The Enterprise Market in 2025 - Digital Futures 2025

The Enterprise Market
in 2025
Evan Kirchheimer
Practice Leader
Enterprise Services
Ovum

1. At stake: a huge amount of wallet
share
Comms/
network
Applications IT Mgt Infrastructure
Source: Ovum ICT Enterprise Insights, Global– External ICT spend, 2015.
Numbers may not add up to 100% due to rounding.
Implication: Almost 80% of enterprise ICT spend is not on
communications or networks. But does more network-based
ICT offer an opportunity?
22% 24% 25% 28%
IT Budget Allocation:2015 to 2016
Digital Futures: The World in 2025
© Ovum 2015, Informa Telecoms & Media Ltd

2. Cloud and mobility will continue to impact
all enterprise services
ICT services
Fixed voice PSTN
Mobile voice and data Public cellular network
Managed network services Access, leased line, VPN
Compute Hosting, data center, compute,
storage
Unified communications Managed telephony, IM, conferencing,
video, collaboration and contact
centers
Applications App development, managed OS,
desktop, productivity and business
apps
Managed security Network, perimeter, device,
application, threat detection, DDoS
prevention
Cloud
• IaaS
• PaaS
• SaaS
Managed
Mobility &
Workspace
• Contract
• Devices
• Campus
wireless
• Apps
• Desktop
Professional services

3. Picking battles in ICT will be essential
BusinessProcessImplications
Threat from non-telco IT providers
Fixed
voice/data
Mobile voice
and data
Applications
Managednetwork
services UC
Managed
mobility/
workspace
Compute
Managed
security
Telco legacy- commoditized
Telco advantage - commoditizing
IT advantage - increasingnetwork dependence

Strategic
 Mgd Network, compute,
mgd mobility/ workspace,
UC, apps, security
Legacy
 Fixed voice
 Mobile voice/data
4a. Have hope! Telcos are succeeding at
substituting legacy services
• Telco strategic managed
services will overtake legacy
enterprise services revenues
(including fixed voice and
mobile voice & data) by 2019
$m
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2013 2014 2015 2016 2017 2018 2019 2020
Legacy services Strategic services
Implication: An opportunity for telcos to differentiate across a
new range of applications services. Telcos need to manage
the increasing complexity of their services portfolios
Source: Ovum, Telco-managed ICT services forecast 2014-20

4b. Telcos are also taking a greater share of
global ICT Services revenues
• Telco revenues in like-for-like
enterprise managed services are
less than 13.7% of the global IT
services market
• But by 2020 telco strategic
services will account for nearly
18% of global IT services
• Dependencies:
– Cloud/IaaS/SaaS
– Professional services
expertise
– Sales force transformation

4c: Apps, mobile, cloud: you’ve been warned
6%
6%
6%
7%
5%
7%
7%
10%
16%
17%
17%
18%
22%
21%
24%
23%
23%
23%
24%
27%
26%
27%
27%
25%
Fixed voice services
UC, collaborationtools and call centers
Traditional hosting and data centre services
Mobile voiceservices
Fixed data services
Business applications
Mobile dataservices
Cloud computing services
European enterprises: 2015 budget growth areas
Increase over 10% Increase 5-10% Increase 0-5%
Implication: Six out of 10 European enterprises will increase
compute spend, and a third will grow their budget by 10% or
more – but this growth will be concentrated in some domains

5. Regional growth continues to point to AP,
ME and Africa
8.9%
12.2%
11.7%
9.4%
11.3%11.2%
9.6%
CAGR 2013 – 2020: Telco-Managed Global Strategic ICT Services

6. Telco deals: more complex, more
expensive
• Telcos are making their
money in the $20m-$500m
range
• >50% of that opportunity is
below $100m
• Enterprises are becoming
more comfortable with a
supplier mix, especially
regionally
• Emerging MNCs from new
regions fuelling this shift
Implication: Regional expertise, service
specialisation and partnering become more and
more critical
Top 1,000 deals(2010/2014)
Numberofdeals
0
200
400
600
800
1000
2010 2014
500 +
20 - 499
1 to 19
TCV/deal
($m)
$5.9b $7.4b
$10.8b $23.1b
$2.5b $3.2b

