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Telcos Strategic Positioning in the New World (Slovenia Telco Day 2013)

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  • 1. IBM Institute for Business Value Telco Day Telco’s strategic positioning in the new world Mobile, Cloud, Social and Big Data © 2013 IBM Corporation
  • 2. IBM Institute for Business Value Telecommunications is IBM’s #1 research focus Dublin Research Labs Industry TSL Russia Solutions Labs(Moscow Satellite TSL) c Watson Almaden c  Big Data & Analytics  Storage  Nanotech Healthcare Smarter Cities TSL Israel & Research Lab  Semiconductors  Systems (Haifa Satellite TSL)  Software & Services TSL Europe  Big Data & (La Gaude & TSL North America Research Lab Analytics Montpellier, France) (Austin, Texas) Web Services TSL China & Research Lab (Beijing) Japan  Internet of Things  Smarter Cities (Tokyo Satellite TSL) (New Delhi) TSL India (Bangalore Satellite TSL) ASEAN (Kuala Lumpur Satellite TSL) TSL LATAM Centers of Excellence 2 (Sao Paulo, Brazil Satellite TSL) Institute for South BusinessAfrica (Johannesburg, Satellite TSL) Value Worldclass Partner Ecosystem © 2013 IBM Corporation
  • 3. IBM Institute for Business Value The IBM Institute for Business Value creates fact based thought leadership that help clients realize business value Future Agendas CXO Surveys 3 to 10 year industry outlook with action oriented next steps 3 Value Realization Studies In-depth assessment of today’s critical issues, opportunities, etc. Chief Officiers studies – CEO, CIO, CMO, CFO, CHRO, etc. © 2013 IBM Corporation
  • 4. IBM Institute for Business Value What will be the Telco’s role in the new world? Technological advances and mega’ market trends are creating a very new world for consumers, businesses and markets as a whole. In this new world, Telco’s strategic positioning and response relies on major growth plays Prediction is very difficult, especially if it's about the future. ― Niels Bohr 4 Your theory is crazy, but it's not crazy enough to be true. ― Niels Bohr © 2013 IBM Corporation
  • 5. IBM Institute for Business Value Four key Technologies will have big impact on telecommunications Natural Language Analytics DeepQA Program Learn Big Data: Realtime Inference & Knowable Future 1,000,000X Data Workload Optimised Systems 5 5 Cognitive Computing “SyNAPSE” 1,000X Silicon Devices Nano Scale 1,000X 1 Billion Transistors Exascale Software Defined Environments Nano Systems 1 Trillion Devices © 2013 IBM Corporation
  • 6. IBM Institute for Business Value Mega market trends evident today are driving re-evaluation of business strategy  Rise in power of the smarter consumer  Social media explosion driving Market new behaviours Regulatory Economic  • Slow long term growth outlook, shifting wealth and urbanisation Structural separation continuing  Increasing roles of regulators especially • Change in Global Hierarchy in privacy • Demographic shifts   Going global for growth  Big data and hyperdigitisation  The 3rd platform – Cloud  Internet of Things  Mobile first as a design point 6  Mobile saturation extending to M2M Technology ICT Industry Accelerated pressure on revenue/costs  OTTs and new competitors  disintermediating Network technology investment and change © 2013 IBM Corporation
  • 7. IBM Institute for Business Value Increasing power of the consumer/Social Media Internet, the mobile and social media has led to an amazing consumer revolution as profound as any seen before 7 Today, roughly 1/3 of world’s population is on line And their use of social media tools to shop, spend and share insights is growing They are increasingly accessing the Internet through mobile devices © 2013 IBM Corporation
  • 8. IBM Institute for Business Value Social Networking has become a key communication channel, in particular among under 25s Daily Usage Increasing power of the consumer/Social Media 1 84% 2 Mobile Telephony 82% 3 Social Networking 72% 4 5 COMMUNICATIONS SERVICES USAGE UDER 25s Email/IM/Chat Video Streaming 58% Fixed Voice 42% 6 VoIP 32% 2/3rd or more of consumers under 25 use Social Networks daily 80% Email/IM/Chat 75% 3 Social Networking 66% 4 Video Streaming 47% 5 Fixed Voice 33% 6 8 Mobile Telephony 2 Mature markets 1 VoIP 17% ±1/2 of consumers under 25 stream or download video daily Source: 2011 IBM Global Telecom Consumer Survey, 25 countries Global N= 13237 Mature Countries N=8866; Emerging Countries N=4372 © 2013 IBM Corporation
