Ahead of Carriers World 2017, Total Telecom caught up with Angus Ward, CEO, Digital Ecosystem Management at BearingPoint. Angus commented that latest research on the World’s top 3,500 listed companies shows that those adapting what they sell and how they sell it to meet the needs of the digital economy have typically doubled their share price since 2010 and accelerated revenue growth. This comes from adopting a platform-based business model – the model of choice for the digital economy as it is now used by the World’s 5 most valuable companies and 50% of top 32 global brands. He gave us exclusive insights into this simple model and how carriers can leverage platform thinking, which BearingPoint calls “Digital Ecosystem Management."
Is technology the only enabler for wholesale carrier revenue growth?
We see technology trends reshaping the wholesale industry and opening up new service areas. Significant future growth is forecast from non-voice products and services enabled by technology (e.g. SDNFV, Cloud, 5G, IoT), and new customer markets supporting an increasing variety of retail communications services.
However, revenue growth opportunities for wholesale carriers are not limited to technology changes. Wholesale carriers can accelerate change through more disruptive approaches – from the rapid introduction of very different new products, bundles, and agile solutions for customers, to leveraging new go-to market strategies and the implementation of new business model ideas. And this is where we are focused. In short, what they sell and how they sell it.
BearingPoint believes that the best performing carriers will be those that compliment efficiency gains in operations with more digitally disruptive platform-based business models to continuously create new revenue growth opportunities (you can read more about this in "Disruptive growth strategies for Telcos", Angus Ward, CEO, Digital Ecosystem Management, BearingPoint, Aug 2017).
For wholesale carriers, leveraging digital business platforms to seamlessly integrate across partner ecosystems is key to business model transformation. Whether new bundles, more complex or more specialist products that are far better at meeting customer needs, the model enables carriers to innovate to grow revenue. At the same time, platforms allow carriers to meet customer demands for far greater flexibility and responsiveness as it automates and digitize processes: fully frictionless and end-to-end for self-serve and sales to fulfillment and monetization across all internal stovepipes and partner organizations. This creates greater consistency and reliability, which always goes down well with customers.
By applying these growth strategies, a carrier can transform from being just a voice and data service provider to being a telecoms and digital solutions provider combining all the elements for success – cloud, network, security, things, IT, data and intelligence.
What is the relevance of a B2B2x platform business model for wholesale carriers?
Wholesale carriers’ current growth strategies are focused on digitizing operating models, processes and sales channels to become more efficient and customer centric. Whilst this approach is essential to compete in the digital economy it does not address commoditization and declining growth of traditional core services. It perpetuates the model where OTT players are the real beneficiaries of communication services.
Carriers can build on the progress they have already made with digital transformation and channel it to develop more disruptive plays. We look at what telecoms can learn and apply from digital natives (frequently the OTT players), who use platform-based business models.
There are different kinds of platform business models, but BearingPoint believes the multi-sided B2B2x business model, with a partner ecosystem and network effect can be used to innovate disruptive new products and services, and is best suited to carriers’ inherent capabilities and assets.
From a transformative operating model perspective, the immediate goals that carriers will achieve with a digital ecosystem platform are: take out cost – reducing costs, removing friction as processes are digitized and silos bridged into a single operational platform; accelerated time to market – introducing new services and bundles far quicker and without the normal limitations on what can be achieved; and removed complexity – consolidating the BSS portfolio, and allowing for managed sunset of legacy systems. This is the springboard then for building the right kind of digital experience using modern APIs and UI.
In addition to addressing these immediate challenges with a B2B2x platform, carriers are freed up from the normal system and technology constraints in finding new ways to create additional value for customers. The B2B2x opportunity lies in the ability for carriers to embed their products and services within ecosystem customers’ own offers (the second ‘B’ in B2B2x) and support them in developing better products for end customers (the ‘x’ in B2B2x). This is a more collaborative model, focused on maximizing value created by the whole ecosystem by leveraging the network, co-innovation and co-investment.
How can wholesale carriers master B2B2x platform dynamics as the engine for revenue growth?
Digitizing operating models, processes and sales channels presents a tremendous opportunity for carriers to become more customer centric and efficient. However, to grasp the real growth opportunity, carriers should look at this initial digitization as the first step towards being able to leverage a more disruptive business model with a differentiating partner ecosystem for co-creation, innovation and investment around a B2B2x platform. This combined with the streamlined BSS landscape allows the carrier to create a seamless digital experience for the customer that is indivisible from the multi-partner product being sold.
We believe that carriers who transform from being voice and data service providers to being a B2B2x digital business platform provider for complex services supporting the requirements of their many customer segments will succeed in an environment of commoditization, changing market demands, and the emergence of new types of customers and digitally savvy competitors.
Adopting this new thinking would require finding a route that balances digital transformation (to deliver immediate efficiency gains and a new digital execution model) whilst moving towards a platform-based business model with propositions fit for the digital economy. Our key advice to carriers is: “Starting anywhere is often a better right answer than not starting at all!"