Angus Ward, partner and CEO of BearingPoint//Beyond, Digital Platform solutions, shares his thoughts about the recent partnership with NTT Group and the future of the telecoms industry
What sort of trends are you noticing in the industry as operators around the world launch their initial 5G offerings?
In the last 12 months, we’ve seen a lot of hype around the launch of 5G services in major cities. However, Tier One operators are all too aware that 5G will generate relatively little incremental revenue when it comes to traditional connectivity services. 5G’s real value lies in its use in combination with other technologies, like IoT, AI, analytics, cloud, and virtualisation.
We’re seeing a bifurcation of operators and markets. Some are moving swiftly to revamp their organisations and build the structures, processes, and partnerships to co-create new over-the-top digital services and business models that will fully monetise 5G. They’re striking partnerships with big tech firms such as AWS and creating digital marketplaces that serve industry verticals and horizontal markets alike.
At the same time, many operators are still in denial, sticking with 4G business models. They are moving too slowly and failing to bring in the necessary talent, solutions, and partnerships to create the attractive propositions that customers now want to buy. As these operators struggle to grow revenue, financing 5G will become a major problem.
Meanwhile, many enterprise customers aren’t waiting around for operators to act. Instead, they’re taking it upon themselves to build their own digital solutions and ecosystems, to solve their own pressing technology needs or to generate new revenue streams with products and services that embed those new technologies. There is fierce competition for the developer talent needed to do so.
Unless operators get their act together and move quickly, they’ll miss out on the opportunity presented by digitalisation. In 2020, operators that focus on working with partners to co-create services and solutions for enterprise customers using fully frictionless digital marketplaces will be best placed to succeed.
In contrast, those who prioritise very traditional direct-to-consumer services (including second brands and MVNOs) as their core strategy will likely struggle to achieve meaningful returns over the medium term.
Tell us more about your recent project with NTT in Japan.
NTT Group is using BearingPoint//Beyond’s Infonova Digital Business platform to modernise, consolidate, and simplify its BBS to accelerate digital transformation of its own operations: and also meet the increasing demand from its many customers for new digital products and services to help them on their own digital transformation journey.
Our work with NTT Group isn’t a project, it’s a long-term collaborative journey that goes beyond conventional IT transformation. For NTT Group, it’s an opportunity to become more operationally agile and efficient: to create new value and revenue while increasing its presence in the global market.
One of the main pillars of NTT Group’s wider strategy is to promote its B2B2X model.
Rather than provide digital services directly to enterprises, NTT Group will instead use our platform to make available different tools and technologies – such as AI, analytics, IoT, 5G connectivity, and more – backed by an ecosystem of third-party partners and service providers. Working with partners, NTT can also co-create new value-added solutions and services for their customers.
What challenges did this present?
NTT is the world’s fifth biggest telecom operator and is embarking on a significant journey to transform its entire business.
This isn’t just a one-off process to drive cost efficiencies or swap one BSS out for another. It’s about completely overhauling its operations and processes, broadening the range of features and services that it can offer to business customers, and, of course, driving new revenue.
What NTT is undertaking is very different from previous BSS-related projects. Digital transformation is about much more than just technology.
It’s an ongoing, continual process that throws up a range of different challenges – everything from customer centricity; new business and operating models; learning how to be more agile, open and experimental; working with new partners to come up with new products and services that will excite customers; and extending into new markets and verticals to offer genuine solutions to customer problems.
Learning how to do something in a completely new way can be very daunting for any operator, which in turn slows progress down. It’s our responsibility as NTT’s partner to help them explore and successfully navigate the new digital services environment.
What lessons can be learnt from your work with NTT?
The key lesson is that the accepted thinking around IT transformation for operators is well and truly dead. Selling the same products in the same way but with newer IT may unlock efficiency gains, but it’s not a path to growth.
Previous operator approaches to transformation are no longer fit for purpose. Once upon a time, for a new technology like 5G, operators could get away with thinking: “Let’s not worry about it. We only need to migrate our existing 3G and 4G products onto the new platform, then, in two or three years’ time, we’ll launch our new 5G services.”
But the notion that an operator can effectively do nothing for two or three years while it replaces its BSS is impractical and potentially hugely damaging. Operators can’t afford to stand still anymore – not in today’s fast moving and constantly evolving digital marketplace.
The onus now is on operators to fix their technical problems, upgrade their existing systems, reduce their costs, grow revenue, and modernise and expand their business models to put a continuous stream of truly exciting new propositions (co-created with market leading capabilities from partners) in front of customers – all at the same time, in parallel.
A platform-based approach allows them all at once to move into new sectors, forge new opportunities, and come up with new propositions with new partners and customers that generate extra revenue.
What predictions do you have for the industry over the next 12–18 months, particularly with regards to the scaling up of 5G?
For the telecoms industry, 2019 was all about winning the race to 5G. It was about being seen to be the first in your market to achieve a 5G milestone, whether it was a service launch or a breakthrough in network performance.
This year, however, the hard work begins. 2020 will be a reality check for operators and their 5G aspirations, including how to properly monetise 5G, identifying genuine market opportunities, and putting in place effective and sustainable business models.
Bear in mind that as operators consolidate fixed and mobile networks and private LTE solutions expand rapidly, 5G becomes about a lot more than just mobile connectivity.
All of this will take place as operators’ traditional revenues continue to be squeezed by OTTs and other providers in both the consumer and enterprise spaces.
Of course, it’s going to take longer than just 12 months for operators to put in place all the partnerships and processes to make money from 5G. To reposition themselves, partner with OTTs, and together develop new compelling products and services that solve genuine customer problems, and which customers are willing to pay for, is a multi-year endeavour.
Importantly, operators need to pursue partnerships with OTTs now. If not, the OTTs will be quite happy to go it alone.
Bearing Point/Beyond are a sponsor of the Total Telecom Congress