/SMB customers. This helps to ground innovation on deep understanding of the problems that customers want to solve, and the pains/gains alternative solutions offer. As 5G gathers pace, it’s time for CSPs to sit down with their B2B customers to better understand the challenges they face and better explain the possibilities of 5G.
Together, they can identify and come up with relevant solutions that incorporate 5G, and which increase efficiency, create new ways to engage with customers, and generate revenues.
However, our research has found that CSPs are not currently seen as obvious partners for enterprises and SMBs to build their 5G use cases.
In Asia, network equipment providers like Huawei are viewed as more important partners than CSPs. In Europe, meanwhile, CSPs are in joint fourth place behind device manufacturers, software and technology companies as suitable partners for developing 5G use cases.
Why are CSPs not at the top of the list?
CSPs want to sell 5G, and business customers clearly want to buy it. The problem is that CSPs at the moment only want to sell a combination of connectivity and hardware products. Businesses, however, want more sophisticated, complete solutions that better fit their needs, provide specific functions, and which they can use in a bite-sized way, with no upfront investment or risk.
5G for business customers is not about buying a network slice or mobile edge product. Instead, it’s about finding solutions that are made up of the best available technologies, and which can be used to quickly drive efficiencies or grow revenue.
Even the largest enterprises don’t have all the technology knowledge or capabilities they need to deal fully with the integration of new standalone technologies. Therefore, they look to partners that understand their challenges and can orchestrate the right ecosystem of technologies and players to deliver solutions that perfectly solve their problems.
Historically, CSPs have tended not to work in this way. As a result, businesses rank CSPs lower than technology consultants or network equipment providers when it comes to potential partners with which to develop 5G use cases.
So, what should they do about it?
If CSPs want to grasp the significant opportunity presented by enterprises and SMBs wanting 5G-powered services, they must take steps now to collaborate with a broad and varied ecosystem of partners. Only in this way can they design, develop and launch the 5G use cases and solutions that business customers want and need.
According to BearingPoint//Beyond’s own research, businesses expect to need an average of nine partners to support their 5G use cases. More than 60 per cent believe that 5G use cases will involve between four and 12 partners. In contrast, CSPs think they will need an average of just four partners to support the 5G use cases which they have in mind.
This significant difference shows that CSPs are still thinking too small when it comes to 5G. Their focus is still largely individual partnerships and not broad ecosystems in which tens or even hundreds of third-party providers can participate.
If built correctly, partner ecosystems will help CSPs become more agile, innovative and able to properly meet all the technology needs of businesses across a range of different industries and verticals. An ecosystem-led approach enables CSPs to solve genuine problems for customers and also open up fresh opportunities with co-created solutions supported by ground-breaking business models and attractive revenue share arrangements. If CSPs want to meet the expectations and demands of businesses, they have to become masters of this partner ecosystem orchestration.
Let’s be clear: 5G is not yet a mature technology and won’t fully arrive at scale until 2025. But this doesn’t mean that CSPs can rest on their laurels. Large enterprises and SMBs are already choosing their partners to help them carry out their long-term digital transformation plans, in which 5G will play a critical role. However, at the moment, CSPs are not in their thinking as prospective partners.
CSPs must be willing to change their attitudes and also their internal processes, they should learn to experiment more and to take more risks so as to properly collaborate with both business customers and third-party partners. And they must do so quickly. Because if CSPs don’t, they’ll miss out on fresh revenues and greater market share in the same way that they did so with 4G and 3G.
Angus Ward, CEO, BearingPoint//Beyond