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Whitepaper telecom companies_in_2015_uk


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Telecom companies in UK in 2015 Telecom business report

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Whitepaper telecom companies_in_2015_uk

  1. 1. contentforeword 3introduction 41. scenario planning 5 1.1 What is scenario planning? 5 1.2 what method did we use? 52. trends in the telecom market 7 2.1 overview of trends 7 2.2 top three most unpredictable trends 9 2.3 top three high impact trends 10 2.4 prioritization of trends 103. four scenarios 12 3.1 overview 12 3.2 scenario 1: the techonology driven world 12 3.3 scenario 2: the commodity driven world 13 3.4 scenario 3: the tailor made world 14 3.5 scenario 4: the segmented world 144. discussion and conclusion 16appendix 1: key publications about scenario planning 17
  2. 2. introductionNew technologies, new regulation, new services, and This report will first discuss the scenario planningnew customer demands: there is no doubt that the method we used to develop the scenarios. Next,telecom sector is in turmoil. The unpredictability of we report on the trends and developments that wetrends makes it hard to develop effective strategies. To have gathered by interviewing telecom managers andget a view on what the telecom market may look like industry experts. After that we move to the core of thein 2015 and to determine how telecom companies can paper: the four scenarios for the telecom market inanticipate on the changes in the market; trend analysis 2015. We describe each scenario and we identify theand scenario planning are effective tools. role and the strategy of telecom companies in each scenario.Scenario planning is a proven method for strategydevelopment in a turbulent environment. It helps to elicit Finally, early warning indicators are defined that helptrends and highlights the most important uncertainties to indicate in which direction the telecom market willin a market. Our approach to scenario planning results develop. Early warning indicators that are particularlyin four scenarios of the future, each with a strategy on relevant are related to patenting, investment inhow best to approach that future. innovation, the entry of new players in the market, changes in the type of personnel hired and the emergence of surprising business models.4
  3. 3. scenario planning1.1 What is scenario planning? Therefore scenarios sketch a set of plausible but clearly different scenarios of the future. Others haveChange is the only certainty in the world. However, emphasized that scenarios are stories, describingrapidly changing circumstances make the future possible futures that are affected by decisions madeuncertain and hence make it difficult for managers today. At any rate, scenarios are no prediction of theto determine their strategy. One thing is for sure: future. Rather, they are a tool for managing uncertainty.extrapolation of current trends is not a sound basis for They are an instrument that helps to improve decision-strategy making. making in different future business environments. AnBut decision-making based on intuition and incomplete important part of the value of scenarios lies in theinformation is equally difficult. strategic discussions they generate. The strategic conversation around scenarios delivers new insights asScenario planning has been developed to help well as strategic options. The aim of scenario planningcompanies cope with uncertainties and to deal is not to identify one specific future, but to explorewith changing trends and developments. Originally possible futures and to identify the mechanisms thatused for developing military strategies, in the sixties drive the future in a particular direction. Appendix 1 listsscenario planning was applied to the development of a short bibliography of the authors mentioned and ofgovernmental policies. Application to business followed other important publications about scenario planning.later and since then the method of scenario planningwas continuously improved and refined. It is now Scenario planning helps managers to think out of thewidely used as a practical tool to create awareness box in a structured way. It enables the discussion aboutfor strategic shifts, to get a grip on turbulent business the impact and uncertainty of business trends. As aenvironments, to manage risks and to generate result, if the changes occur, managers will be able tonew strategic options. One of the most successful deal with them appropriately because they have alreadyapplications of scenario planning was developed by thought about the consequences of those changes.Royal Dutch/Shell. By the end of the sixties Shell startedstudying ‘what if’ questions about their business. 