Enhancingthe business valueof broadbandRecent views from Chief Information OfficersResults from the 2012 CIONET & INSEAD eLab survey ofEuropean CIOs on the business value of broadbandWhat’s next.
BackgroundThis report was developed in responseto EU Commission Vice-President NeelieKroes’ request to better understand theviews of Chief Information Officers fromorganizations that invest in broadbandservices.Chief Information Officers (CIOs) areespecially savvy about both what it takes toprovision ICT infrastructure services, suchas broadband, and what it takes to contractand foster a mutually-beneficial relationshipbetween a client and service provider.However their experiences and insights areoften lacking in policy discussions regardinghow to enhance the business value ofbroadband.EU Commissioner Neelie Kroes is responsiblefor the Digital Agenda in Europe. Following-up on the successful collaboration betweenCIONET, INSEAD eLab and her team onthe 2011 European CIO of the Year awardsand 2011 IT-Enabled Leadership Report,Commissioner Kroes requested CIONET andINSEAD eLab to survey CIONET members onthe business value of broadband. The surveywas conducted online over a period of 3weeks, from 16 January until 8 February.What follows are the key insights from theresults.AcknowledgementsThis report and the research it is based onwould not have been possible without thegenerous support of many people. Thecollaborative development of this reportwas led by Nils Olaya Fonstad, AssociateDirector of INSEAD eLab. The author greatlyacknowledges the CIOs who took the timeto complete the survey. Special thanks tocolleagues Bruno Lanvin, Lazaros Goutas,and Virginie Bongeot-Minet from INSEADeLab; EU Commission Vice-President NeelieKroes, Constantijn van Oranje-Nassau, LucillaSioli, Jack Schickler, and Gianluca Papafrom Digital Agenda for Europe, InformationSociety and Media Directorate-General; andHendrik Deckers, Frits Bussemaker, and MiekePauwels from CIONET.The contents of this publication do notnecessarily reflect the position or opinion ofthe European Commission.Table of Contents_Background...................................................................................... 2Table of Contents............................................................................ 2Acknowledgements........................................................................ 2Introduction by EU Commission Vice-PresidentNeelie Kroes..................................................................................... 3Profile of survey participants........................................................ 4Increases in broadband speeds.................................................... 5Benefits on the business of increasesin broadband connection speed.................................................. 6Key drivers of future demand....................................................... 7A challenge for CIOs: Managing across locationswith different connection speeds................................................ 8Key actions that CIOs believe the European Commissioncould promote to remove barriers to adoption....................... 10Overview........................................................................................... 122
Introduction byEU CommissionVice-PresidentNeelie KroesMy goal is to get every European digital and make Europe the connected, competitive con-tinent. But to do that, it is important to hear from those who use broadband to boost theirbusinesses.So, a few months ago, I asked INSEAD and CIONET to survey the members of CIONET onthe business value of broadband. And I am delighted that CIOs have responded so positivelyto my call, and have presented me with this important study.All in all, this study shows that broadband delivers for businesses - whether it is by helpingstaff work collaboratively, or by giving access to important new resources like the cloud.And the message from those participating CIOs is clear: to get the benefits of broadband,the EU needs competitive markets and wide availability.CIOs provided four new important sets of insights with regard to enhancing the businessvalue of broadband:1. The impacts of having greater broadband connection speeds (rather than from simplyhaving access