  • 9. IBM Institute for Business Value Internet Search, Friends/Family and, in emerging countries, Social Media have become the preferred sources of information Increasing power of the consumer/Social Media What are you preferred sources of information? 70% 66% Internet search 64% Recommendations/ advice 51% 51% Social media 28% 45% Websites of communication providers 35% 31% Traditional advertising 19% 22% Emails/ promotional offers 9 Mature countries 13% 19% 23% Retail stores Shopping portals/ auctions Emerging countries 17% 8% Source: 2011 IBM Global Telecom Consumer Survey, 25 countries Global N= 13237 Mature Countries N=8866; Emerging Countries N=4372 © 2013 IBM Corporation
  • 10. IBM Institute for Business Value Consumers now have unprecedented power to build & demolish brand strength as they blog, text and comment via Social Media 12/29/11 Press Release: “Starting January 15, a new $2 payment convenience fee will be instituted for customers who make single bill payments online or by telephone” What happens when being disconnected? Attempt to redial/reconnect Most/ sometimes Never Always 44% 48% 7% 81% Avoid providers with Within 24 hours, more than 100,000 people had signed a online petition: whom friends had bad experiences Greetings, I am disappointed to learn that Verizon Wireless plans to institute a new $2 fee for paying bills online…. Your company should not assume that Tell friends about my it can do anything to your customers and that we will allow it to happen… 12/30/11 Press Release: “Verizon Wireless has decided it will not institute the fee for online or telephone single payments that was announced earlier this week. The company made the decision in response to customer feedback about the plan…” 10 poor experience 25% 16% Contact customer service 9% Switch providers, e.g. use a different SIM 10% My provider proactively contact me 5% 31% 56% 19% 61% 51% 23% 41% 56% 45% Avoid Providers with poor experience 77% Tell friends/ family bout their poor experience 65% Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237 © 2013 IBM Corporation
  • 11. IBM Institute for Business Value Communications Service Providers (CSPs) have not kept pace with all of the changes in today’s environment Global CSP Marketing Priority Matrix 2 Growth of channel and device choices 3 Social media 4 Data explosion 5 Decreasing brand loyalty 6 Shifting consumer demographics 7 ROI accountability 8 Regulatory considerations 9 Emerging market opportunities 10 Financial constraints 11 Privacy considerations Factors impacting marketing Increasing power of the consumer/Social Media Customer collaboration and influence 12 Corporate transparency Percent of CMOs selecting as ‘Top five factors’ 13 Global outsourcing 6 Underpreparedness Percent of CMOs reporting underpreparedness 3 70 10 9 11 5 6 1 7 60 2 4 8 50 12 7 11 40 0 11 1 20 40 60 Mean © 2013 IBM Corporation
  • 12. IBM Institute for Business Value And as consumers encounter new products, services and experiences on virtually a daily basis, they fell less loyalty towards CSP brands Telecommunications 2011 Telecom Consumer Survey across 25 countries: Global average of advocacy levels in Telecommunications industry 18% 22% 60% Advocates Apathetics Antagonists Customer advocacy in Retail industry is close to twice that of the Telecommunications industry UK Italy France Canada US Mexico Brazil Retail Industry 34% 33% 25% 26% 32% 39% 52% 51% Telecom Industry 12 Germany 20% 16% 17% 21% 13% 20% 24% 17% © 2013 IBM Corporation
  • 13. IBM Institute for Business Value Increasing power of the consumer/Social Media The good news is that an increasing number of CSPs have started using social media to ‘listen & engage’ with customers Applying social approaches to listen & engage customers 59% Respond to customer questions 79% Capture customer data 47% Solicit customer reviews and opinions Mine Conversations Crowdsource Insights Provide Answers Influence Influencers Reactive Proactive 47% Identify and manage key influencers Today Groups 79% 68% 35% Individuals 68% Next two years Source: Institute for Business Value, 2012 Business of Social Business Study (% CSPs with customer-related social business activities) 13 © 2013 IBM Corporation