1.2 What method did we use?The very long time horizon of the oil industry madeit necessary for Shell to take long-term trends into There are different ways to approach scenario planningaccount. By using the scenario method, unexpected and there is not one best method. To develop ourthings were found. When the first oil crisis occurred in telecom scenarios we have gone through the following1973, Shell had already thought through the scenario phases: gathering trends, clustering trends, prioritizeof sharply rising oil prices. Therefore it was able to trends, determine the axes of the scenarios, describingdeal with this situation more adequately than other the scenarios, describing strategic options and pointingorganizations. out early warning indicators as signs for a certain scenario to become reality. In each phase we haveDifferent authors have developed different techniques involved either telecom managers or Atos Consultingfor scenario planning. Schwartz defines a scenario as industry experts to give input, question results and verifya hypothetical sequence of events that describes a the findings. Each of the phases will now be discussedpossible development of the future. This white paper in more detail.uses this definition. The important characteristics ofscenario planning are described in the literature. For Gathering trendsexample, Van der Heijden underlines the fact that The objective of the first phase is to gather trends thatscenarios can be used to explore the long run. The are relevant for the telecom sector. The most importantlong run however, is too uncertain to be adequately method we used were interviews with experienceddescribed by only one scenario. telecom managers and industry experts. 5
  4. 4. In addition desk research was done to identify additional Determining the scenario axestrends. The trends were captured and described, Based on the data gathered, two trends were selectedleading to a long list of (possible) developments in as being the most uncertain and having the highesttelecommunications. An overview of the trends gathered impact. These trends form the axes of the scenariois listed and described in chapter 2. analysis. Next the scenarios were described and the strategic implications for telecom companies wereClustering trends identified by Atos Consulting industry experts.The objective of this phase was to reduce the numberof trends for our study, by grouping similar trends and Describing strategic optionsrenaming them. For example many respondents raised For each scenario the strategic implications for telecomthe issue of distribution channels, but in a slightly companies were identified by Atos Consulting industrydifferent wording. These statements were put together experts. The source of competitive advantage for a firmin one overarching trend about distribution channels. and the impact of the scenario on the role of telecomThe clustering was done in a brown paper session companies are briefly clarified.involving Atos Consulting industry experts. The endresult was a list of 23 trends. Defining early warning indicators Of course it is important to know sooner rather thanPrioritizing trends later whether a particular scenario is likely to materializeThis phase aimed to identify the two most important in reality. For this purpose we also defined some earlytrends of our list of 23. To achieve this goal, we asked warning indicators for each scenario, which may signalfourteen telecom managers and industry experts to rate that the telecom sector is moving in the direction of oneeach trend on a one to five scale. An online tool was of the scenarios.developed for this purpose. The rating was done on twovariables. The first variable was uncertainty: how certainis it that the trend will occur? Next the respondentsrated the impact of the trend: if the trend does occur,will it affect your business marginally or substantially?6
  5. 5. trends in the telecommarket2.1 Overview of trends 4 Government investment Without an active role of the government, theDozens of relevant trends affecting the development Netherlands, and Europe in general, may fall behindof the telecom industry were gathered by interviewing in terms of technological development. This trendexperienced telecom managers and industry experts. does not only relate to investments in research andAfter eliminating overlap and clustering, 23 trends were education, but also to investments in infrastructure andidentified. They are listed below. coverage to catalyze technological development in the Dutch Telecom industry.The list may not be exhaustive but it does give anoverview of elements that will affect telecommunications 5 Cloud computingin the years ahead. As such it may be of use for Service providers become the personal archives forcompanies as input into their strategy process. The customers: all photos, files, music will only be availabletrends are listed in random order of importance. online in the cloud. The rise of cloud computing will have an impact on telecom providers. Besides the1 Impact of multichannel strategy need for more bandwidth, it may further speed up theMore and more ecommerce and customer web-portal integration of IT and telecom. But to what extent willtechnology will replace traditional market channels. the telecom sector become a main player in cloudThe impact of ecommerce on distribution channels computing and reap its benefits?is substantial, but it is still unclear to what extent andat what speed they will transform existing channels. 