to broadband or not);2. The key drivers of future demand for greater broadband connection speeds;3. The challenge faced by many CIOs of managing across locations with different connec-tion speeds; and4. Barriers to adoption that CIOs believe the European Commission could help remove.The issues in this report are things I take very seriously. Indeed in many areas we are al-ready working hard: after all, getting broadband coverage for all is a key target of the EU’sdigital agenda. That’s why I continue to champion the importance of open and competitivemarkets to stimulate innovation, initiative and investment. That’s why with the ConnectingEurope Facility, we have proposed over 7 billion euros of EU broadband funding – mainlythrough innovative financing – to decrease perceived risk, “crowd in” private sector financeand deploy broadband across Europe. That’s why we are taking forward measures to cutthe cost of high-speed broadband infrastructure. And what’s more, so that we can all enjoythe opportunities afforded by high-speed broadband, we are preparing a cloud computingstrategy to identify and overcome barriers to take-up.Studies like this one are a new platform for interaction between my team, academia and keyleaders from the business sector, specifically Chief Information Officers from non-ICT sectorfirms. I look forward to meeting contributors at the forthcoming CIO CITY conference. Andhope that overall this can be the beginning of a regular dialogue, with continuing construc-tive input on how the European Commission can best enable their organisations to operateand innovate competitively.Neelie Kroes3
4Profile of surveyparticipantsOver 110 CIOs took thetime to share their viewson broadband toCommissioner Kroes.Most participating CIOs (88%) repre-sent large firms (i.e., firms with 250 ormore employees). About a quarter ofparticipating CIOs represented firmswith 250 – 1,000 employees; anotherquarter representing firms with 1,000-5,000 employees; and another quarterbetween 5,000 and 50,000 employees.Participating CIOs representa variety of sectors,particularly Manufacturing (26%) and Financial services (16%).Participating CIOs representseveral European countries,particularly Belgium, France, Italy, Spain,the Netherlands, and the United Kingdom.Less than 250 employees250 - 999 employees1.000 - 4.999 employees5.000 - 9.999 employees10.000 - 49.999 employees50.000 or more employees12%26%28%14%12%9%26%16%9%9%7%6%5%5%5%5%5%2%ManufacturingFinancial and insurance activitiesInformation and communicationProfessional, scientific and technical activitiesWholesale and retail tradePublic sectorAccommodation and food service activitiesConstruction; Real estate activitiesUtilities (e.g., electricity, gas and steam, water)Transportation and storageOtherAdministrative and support activities14%10%12%17%13%14%5%15%BelgiumFranceItalyNetherlandsSpainUnited KingdomOtherUnknownSource: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband.Source: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband. Source: 2012 CIONET and INSEAD eLab survey of CIOson business value of broadband.
5Increases inbroadband speedsOver the past 3 years, over two-thirds ofparticipating firms experienced increasesin broadband connection speed.__ Over the past 3 years, at their fastest location:·· 26% of survey participants (N=29) experienced an increase in broadbandspeed by a factor of less than 3;·· One third of survey participants (33%, N=36) experienced an increase inbroadband speed by a factor of 3 to 10; and·· 15% of survey participants (N=17) experienced an increase in broadbandspeed by a factor of 3 to 10.__ Over the past 3 years, at their slowest location:·· 25% of survey participants (N=28) experienced an increase in broadbandspeed by a factor of less than 3;·· 23% of survey participants (N=25) experienced an increase in broadbandspeed by a factor of 3 to 10; and·· 7% of survey participants (N=8) experienced an increase in broadbandspeed by a factor of 3 to 10.