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Understanding and overcoming barriers in the evolution from telco to techco

(Image credit: / Who Is Danny)

The consumer business of any telco is currently under immense pressure. Since we moved to full ‘all you can eat’ data plans, margins have been consistently eroding, the cost of spectrum is rising and the balance sheets just can’t handle it. In response, we have seen an increasing number of telcos attempting to diversify their offer through emerging technologies – initially from a consumer perspective, but latterly the focus has turned to the enterprise sector, as this is where the greatest margins lie.

Indeed, as technologies such as IoT, 5G and edge computing were emerging, telcos’ immediate focus was to adapt them for consumer purposes – showcasing interesting new ways for customers to interact with their homes or the environments around them. However, the real promise is in intelligent industries and the contribution they can make to really revolutionizing the way that work is done. From crop awareness, food supply chain viability, and automation and augmented reality extending the specialized expertise to all workers – we can truly connect the world in real-time, so things like human safety have the potential to no longer be an issue when dealing with autonomous vehicles or robots, we can deliver on the well-being of our planet and regenerative prosperity can become a reality. 

Telcos urgently need to take advantage of this opportunity and spread their play across the entire value chain, in every industry, and not just provide the utility/connectivity layer. In short, they need to start looking more like industry-verticalized technology companies. But that is easier said than done – so here, if I may humbly posit, are a few considerations telcos could keep in mind if they want to ensure they are part of creating ‘best in class’ enterprise services at an optimum margin.

Understanding your internal capabilities (and handicaps) 

In order to make the shift to acting like a tech-co, a profound transformation, the first step a telco should take is to map out what expertise and capabilities they have in-house now and what could feasibly be created in the future from their baseline, within the constraints of what will be a cultural transformation. Honesty and humility are key to this exercise, along with a hefty dose of pragmatism about the time culture change takes. It is challenging to be really honest about what you are good at and what is simply an ambition.

Many have attempted to follow the traditional model of doing everything in-house, creating new areas and stretching existing ones, with limited success. The long-held belief is that if you own and operate a network that has historically been sold and serviced to your customers, then why not also do that in this era? However, this is truly a new world, a frontier yet to be cracked. But the race is real, and fast accelerating with many many new entrants vying for their place, in a model that in some instances may not require a telco to succeed. For telcos to truly succeed and claim more space than the utility providing the connectivity, it is important to relinquish control and recognise that the answer to everything is in eco-systems and not going it alone.

Telcos are incredibly good engineers, connectivity solution architects and developers and these are areas they should champion when building solutions for enterprise companies. Differentiation and therefore end-client choice will be driven from understanding the potential of these new technologies within the industry context, and from an industry process and user perspective. Understanding the nuance of different industries and their unique friction points to enable the clients to achieve a new market position, not just a better one in the old paradigm is the key. Rather than this being a new area to be developed, it is important to understand that the catch-up game in industry expertise it not possible in the current competitive context, and should be the impetus to reach out to partners with industry specialists and a track record of taking industries to new places through multi-lateral transformations.

Augmenting skill sets to sell solutions

Building on the above point, historically telcos are very skilled at seeing the world as SIMs or connection points, but now it is a world of humans and machines, processes and analytics, systems of engagement and records with needs that only fully integrated industry-specific solutions can address. To make that leap into behaving like a technology company, telcos need to move away from being connectivity-focused and start seeing things from an end-user point of view – what issues do their customers’ customers face and what services can they provide to help solve them? Both from a solution and a business model perspective.

This presents a whole new set of opportunities/challenges…for starters, selling solutions and services is completely different to the world of selling connectivity, so telcos would best be served to look to external support to bolster their skills in this area – for now certainly, but potentially this is an area where learning through doing can transfer capabilities to telcos over time. Again, to draw tech-co comparisons, software companies will typically partner with professional services firms to take their offerings to market as they have the knowledge to sell complex solutions across vertical industries, as well as an understanding of how to best integrate advanced new technologies into business processes, data layers and resulting operating model implications.

Building out your ecosystem 

Individual relationships aside, legacy companies, in any industry, are typically not that great at playing within larger ecosystems and partner models – and most telcos are at the beginning of this journey. But to access a wider breadth of enterprises, they will need to develop the capabilities of playing within an ecosystem and identify potential partnerships to help them extend their reach. There is a real push among every operator to find side partners to help them convert their telco capabilities into functioning enterprise solutions. But this needs to go further. 

The long journey, starts with a small step 

There is a worry that in order to exploit this opportunity, for a telco to get all their ducks in a row and really interrogate their internal capabilities and solutions offerings, it could take months or years before they really start making that transition to tech-co. Many big telcos have taken years to sign partnership deals with other technology companies before truly penetrating the market.

We could simply start acting now to get the ball rolling and find some like-minded companies who wish to take that first step beside us, and transform through doing together.

Amanda Gosling, Vice President - Telco, Media, Technology and Services Market Leader, Capgemini UK

Amanda helps to transform Capgemini's clients into what is next for their business. Taking a human-centric approach to systems thinking, Amanda considers the customer, employee and ecosystem to discover areas for innovation and optimisation. Working with leaders to drive new businesses, better businesses and more sustainable businesses, her team work at the heart of design, data, process and enabling tech.