6 BandwidthTelecom providers have started opening up their own Limited investment in and availability of bandwidth willstores (particularly in the mobile industry) and others slow down the development and consumption of newwork with resellers. How much business will move services. The ever increasing thirst for bandwidth needsonline? What is the right combination of traditional and to be met in order to meet customer demand andechannels? How fast will these developments go? facilitate development of new services. It is difficult to finance capital intensive programs like rolling out LTE or2 Further commoditization deploying fiber to the home.The traditional services offered by the telecom sectorhave largely become commodities, especially standard 7 Fixed-mobile convergenceservices like telephony and data communication. This More communication devices come to the market whichputs pressure on the margins of service providers. enable consumers to become the architect of their ownInnovation and new services can temporarily break the fixed-mobile integration. They can use a multitude ofcommoditization trend. But how long will it take before technologies (e.g. GSM/UMTS, WLAN, ISDN/PSTN,competition catches up and these new services are Skype) that best fit their quality and cost requirements.commoditized as well? Historically the service providers organized fixed mobile integration, but new technologies like the Femto-cell3 Business model transformation will enable fixed-mobile integration in the home and putA lack of good business models may slow down customers more and more in the driver’s seat.the development of telecom companies. As a directconsequence of the trend towards commoditization, the 8 PANquestion is where profits will come from in the future? Is Because of the possibilities generated by Personalisedit content, IT services, communications services? And Area Networks the demand for network capacity willhow can telecom companies generate sufficient profit grow. Personalised Area Networks enable the exchangefrom that? Will they be able to develop better business of data between computers, mobile phones, PDAsmodels for new services? over short distances, usually a few meters. When the 7
  6. 6. use of PANs increases, development and adoption cost saver and reduce the carbon footprint too. Butof applications and related services will require more costs may increase as well, for example if telecombandwidth. companies become responsible for dismantling networks or handheld devices in an environmentally9 Information overkill friendly way.The overkill of information and the continuous needto be on-line, will damage individuals’ health. So far 14 Dual market structureconsumers have embraced most opportunities that A strict partition between service providers andmodern communication offers. However, criticism is infrastructure providers will emerge in the market. Forrising. We may wonder whether we want to live in a some time now the distinction between service andsociety where people have a better relationship with infrastructure has been increasing. To what extent doestheir iPhone than with their family. And the continuous this trend mark the beginning of a long-term change inavailability may lead to increased stress and even the industry? Will it guide the process of business modeladdiction: the term ‘crackberry’ is only half a joke. transformation the industry is facing?10 Communities 15 Brain drainCommunities become the new home base for people. Technological knowledge will leave the Netherlands.Information overkill may be a problem, but new media The need for people with an in-depth understanding ofalso create new opportunities for people to create new modern telecom and information technology is clear.and meaningful relationships. Internet communities are However, the number of students enrolling in universityan example. courses in this area may not be high enough to meet demand. In addition, they may have more interesting job11 Ubiquitous computing opportunities elsewhere. Will we witness a brain drainServices are available to customers in high quality, that erodes our innovation power?anytime, anywhere. Over the past few years wehave witnessed an increased availability of services 16 Co-financeprovided by telecom companies. Considering the new Clients will start to co-finance investments in hardwaretechnologies that are in the pipeline, we may expect this and infrastructure. Capital intensive programs cannot betrend to continue. financed alone by telecom companies. Co-financing is a way to deploy infrastructure, to increase coverage and12 Transport to catalyze (service) developments, while sharing theTelecom diminishes the need for physical transport. financial burden with stakeholders.With crowded roads and the negative environmentalimpact of cars, the search is for an alternative to 17 R&Dphysical transportation. Increased communication Telecom companies close their R&D departments;capabilities, like conference calls and online meetings, vendors and clients will take over the innovationmay reduce the need for people to meet face to face process. A key question here is whether telecomand increase telecom revenues. On the other hand, we companies will prove to be effective innovatorsknow that a call can never replace a meeting in person. in technology and hardware or whether they willOr can it? rely entirely upon vendors. Concerning content and applications individual clients and specialized13 Sustainability companies have already taken over the innovationSustainable production will coincide with cost reduction. process, often in a Web 2.0 fashion. Clients developThe energy costs of running data centers are enormous. new applications and service providers integrate them inEnergy saving technologies may therefore be a huge their service offerings.8