__ Over the past 3 years, one quarter (N=28) of survey participants did not experi-ence any substantial improvement in broadband connection speed at theirfastest (or only) location. For organizations with multiple locations, just over athird (36%, N=40) did not experience any substantial improvement in broadbandconnection speed at their slowest location.Amongst those firmsthat experienced anincrease in broadbandspeed, about a third(30%) experienced nochange in overall costsfor broadband; abouttwo-fifths (44 %) expe-rienced an increase inoverall costs of less than25 percent; and about afifth (18%) experiencedan overall increase of 25percent or more.Estimated change in overall cost forbroadband, as a percentage of the pre-vious price, for firms that experiencedan increase in broadband connec-tion speed, over the past 3 years (in %)(N=82)Table: Number of firms with a specific speed at location with fastest connectionand experienced change in speed at that location (N=110)Source: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband.Source: 2012 CIONET and INSEAD eLab survey of CIOson business value of broadband.Change over past3 years at fastestlocationSpeed at fastest location (Mbit/s) Total> 100 30 - 100 10 - 30 2 - 10 < 2None 15 5 4 4 0 28By a factor < 3 15 4 6 3 1 29By a factor 3 - 10 17 12 3 4 0 36By a factor > 10 9 3 3 2 0 17Total 56 24 16 13 1 110x>10050≤x≤10025≤x≤500≤x≤25x=0x<01%7%10%44%30%7%
6It has stimulated the useof software as a service orcloud computing activitiesBenefits on the business ofincreases in broadbandconnection speedSurvey participants that experiencedan increase in broadband connectionspeed were asked to consider the ex-tent to which their organization experi-enced a variety of impacts.The greatest reported impacts ofexperiencing faster broadband con-nection speed were related to mixtureof internal operational benefits – i.e.,benefits with regards to how things getdone internally – and external engage-ment benefits – i.e., benefits relatedto an enhanced capacity to engagewith external stakeholder groups, suchas external service providers, externalcustomers and external partners.The most significant reported impactwas that increased broadband connec-tion speed strengthened collaborativeapproaches within the enterprise. Thenext two most significant reported ben-efits of increased broadband connec-tion speed were that it stimulated theuse of software as a service or cloudcomputing activities and it mitigatedrisks of continuity/disaster.The following percentage of CIOs of organizations that experienced an in-crease in their broadband connection speed reported the following greaterimpacts from their investments (N=82, representing 75% of participants).Benefits to Internal Operationsof increases in broadband connection speedBenefits to Engagingwith External Stakeholdersof increases in broadband connection speed% of organizations that reported this benefitas one of the top two greatest impacts ofincreased broadband speed% of organizations that reported this benefitas one of the top two greatest impacts ofincreased broadband speedIt has strengthenedcollaborative approacheswithin the enterpriseIt has mitigated risks ofcontinuity/disasterIt has facilitatedengagements withexternal customersIt has facilitated theinternal reorganisationof workIt has facilitated exchangeswith external partners,including the PA49%35%41% 32%19% 23%Source: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband.
7Key driversof future demandCIOs report that the main driver for future demand for greater broadbandspeeds will be using software as a service or cloud computing activities.When asked what are the top three drivers for higher speed broadband, partici-pating CIOs reported the following.Table: Percentage of CIOs that selected the following as one of the top threedrivers of future demand for greater broadband speeds (N=104)The vast majority of par-ticipating CIOs anticipatetheir organizations willdemand higher speedbroadband services.Drivers related toenhancing internaloperations domi-nated the three keyfuture drivers forfaster broadbandconnections.93%Using software as a service or cloudcomputing activities62%Making internal business processesmore efficient and effective55%51%Strengthening collaborativeapproaches within the enterprise45%Facilitating exchangeswith external partners45%Enhancing engagementswith external customers31% New revenue generating products or servicesSource: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband.