  • 14. IBM Institute for Business Value Increasing power of the consumer/Social Media And many are planning to use social business to connect to customers, employees and partners, and to spur innovation A Social Business uses collaborative tools, social media platforms and supporting practices to engage Customers, Employees, Business partners and other stakeholders in an ongoing dialogue. Create valued customer experiences Drive workforce productivity and effectiveness Accelerate innovation Source: Institute for Business Value, 2012 Business of Social Business Study 14 © 2013 IBM Corporation
  • 15. IBM Institute for Business Value OTT providers – in particular the top 4 – are expanding their dominant position in the communications landscape Disruptive OTT competitors Market Value Market Value of Top 25 drivers of Internet traffic 70% of market cap = 1/2 Market Value of Top 150 Telecom Providers The massive shift in value continues towards the OTTs as capital markets prize the direct customer relationship and value provided by OTTs, >>>>>>> reducing the CSP valuation back to utility status! 15 © 2013 IBM Corporation
  • 16. IBM Institute for Business Value Consumer sentiment on future spending in Emerging Markets exceeds Mature Markets by 26% Emerging Net Increase/Decrease Utilities Utilities 40% Food & drinks Food & drinks Change in Global Hierarchy Mature 30% Transportation Transportation 22% Mobile Telephony Mobile Telephony 21% Clothing Clothing 16% Holidays Holiday/vacation 7% Net Increase/Decrease UtilitiesUtilities 4% Food & drinks Food & drinks -3% Transportation Transportation -6% MobileMobile Broadband broadband -10% Mobile Telepony Mobile Telephony -14% Pay television Pay television -16% Mobile Broadband Mobile Broadband 6% Sports Pay television Pay television 6% Fixed FixedTelephony Telephony -19% Clothing Clothing -19% Electrical appliances Elect. Appliances 3% Fixed Telephony Fixed Telephony. Going out Going out Sports 16 Sports 2% -7% -10% -18% Sports Holiday/vacation Holidays -23% Elect.Electrical Appliances-24% appliances Going out Going out -32% Source: 2011 IBM Global Telecom Consumer Survey, 25 countries Global N= 13237 Mature Countries N=8866; Emerging Countries N=4372 © 2013 IBM Corporation
  • 17. IBM Institute for Business Value In emerging markets, people expect net increase in mobile broadband spending Emerging Markets -32% 15% 15% Russia Brazil Korea China 8% India -2% 6% South Africa -20% -25% -3% 5% Mexico -6% 12% Poland -6% 31% UAE Netherlands -7% Australia Canada. -7% 35% Sweden Germany -10% -9% Japan Belgium -13% -12% -16% -15% France USA UK Cyprus Spain Czech R. Italy Portugal 45% Greece Change in Global Hierarchy Net Increase / Decrease Consumer spending MOBILE Broadband (2011 – 2014) -43% Mature Markets 17 Q05 Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years? Source: 2011 IBM Global Telecom Consumer Survey, 25 countries Global N= 13237 Mature Countries N=8866; Emerging Countries N=4372 © 2013 IBM Corporation
  • 18. IBM Institute for Business Value Many CSPs have increased their footprints outside their home markets by expanding to emerging markets Going Global 15 multi-country (10 or more countries) companies now control ± 3 billion subs 18 Number Market Subs 2011 Company (HQ) of (mio) Rev $B Value $B Countries 05/01/2012 France Telecom (France) 32 217 59.6 36 Telefonica (Spain) 25 238 84.8 63 Bharti (India) 21 243 11.9 22 MTN (South Africa) 21 165 15.8 33 Vodafone (UK) 20 439 76.1 144 Singtel (Singapore) 20 146 15.0 40 Telia Sonera (Sweden) 19 160 15.6 29 Vimpelcom (NL) 19 205 20.3 16 America Movil (Mexico) 18 236 52.9 104 Etisalat (UAE) 18 135 8.8 17 Deutsche Telekom (Germany) 17 128 77.7 48 Millicom (Luxembourg) 13 43 4.5 10 Tele2 (Sweden) 12 35 6.2 8 Telenor (Norway) 11 140 17.5 29 STC (KSA) 10 139 14.8 22 Axiata (Malaysia) 10 199 5.4 15 Challenges:  How can the multi-country CSP leverage their scale and identify the right synergy potential for their company?  How can the single-country CSP compete against global CSPs in their own market? Emergence of multi-country Giants © 2013 IBM Corporation