  7. 7. 18 Labor shortage 23 GovernmentVirtualization is so demanding on staff, that there is a The government will increase its influence onshortage of qualified labor. The integration of IT and infrastructure. This trend depends highly on the politicalTelecom creates highly complex puzzles that few are signature of the government. Some political partiesable to solve. At the same time new ways of organizing believe telecom is a public service and that thereforerequire more flexibility, new labor relations and different government should be heavily involved in the telecomcompany norms and values. This requires a whole new market. Other parties believe telecom services can betype of employee. provided without problems by companies competing in an open market.19 P2P marketingFor a fee, clients will promote products among their 2.2 Top three most unpredictable trendspeers. New marketing tactics may be needed to reachconsumers and engage them. Peer-to-peer marketing The 23 trends described in the previous sections,may be an option: by paying people to promote were rated by telecom managers and industry expertsproducts to their friends and acquaintances telecom on their predictability and their impact. Which trendsproviders may enter new markets. Monitoring and did the respondents rate as the most unpredictable?influencing discussions on user sites is another element Box 1 provides the answer. The future of R&D andin this regard. innovation raises most questions for our respondents. It may very well be possible that R&D departments20 Privacy continue to exist; on the other hand there is an equallyConsumers will demand better protection of their great likelihood that the entire R&D and innovationprivacy. So far people have not found the issue of process will become much more vendor driven. Inprivacy a to be major issue. But more recent experience that case telecom companies will not develop newshows that consumers are becoming more reticent technologies and networking services themselves. Theyin putting all kinds of information online. In addition will source them from vendors instead. For content andconcern is growing about how other organizations applications this has already happened. Few telecombenefit from connecting all available online information companies develop their own content. Sourcing itof the individual. from specialized suppliers or using crowd sourcing techniques appears the way forward here.21 Anti-trustThe influence of anti-trust authorities increases. Anti- The effect of information overkill is also unclear. Thetrust authorities are watching the telecom sector with modern consumer is swamped with information andincreasing intensity. Recent interventions, for example even more is under way. So far consumers have beenregarding the cost of SMS text messages, show that able to handle all information. But will the informationthe regulators continue to be active. The obligatory overkill and continuous communication run into eitheropening up of proprietary networks to competitors is physical or psychological barriers? How much cananother example. people handle? There may also be another social backlash: the rising irritation about people phoning and22 Long term contracts texting during meetings, in public transport, in cinemasLong term contracts with consumers may be forbidden. and at any other public place.As a specific element in anti-trust regulation, theauthorities aim to make it easier for consumers to The third most unpredictable trend is the availability ofswitch among providers. The consequently flexibility labor. Organizations that become increasingly virtualin contracts will lead to a less sustainable business, require high levels of skills and knowledge. In additionespecially for incumbents. the integration of telecom and IT requires personnel 9