8A challenge for CIOs:Managing across locationswith different connection speeds.Percentage of firms with locations with the same andwith different connection speeds (N=111; all values in %).Source: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband.Survey data revealthat a significantnumber of firmsmust contendwith locations withdifferent broadbandconnection speeds.Speed of location with SLOWEST connectionOnly onelocation≤ 2 Mbit/s 2 - 10Mbit/s10 - 30Mbit/s30 - 100Mbit/s≥ 100 Mbit/s42 32 9 5 5 8SpeedoflocationwithFASTESTconnection≥ 100 Mbit/s 51 21 15 5 2 5 430 - 100 Mbit/s 22 6 8 3 3 0 210 - 30 Mbit/s 14 7 5 1 0 0 12 - 10 Mbit/s 12 7 3 0 0 0 2≤ 2 Mbit/s 1 1 0 0 0 0 0
9ManagingLevels of DifferenceThe variable “Level of Difference” wascreated to represent the magnitudeof difference in broadband connec-tion speeds between the location withfastest connection and the locationwith slowest connection. A firm with aLevel of Difference of 1 is a firm wherethe location with the fastest broadbandMost CIOs report managing across locationswith different broadband connection speedsLevel of Differenceand Size of FirmThe size of a firm (in terms of number of employees) influences the extent to whichthe firm has locations with different broadband speeds: larger firms are more likelyto have more locations and having a greater number of locations increases thechances that there are differences in broadband speed across those locations.Having a high Levels of Difference complicates a firm’s efforts to access cloud-based services - a top driver of future demand.As a result, the survey data indicate that larger firms are less likely to take advantageof benefits from increases in broadband speed, particularly internal operationalbenefits.connection has a connection speedof say, either “at least 2 Mbit/s but lessthan 10 Mbit/s” or “at least 30 Mbit/sbut less than 100 Mbit/s,” and at thelocation with the slowest connection,a speed of one less on our scale (i.e.,either “less than 2 Mbit/s” or “at least 10Mbit/s but less than 30 Mbit/s”).Source: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband.About a quarterof CIOs reportedhaving to manage aLevel of Differenceof 4 – i.e., themaximum Level ofDifference23% Difference of 424% Difference of 322% Difference of 219% Difference of 113% No difference
10Key actions that CIOs believe theEuropean Commission could promoteto remove barriers to adoptionCIOs were asked: “What barriers are in the way of your firmadopting higher-speed broadband which you believe theEuropean Commission could help remove?”Overall, their responses included recommendations for action related tofour key areas of action.The following represent percentage of respondents who advocated thefollowing sets of actions to remove barriers to adoption.(Please note: some CIOs advocated more than one set of actions).Promote competition to reduce prices;reduce tariffs and excessive charges forservices such as data roaming53Increase availability and service quality of higher-speed broadband - especially in last mile and rural -also, reduce lead time to implement46Enable single face to customer by standardizingcontracts and enhancing interoperability24Standardize data legislation and regulate frequency bandfor M2M infrastructures7Source: 2012 CIONET and INSEAD eLab survey of CIOs on business value of broadband.
11Representative quotesfrom survey participants.“ Promoting more competition todecrease the cost into telco markets.“ Most suppliers are focussing onbandwidth which will ultimately meanmore revenue for them and contentproviders rather than on quality, resil-ience and latency of services. Speedisn’t everything!! License applicationsshould impose basic quality metricsto be adhered to.“ Increase the availability of the high-speed broadband and reduce thelead time necessary to implement it.“ Although there are a few players inthe telco market, there is still a feel-ing this market is monopolised by alimited number of suppliers.“ More competition between opera-tors.“ Improve legislation. What is theapplicable law when transferring datafrom A to B, through different coun-tries?“ Barriers for us only relate to proper-ties we have which are remote andlocal exchanges do not have capabil-ity.“ We benefit from competitionamong two carriers, obtaining bestservices with same budget. Please,keep the market open.“ Facilitate delivery of high-speedbroadband for a reasonable priceespecially in the Central Europeancountries.“ The choice for the local tail isreduced. We have just two majorproviders in our market. In reality fora lot of industrial parks (zones) thereis just a single choice, as the installa-tion costs for all other providers aretoo high.“ In some areas, wired broadband isnot available, neither 3G. We use sat-ellite radio transmission and recentlyswitched to terrestrial radio transmis-sion. This slows down our attemptsof centralization of IT services.“ 1. Stimulate the development ofglass fibre networks in Europe.2. Remove monopolies for the cablemarket.