  • 19. IBM Institute for Business Value The Cloud trend has now reached a tipping point where it can create and deliver business value Business Value can be created in 3 main areas: Cloud Performing current business more efficiently and effectively Creating new business models for delivery of current services Creating entirely new businesses 2015 19 © 2013 IBM Corporation
  • 20. IBM Institute for Business Value CSPs clearly intend for Cloud to improve their business capabilities, in addition to enhancing internal efficiencies How Important are the Following Objectives for Adopting Cloud? (% of Telecom Respondents) New/enhanced revenue streams New/Enhanced Revenue streams Competitive/cost advantages thru vertical integration New delivery channels/markets New delivery channels/markets 52% 19% 34% 39% 31% 35% 29% 27% 34% 27% 35% 38% Increased collaboration with external partners Increased collaboration with external partners Cloud CompetitiveCompetitive differentiationspecialization differentiation thru thru specialization 26% 38% 36% Flexible pricing models Flexible pricing models 25% Rebalanced mix of products/ services Rebalanced mix of products/services 22% Business Capabilities 20 Internal Efficiencies 32% 44% Very Important Source: The IBM Institute for Business Value study: The natural fit of Cloud with Telecommunications, 2012 Survey selections Important 43% 34% Neutral to not important © 2013 IBM Corporation
  • 21. IBM Institute for Business Value Cloud CSPs can help cities use cloud to integrate data across city operations enabling delivery of citizen services Rio de Janeiro Cloud-based data solutions emergency response system planning. ibm-takes-smarter-cities-concept-to-rio-de-janeiro 21 © 2013 IBM Corporation
  • 22. IBM Institute for Business Value CSPs can spur the development of ‘smart home’ appliances using Cloud technology Cloud Vodafone and IBM team up on ‘smarter home’ initiative Enabling consumers to use their smartphones in a variety of remote activities including viewing their home’s utility consumption; controlling security, heating and lighting systems; and activating home appliances. Enables manufacturers and service providers to collect data fro appliances for product development and maintenance, and to rapidly introduce related new consumer services. IBM and Vodafone Advance Smarter Home Initiative 22 © 2013 IBM Corporation
  • 23. IBM Institute for Business Value Much more than any other industry, CSPs define big data by the capabilities needed to do analytics on information real-time Defining big data Real-time information streaming • Digital feeds from smart devices, sensors, social and syndicated data • Instant awareness and accelerated decision making Real-time information Non-traditional sources of information Big Data A greater scope of information For CSPs the real time aspect is extremely important as locationbased services, smarter network operations, intelligent marketing campaigns, next best actions, and fraud detection require a more contextual real-time view of information. The latest buzzword New kinds of data and analysis Data influx from new technologies Large volumes of data CSP respondents 21% 13% 11% 18% 11% 8% 9% 16% 8% 13% 0% 8% All-Industry respondents Source: Analytics: The real-world use of big data, a collaborative research study by the IBM Institute for Business Value and the Saïd 23 Business School at the University of Oxford. © IBM 2012 40% 15% © 2013 IBM Corporation
  • 24. IBM Institute for Business Value Two-thirds of CSP respondents identified customer-centric objectives as their organization’s top priority Big data objectives Customer-centric outcomes Understanding behavior patterns and preferences provides organizations with new ways to engage customers Customercentric objectives Big Data New Business Models 24 Providing a greater customer experience, every time, is vital for limiting churn, building loyalty, and for competing against overthe-top players, including Google, Apple, Facebook, WhatsApp and Skype, companies that have proven adept at dreaming up compelling online experiences for consumers. Risk/Financial management 66% 49% 15% 14% CSP respondents All-Industry respondents 11% 15% Operational optimization 8% Employee collaboration 0% 18% 4% © 2013 IBM Corporation