  8. 8. with a specific set of capabilities. Will there be sufficient also be high. If ecommerce indeed replaces traditionalpeople to function effectively in this context? Behavioral sales channels to a large extent, this will mean achange is prompted as well by the new ways of working substantial change in the way of doing business.that are developing in practice: virtual teams and flexible Setting up improved ecommerce channels will requireoffices undermine the traditional social structure of a a big investment. On the other hand, the multichannelcompany. New social structures will develop around approach requires such investments as well. A wrongthe work place. The coming years we will see many decision in this area will dramatically affect the bottomexperiments around this. Will employees be able to line, not only because of investments lost, but alsocope with this constant state of flux? because of clients switching to the competition.Both telecom managers and industry experts listed Finally, when computing becomes ubiquitous this willthese three trends as highly unpredictable. The industry fundamentally change the industry as well. Ensuringexperts however also expressed concern about the high quality availability of services around the clock‘Government investment’ trend: they believe that the requires a major the Dutch (and European) government willmake in technology and networks are highly uncertain. The ‘increased commoditization’ and ‘ubiquitous computing’ trends were not only thought to be high Box 1: Top three most unpredictable trends impact trends. The respondents also believed that these trends were quite certain. Telecom offerings will commoditize and services will become ubiquitous. Telecom companies close their R&D departments: innovation Hence, no company can escape factoring this into its will be sourced from vendors and from clients themselves. strategy. About the use of channels the respondents are less certain: maybe ecommerce will replace existing Information overkill: The overkill of information and the channels, maybe not. continuous need to be on line, will lead to a social backlash. Box 2: Top three high impact trends Labor shortage: The virtual organization is so demanding on staff, that a shortage of qualified labor may occur. Increased commoditization: The services offered by the tele- com sector have become commodities; new services run the risk of fast commoditization.2.3 Top three high impact trends Impact of multichannel strategy: The right balance between traditional and echannels still needs to be found.The top three trends that are deemed to have thehighest impact on companies are listed in box 2. Ubiquitous computing: Services are available to customers inIncreased commoditization will have the highest impact high quality, anytime, anywhere.on the sector. Telecom services like telephony and datacommunication (including Internet) have now becomebasic needs for most customers. The positive side ofthis phenomenon is that in a recession people will not 2.4 Prioritization of trendseconomize on them. The downside is that the marginson these services are under continuous pressure. In For creating the scenarios we need to determine theresponse telecom companies develop new services, two trends that are the most unpredictable and have thebut as the speed of commoditization appears to be highest impact. Industry experts and telecom managersincreasing, these services will give telecom companies have rated each trend on these two variables on aonly a short break as they too will be imitated rapidly. one to five scale. Per trend we calculated the averageIn addition, the impact of the multichannel strategy may rating. Figure 1 plots the results for the 23 trends we10
  9. 9. found along the two axes of impact and predictability. Therefore these two trends are used to develop theThe horizontal axis shows whether the trends are scenarios.unpredictable; the vertical axis shows whether the trend Other trends scored lower than these. You may studyhas a high impact or not. figure 1 to find out how the other trends were rated. For example trend 11 - ubiquitous computing willMost of the trends we identified were rated as high considerably affect the telecom industry, but it is aimpact and the majority was seen as unpredictable predictable trend. The lesson drawn from this is thatas well. This reflects the high degree of turbulence the companies should invest in meeting this trend. On thetelecom sector faces. The figure shows that trends other hand, trend 4 - government investment is highly1 - multichannels, 23 - government, 18 - labor shortage, unpredictable, but the impact on business is seen as17 - R&D are both highly unpredictable and have high relatively low. Therefore this should not be high on theimpact. Detailed study of the data showed that trend management agenda.17 - R&D and trend 1 - multichannels also hadlow standard deviations, meaning that most of therespondents had rated these trends in the same way. Figure 1: Trend plot Further commoditization High Impact Ubiquitous computing Impact of multichannel strategy Privacy Business model transformation PAN Government Anti-trust Transport P2P marketing Labor shortage Communities R&D Long term contracts Brain drain Bandwidth Sustainability Information overkill Dual market structure Fixed-mobile convergence Cloud computing Co-finance Government investment Low Impact Predictable Unpredictable 11