7. Telcos will continue to struggle with the
ICT business model
• Telcos have nearly
DOUBLED
their global contracts
pipelines in the space of 5
years
• However, growing
profitability
has been a lot harder for
many
Implication: Commercial and financial
innovation, for example in licensing
and finance, are as important as
technology solutions

8. Finance departments make the deal
Who influences your choice of strategic telecoms andtechnology
suppliers andhow is it changing? “Increasing influence”
Implication: The customer has changed. There are more ICT
decision influencers and they are more conservative in their views
about telco capabilities. Telcos must continue to invest in sales
team transformation with cross-business knowledge
Source: Ovum Enterprise Insights

9a. It’s well past the time to focus just on the high-
end

8.1% 8.1%
11.9%
38.5%
33.3%
9b: Telco leadership agrees on the SME
opportunity
SoHo / SME /
SMB
Enterprise Government WholesaleConsumer
Telcos: Which customer segment offers the best growth potential?
N=135 operators
Source: Ovum 2014 Telecoms Cloud Global Insights Survey
Implication: The question is how to tap it. Cloud services and
virtualization technologies are enabling outreach to a wider set of
enterprises across verticals and size groups
Only 0.45%
of UK
businesses
have more
than 250
employees
c.53% of
employees
work for
firms with
<250
employees

9c. The challenge: how to address this
diversity
SMEs employ all kinds of people – including a significant number
of semi-skilled workers. What’s needed are value propositions
that are relevant to a major percentage of the total SME (and
SoHo) universe on a national basis.
Professional, scientific
and technical services
Wholesale & retail* Food and accommodation
Construction Manufacturing
*inc. motorcyclerepair

10a. Telcos must foster and not just support
heterogeneous device landscapes
Source: Ovum Employee Mobility Survey 2015
38.6% of employees who use their own smartphone for
work (and also have a corporate-providedphone) do it
because they prefer it to the one provided by their employer
43.4% of those who use their own tablet for work do so
because of a range of applicationsthat let them do their jobs
better
43% of those who use their own laptopfor work do so because
it can be more convenientin certain situations,such as when
travellingor at home
50% of those who use their own wearable for work do so because
it lets them keep up to date with work issues all day long

10b. Not just the device - employment will
also be ‘fragmented’
“23.9% of Australianworkers are casual
employees” - Australian Bureau of Statistics
(ABS)
The emergence of new digitalplatforms will
add 2.5 per cent to Europeanemployment
numbers by 2025, with some countries like
Spain potentiallyseeing twice that growth – FT
August 2015
“Ukraine’sarmy of freelancers, the fourth-
largest in Upwork’s global network, earned
$61m in 2014 from the mainlywestern
companies that dole out jobson the website”
– FT September 2015
Implication: What role can telcos play in providing secure,
digital ‘passports’ for this growing class of worker?

Evaluation criteria BTGS AT&T T-Sys Vodafone Orange Verizon
Account management
Co-Innovation
Customer support
Delivery to agreed SLAs
Geographical coverage
Network performance/
reliability/security
Problem resolution/fault management
Value for money
Overall score
11. Customer service is a differentiation
opportunity
119
112
115
115
115
131
108
110
116
116
106
110
112
124
112
104
116
113
105
90
110
121
123
128
103
105
112
93
67
83
87
110
87
77
87
95
98
94
91
96
117
115
94
112
111
108
67
92
92
111
122
97
100
102
Best in
Class
Good Fair Needs
improvement
Implication: How
would you score?

12. Telco real-world ups and downs are
learning opportunities
• Retaining value, to some degree,
in the network – re-investment
(inc. security)
• Unified communications
• Some degree of mobile VAS
• Business outcomes, in some
cases
• Application-led approaches
• Siloed ‘digital’ teams
• Cloud – at least initially
• SI relationships of the past
• Service management and
customer experience

Implications – further transformation ahead
Capital– most telcos
will have to choose
where to invest
Skills – apps, mobile
and PS skills are rare
and costly
Sales – salesforce
transformation
required
Relationshipsand
brand – a voice with
CXOs; a brand in SME
Partnering – many telcos
are bad at this (vendors,
SIs, channel)
Support – don’t
underestimate
importance

Telcos are succeeding in ICT, but it is a long game
Experience Brand Network Reach
But reasons to be hopeful abound

Thank you. Questions?
+44 (0) 207 551 9385 | evan.kirchheimer@ovum.com
Ovum.com | @OvumTelecoms

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