“ Monitor and promote competitionand interoperability.“ Availability of high speed services(cost effective ones!) and increasedcompetition for high speed localloops.“ One of main issue of hi speedbroadband is related to mobile con-nection. In each country we canfind good price for connection , butroaming is very expensive. I thinkthat, almost in EU, roaming prizeshould be reduced.“ Remove excessive charges for mo-bile data charges Support broadbandpenetration in rural areas.“ Ensuring that it is available im-mediately and there is little or no lagbetween it availability in the countryand availability to the organisation.“ It is impossible to make contractswith [a service provider] in 1 countryfor services in multiple countries. Weare operating in several countries andwe need to make separate contractsin every country. I wish I could makefor example 1 contract with [theservice provider] for the 6 countrieswe do business with [the service pro-vider] for datalines and or for mobiletelephony. Local rules do not allowfor that. Local telecom laws aredifferent in all countries. There is nolevel playing field and no real com-petition in telecom in all countries.Interconnect fees are too expensive.Telecom is still a national thing. Thismakes it difficult for us to implementinnovative solutions with ICT for ourretail chain.“ Remove barriers on EU wide (betterwould be global) networks due to thelegacy on country specific provid-ers and control boards. Deliveringprofessional business lines (as MPLS)take 3 to 6 months whilst private ac-cess can be arranged within a week,sometimes even same day.“ Eliminate local “last mile” monopo-lies.“ We are in 22 countries, includingoutside EU. In EU differences in priceand max bandwidth can be huge,abroad it sometimes is even a biggerissue.
OverviewEnhancingthe businessvalue ofbroadbandRecent views from ChiefInformation OfficersResults from the 2012 CIONET &INSEAD eLab survey of European CIOson the business value of broadbandFollowing-up on the successful collab-oration between CIONET, INSEAD eLaband her team on the 2011 EuropeanCIO of the Year awards and 2011 IT-En-abled Leadership Report, CommissionerKroes requested CIONET and INSEADeLab to survey CIONET members onthe business value of broadband. Asurvey was conducted online during thestart of 2012. This report consists of keyinsights from the results.The CIOs that participated in this surveyprovide four important sets of insightswith regards to enhancing the businessvalue of broadband:1. The impacts of having greaterbroadband connection speeds;2. The key drivers of future demandfor greater broadband connectionspeeds;3. The challenge faced by many CIOsof managing across locations withdifferent connection speeds; and4. Barriers to adoption that CIOsbelieve the European Commissioncould help remove.The driving objective of those who par-ticipated in this effort is to strengthenengagement between the EuropeanCommission, Chief Information Officersand academia. Your participation andcomments are welcomed to sustain thisdialogue.About CIONETCIONET is the biggest community of ITexecutives in Europe. Bringing togetherover 3500 CIOs, CTO’s and IT directors from wide rangingsectors, cultures, academic backgrounds and generations,CIONET’s membership represents an impressive body ofexpertise in IT management. CIONET’s mission is to feed anddevelop that expertise by providing top-level IT executiveswith the resources they need to realise their full potential.CIONET develops, manages and moderates an integrated arrayof tools and services from the online CIONET platform – theworld’s first social network for CIOs – to a range of offlinenetworking events, conferences, workshops and executiveAbout INSEAD eLabAs one of the world’s leading and largestgraduate business schools, INSEAD bringstogether people, cultures and ideas from around the world tochange lives and transform organisations.INSEAD eLab is INSEAD’s center of excellence in the globalknowledge economy. A key objective of INSEAD eLab is tostrengthen links across academia, business leaders and policymakers by:education programmes all tailored to top-level manage-ment. CIONET also provides exclusive access to the latestresearch through regular online and offline publications anda number of value adding partnerships with key players fromthe academic and corporate worlds.Faced with the rapidly changing role of today’s IT execu-tive, CIONET not only helps its members keep up with thepace of change but empowers them to take an active rolein shaping the future of their field, always challenging themwith “What’s next.”1. Drawing on a variety of global resources to developresearch insights that are academically rigorous andrelevant to private and public sector leaders; and2. Providing leaders with regular opportunities to learnfrom each other and collaborate more effectively.Information on INSEAD eLab including research reports, canbe found at: www.insead.edu/elabWhat’s next.