  10. 10. Four scenarios3.1 Overview Early warning indicators are market signals that indicate that a certain scenario is about to become reality. ByHaving identified the two most relevant trends, we can watching these indicators, telecom companies cancreate four scenarios. These scenarios are divided by develop suitable strategies early on. The next sectionstwo questions, derived from the clustered trends: discuss these elements in more detail.> Will telecom companies create their own proprietary 3.2 Scenario 1: The technology driven world technologies or will innovation mainly be done by vendors? If the former happens, telecom companies In this scenario technological development will continue will have to invest in their own R&D labs. If the latter at a high pace. Telecom companies obtain a competitive is closer to the truth, telecom companies can close advantage by developing new proprietary technologies. down their R&D labs. At the same time customers’ buying decisions are> Does client demand require a multichannel approach mainly influenced by the technological characteristics of or will clients move increasingly online? When all the innovations. Consumers have become technology clients move online an exclusive echannel approach savvy and technology addicts. They will buy most, if not will work. If however, there are different client needs all, their products online. In short: telecom companies and segments, a multichannel approach will be the develop new technologies; consumers love them. right option. Under these circumstances, the most relevant strategyThis leads to four scenarios as shown in figure 2. With for telecom companies is to engage in technologyeach scenario comes a specific strategy, a specific role push: they invent new technologies and push themfor telecom companies and early warning indicators. to the market. Basic research gets back on the Figure 2: Four scenarios Echannels dominate Scenario 1: Scenario 2: The technology driven world The commodity driven world Strategy: technology push Strategy: efficiency Telecom role: disruptive innovator Telecom role: standard direct packager Companies keep Companies close their their R&D R&D departments Scenario 3: Scenario 4: The tailor made world The segmented world Strategy: demand pull Strategy: matching Telecom role: market driven Telecom role: standard segment innovator packager The multichannel approach dominates12
  11. 11. agenda because it is the main way to differentiate from 3.3 Scenario 2: The commodity driven worldcompetitors. Telecom companies need to becomedisruptive innovators. In the very long run, beyond our In this scenario there are no distinctive telecom2015 time limit, this scenario may mean for example technologies that give telecom companies a competitivethe disappearance of fixed networks as the leading edge. Instead, there are a number of standardtechnology for transporting voice and data. Disruptive technologies offered by vendors. There may be someinnovators will find entirely new ways for data and incremental innovation, but no mind blowing newtechnology transport that eradicate the current focus functionalities are invented. Hence there is no need toon fixed assets. Fixed mobile integration becomes a maintain an R&D department. At best a few expertshistorical term. with technological knowledge scan the offers of vendors for interesting stuff. Consumers recognize thatEven if physical networks remain, in this scenario technological change is incremental. As a consequence,they will play a minor role. They are what roads are they are all very much aware of the standards thatto transport: they need to be there, they need to be exist and have a pretty good idea about what theymaintained, but apart from that nobody really cares. The want. They do not need to go to a store to check thecustomer is interested more in cars, than in the type of hardware, but just order it online.asphalt he drives on. Some telecom companies mayspecialize in maintaining efficient networks, but these Telecom companies will have to offer the technologiescompanies are at the mercy of the disruptive innovators, and the connected services in a convenient and efficientwho create the real value for the consumer. way. Gaining economies of scale to serve mass markets cheaply is the key to company survival here. This mayAn example of a company pursuing such a strategy in mean a shake out and a merger wave will reshape theanother industry is Google. It is highly innovative, only players in the industry. The role of the telecom providerdistributes services online and has completely disrupted is best described as a standard direct packager: itexisting business models, putting pressure on such takes standard technology and services from otherdiverse industries as traditional software, newspapers companies, then packages them and offers them on theand publishers. In this scenario of the technology driven web with little thinking about product, telecom companies that are disruptive innovatorswill do to the current telecom industry what Google has An example from another industry is Dell. Dell does notdone to software. They will redefine existing industry innovate its technology, but buys components fromboundaries completely, based on technology. vendors. Next it ties those components together and ships the resulting product fast and cheaply to the Early warning indicators consumer. It is a completely online business model. As most people now have