  • 25. IBM Institute for Business Value Advanced analytics will help CSPs to gain customer insight from the Big Data in their network, social media and other customer information Draw Insight from data Acces to data Translate Insight into Decisions Telecom Industry CEOs identify customer insights as the most critical investment area (Global CEO Study 2012) Big Data Customers 83% Sales 67% Operations 55% Markets and competitors 47% Supply chain 40% Human resources 39% Risk management Financials 25 32% 25% In which areas do you plan to improve your ability to draw meaningful and executable insights from available information?” © 2013 IBM Corporation
  • 26. IBM Institute for Business Value Celcom Axiata Berhad uses cognitive (Watson) technology to transform customer care experience Celcom, part of the Axiata group of companies, the oldest mobile telecommunications company in Malaysia. Throughout the evolution of their business, the company has adapted to changing technologies and standards. It’s Celcom’s top priority to use outstanding customer service as a differentiating factor in its drive to market leadership. Big Data Challenges 26 Digitization  Resolve customer issues during their first contact with customer care, in this way reducing churn  Support customer agents in responding to queries on Smartphones as well as in recommending data plans, given the complexity and frequent device refresh cycles. Source: Forbes,May 2013 X  Cognitive technology to help contact center representatives provide faster, accurate, and consistent responses to customer questions and requests.  Eventually give customers direct access to the system for text-based chats whereever and whenever from their smartphones, tablets or computers. For trouble-shooting and support through business processes like account opening, review, or changing plan features. Celcom’s aim is to provide consistent, high-quality support to customers across channels and agents to deliver richer customer experiences across all touch points © 2013 IBM Corporation
  • 27. IBM Institute for Business Value Smarter cities Smarter cars Big Data 27 SMARTER CITIES SMARTER CARS Smarter traffic There are many possibilities how CSPs can partner with other parties in the area of big data SMARTER TRAFFIC New technologies like big data, sensors, mobile, smart grids are changing the way cities operate. Big data can help finding parking spaces, avoid traffic jams, get instant help when emergencies happen. Megacity Rio de Janeiro is already using this technology by participating with IBM and Brazilian CSP Oi, among others. Tomorrow's motor vehicles will communicate with each other, with their drivers, their manufacturers, their surroundings, and with a variety of service providers. Data volumes related to vehicle usage are skyrocketing. Several German automakers have teamed up with Deutsche Telecom to find a solution in big data analytics. French CSP Orange recently participated in Traffic Zen with highway operator Autoroutes du Sud de la France to create traffic forecasts. Orange brings the quality and robustness of its mobile network to inform citizens and decision-makers, enhance information broadcasts, reduce CO2 emissions, and more. © 2013 IBM Corporation
  • 28. IBM Institute for Business Value CSPs can be a key enabler of the new economy, but must embrace the digital opportunity or risk becoming utility providers of bandwidth Social Social media, social business – all the time, respond, solicit, collaborate Contextual Perfect experience New contextual services to improve lives All the time – know, connect, serve Everything Connected Internet of Things, Multiple devices controlling multiple devices (TV, heating, car kids, etc.) The New World 28 Extensive use of avatars, concierge services, virtual interfaces Behavioral profiling Personalized Create own service portfolio according to their own needs, sourced from multiple providers Alternative me Continued virtualization Functions, services, enterprises Continuously providing insights and recommendation to the consumer to improve their lives, experiences and well being © 2013 IBM Corporation