an understanding of what they An early warning indicator that this scenario may play out is want from a pc or laptop, or they have a smart nephew when completely new players from another industry enter the who can help them articulate their wishes, there is no market. Especially when they make investments in seemingly need for a store with staff explaining what the basic negative business cases, this is a warning signal that the choices are. market may be severely disrupted. In addition, rising R&D costs may also point towards realization of this scenario. Early warning indicators An early warning indicator for this scenario is that incum- bents start to move more of their business online. This may mean that the multichannel approach is losing effectiveness. Another signal for this scenario may be falling applications for patents on telecom technology. Falling patent application rates may indicate a lower speed of innovation. 13
  12. 12. 3.4 Scenario 3: The tailor made world Early warning indicators > An early warning indicator for this scenario may be in theIn this world technological progress is combined with hiring policies of companies. When an increasing numbera world in which various channels need to be used to of companies is looking for people that combine techno-serve different market segments. Each segment has its logical skills with market understanding, or companiesown demands in terms of products and services and increase the hiring of both technology experts and markethow these are to be delivered. R&D focuses on serving researchers at the same time, this may indicate a move inthis diversity of market segments. the direction of this scenario. In addition, as is the case for Apple, when companies start to focus on a specific partTelecom players will follow a demand pull strategy in of the innovation (the user interface) and start to scout fordeveloping innovations. They will listen to the market, complementary ideas from other firms, this may indicateidentify the needs of different consumer groups and that the tailor made world is getting innovate around this need. This may lead to > Another early warning indicator is that traditional playersdifferent versions of products and services being offered make surprising alliances and launch plans that do not fitin the market or to entirely different technologies being at all with existing business models. TomTom is a case indeveloped for different segments. point: why would a traditional pc assembler work together with mobile device producers, map publishing companiesThe role of the telecom companies is that of a market and so on?driven innovator. This may lead in two directions. Thefirst one is reactive: creating innovations based on aprofound understanding of consumer needs. The other 3.5 Scenario 4: The segmented worldroad is more proactive: creating innovations that createnew market segments that other telecom companies In the final scenario, the segmented world, telecomhave not yet thought of. operators source innovation from vendors and package those standard technologies for specific marketAn example from another industry is Apple. Apple segments. In many ways this scenario is closest toinnovates based on superior understanding of what the current strategies of most traditional telecomconsumers like. In doing so they deliver superior incumbents. They have decreased their investmenttechnology to existing markets (the iPod that replaced in innovation and have embarked on a multichannelother MP3 players), but they also create new market strategy.segments by supporting online communities. Theirapproach is decidedly multichannel with much online In the segmented world the most effective strategybusiness, but also investments in Apple stores and is matching. Technology and content sourced fromresellers. vendors need to be integrated and they need to be matched with the diverse market segments that exist. The company that is best able to connect the trinity of technology, content and segment will be able to reap superior profits. This requires companies to continually scan the environment for standard technology and content for them to package. In short, the role of the telecom companies is that of a standard segment packager.14
  13. 13. Early warning indicatorsAs already stated, the real world example of thisstrategy is the telecom incumbents. In a market with An early warning indicator that this scenario is likely tothese characteristics, their current strategies may make happen is increased investments in the matching capabilitysense. However, a critique on this strategy is that it of non-incumbents. When non-traditional telecom playerstries to be everything for everyone. There is little focus start to imitate the current incumbent strategies, the world ison either specific technologies or segments. Therefore clearly moving towards this scenario.the risk that niche players enter into the most profitablesegments may be high. 15