  • 29. IBM Institute for Business Value CSPs have a key opportunity to play a central role in the new world Natural Resources Government Healthcare CPG Transportation Retail Telecom? Finance Cities IT Education Energy Traffic The DATA CSPs own enables them to add context and meaning to the data they deliver CSPs carry all the SOCIAL traffic 29 As providers of connecting networks, CSPs are uniquely positioned in the CLOUD marketplace CSPs owns the MOBILE networks © 2013 IBM Corporation
  • 30. IBM Institute for Business Value The emerging ‘two sided’ business model becomes the majority service delivery vehicle; this is a key opportunity for CSPs Consumers In 2020 up to 60% of today’s ICT market is addressable through this delivery model Business Example Players in the services economy today Service providers and partners CSP solutions $1.5B revenue of10K+ Affiliates ISVs Personal comms Expecting $10B transactions on mobile in 2012 Banking Security 40% total units sold by outside sellers Policy 40% new business comes from non-CRM offerings Consultants/ SIs Healthcare Managed customer interface, services, platforms and networks Analytics Media M2M Developers Social business Etc… Etc… API only company reaches 150,000 developers and 1.5M calls a day 4.5M API invocations per month Promotions and loyalty programs 30 © 2013 IBM Corporation
  • 31. IBM Institute for Business Value Telco’s must align growth initiatives to new strategic beliefs, incorporating emerging trends, new technology & the two sided business model Growth initiatives 2 Evolving beliefs • Imperative to create and acquire IP • Customer experience excellence Move the source of value • Lead in the new era services ecosystem • • Accelerate shift to higher value • Strategic beliefs Deliver integration and innovation to clients • • Dramatic simplification Take ‘stop’ decisions early Strategic Growth Play -Create Smarter ecosystem -Build Integrated ICT engine of scale 3 Expand internationally Critical success attributes New technology 1 Strategic Operational Play Be brilliant at the core Future uncertainties Current trends 31 © 2013 IBM Corporation
  • 32. IBM Institute for Business Value The telco must first perfect its strategic operational plays: “be brilliant at the core” 1 Strategic Operational Plays Examples in other industries – all (except cablescos) with NPS > 60% Customer intimacy Emotional connection Virtual channels Dramatic simplification Low cost operating model Optimised heterogeneous network 32 Intense personalization © 2013 IBM Corporation
  • 33. IBM Institute for Business Value Telco’s must create a smarter ecosystem, and put themselves in the centre of the ecosystem 2a Consumers Sales Service providers and partners ISVs Banking Sales partners Solution partners Component partners Consultants /SIs Healthcare Media Developers Etc… Business Delivery Smarter ecosystem core Managed customer interface, service creation, Open APIs. utilities Managed infrastructur e platforms, Core network CSP to create a Sales CSP solutions Personal comms Security Policy Analytics M2M ‘two sided’ business and operating model and partner ecosystem to power business, government and consumer services Social business Etc… Smarter Ecosystem core IP creation and exploitation 33 Clean business model Partners in control of own destiny CSP excels at horizontal Secure, open, standardised Specialist skill sets © 2013 IBM Corporation
  • 34. IBM Institute for Business Value The integrated ICT engine of scale underpins this ecosystem 2b Business Consumers Delivery Service providers and partners ISVs Banking Consultants /SIs Smarter ecosystem core Personal comms Managed customer interface, service creation, Open APIs. utilities Security Policy Healthcare Media Developers Etc… CSP solutions Analytics Managed infrastructure platforms, Core network/ virtualisation M2M CSP to build underlying capabilities of scale to power business, government and consumer ICT needs Social business Etc… ICT engine core Large scale, Low cost 34 Integrated IP comms services Partners ‘inside’ Simplified technology platforms Secure, open, standardised Specialist skill sets © 2013 IBM Corporation
  • 35. IBM Institute for Business Value Thank you www.ibm.com/iibv 35 Rob van den Dam Global Telecom Industry Leader IBM Institute for Business Value rob_vandendam@nl.ibm.com © 2013 IBM Corporation