  14. 14. discussion andconclusionThe turbulence in the telecom sector is likely to remain Most incumbents are currently betting on thehigh. With the aid of the 23 trends and four scenarios segmented world scenario. With the entry of newsketched in this white paper, companies may be able to players, it seems unlikely that their business modelget some grip on the most important developments in will be dominant in five years time. The new playerstheir business. It is up to them to develop the detailed that aim for scenario 1 or 2 may not be very profitablestrategies and tactics to cope with them. The scenarios now, but experience has shown that once innovationsare clearly different and require fundamentally different spread, they spread fast. As the incumbents still have achoices and investments. It is clear however, that the good cash flow, they should be able to experiment withmonitoring of technological developments and channels new approaches. However, this does require them tois of crucial importance for telecom in the years to become more proactive than they are today in meetingcome. the challenges from innovators.The minimum this paper has done is to identify a The positive news is that the scenarios show annumber of ‘no regret’ policies. Those trends that scored abundance of opportunities. Although traditionalhigh on impact, but low on uncertainty, are clearly going business has become a commodity, new trends areto happen. Some of them have already been partly opening up new chances for growth and development.realized. Investing in these no regret policies is the It is for the telecom companies to decide how they arestrategic minimum for companies to focus on. going to profit from that. To retrieve maximum value from this paper telecom companies may challengeThe model shows that even though the idea of their strategy against the presented scenarios. Atosconvergence between telecom and IT has been around Consulting is able to support you in facilitating such afor some time, progress is made only now. The term process, as well as in translating the rather abstractICT, Information and Communication Technology, was scenarios and the early warning indicators to yourlaunched in the 1990s. Indeed, IT and communication specific business challenges.have grown increasingly closer since then, but realconvergence has not yet taken place. The scenariosshow that in 2015 it is well under way. Telecomcompanies should therefore expect that players fromdifferent industries will continue to enter the market.16
  15. 15. appendix 1: key publicationsabout scenario planning> K. van der Heijden, 1997, Scenarios – The art of strategic conversation, Chichester, John Wiley & Sons.> G. Ringland, 2006, Scenario planning: managing for the future, Chichester, John Wiley & Sons.> P. Schwartz, 1991, The art of the long view, Doubleday, New York.> P.J.H. Schoemaker and K. van der Heijden, 1993, Strategic planning at Royal Dutch/Shell, Journal of Strategic Change, vol. 2, pp. 157-171.> L. Wilkinson, 1995, How to build scenarios, Wired, September.> J.T.M. van der Zee and P. Ribbers, 2000, Scenarios for strategic sourcing of information and communication technology, Proceedings of the Hawaii International Conference on System Sciences, January 4-7, Maui, Hawaii. 17
  16. 16. about the authorsProf.dr. Ard-Pieter de Man is Principal Consultant at Nienke Budde is Executive Business Consultant at AtosAtos Consulting and Professor of Management Studies Consulting. Her experience consists of large changeat the VU University Amsterdam. Both his academic projects, mainly reorganizations, post merger integrationwork and his consulting assignments focus on and cost saving programs. Nienke has sharp analyticalinnovation and alliances. Ard-Pieter is the author of ten skills to drill down to the core of a problem, combinedbooks and over forty articles on these topics. with the emotional intelligence to guide people/teams through organizational change and resistance to thisPieter Lugtigheid is Director Consulting Global Markets kind of changes. Having worked and lived in countriesTelecom at Atos Origin International and Principal ranging from China to Congo she is a quick thinker ableConsultant at Atos Consulting in the Netherlands. to deliver sustainable results.Pieter has over 12 years experience in the internationalTelecom arena. In his business development and Eelco van Hemmen is Senior Business Consultant atconsulting engagements his primary credo is “making Atos Consulting with over 3 years of experience instrategy happen”. Implementing and enhancing the Telecom Industry. His primary areas of expertisebusiness strategy, business models and business are Business Process Optimization and Strategy &processes are key in his profile. Innovation. The combination of these two areas enables him to translate Strategic or Innovative challenges intoAshwin Sardjoe MSc, MBA has more than 12 years pragmatic solutions at business process level.of experience within the Telecom Industry. Previous toworking with Atos Consulting, he has worked with BT invarious roles. Recent experience include managementadvisory services and IT project management for largeTelecom companies. His unique background makesan ideal fit for mapping Telecom business strategy andtrends upon related IT/technology strategy and trends.18