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Telecom 2020:Preparing for a very different tomorrow

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Telecom 2020: Preparing for a very different tomorrow

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Telecom 2020:Preparing for a very different tomorrow

  1. 1. 12 September 2014 Telecom 2020: Preparing for a Very Different Tomorrow Rob van den Dam Global Telecom Industry Leader IBM Institute for Business Value
  2. 2. Developing thought leadership Future Agendas Value Realization Studies 3 to 10 year industry outlook with action oriented next steps In-depth assessment of today’s critical issues, opportunities, etc CXO Surveys Chief Officiers studies – CEO, CIO, CMO, CFO, CHRO, etc.
  3. 3. Demand side: our biennial consumer surveys 2014 Consumer Survey: 22,000 consumers in 35 countries took part in the survey, covering:  Customer Spending priorities  Adoption of Comms services  Sources of Information  Customers’ attitudes towards CSPs  Customer Advocacy  Customer Trust
  4. 4. Country-specific profiles and CSP benchmarking
  5. 5. Agenda •How we see the world changing •Future trends that are happening right now •Our vision for a Telco in 2020 •Making it happen •What does YOUR future like?
  6. 6. The acceleration of OTT 50 Million Users 100 Million Users (Int) 300 Million Users (China) 200 Million Users 50 Million concurrent Users 40 Million Subscribers Google fiber 1.2 Billion Users 255 Million Users 130 Million Users 230 Mio Active Buyers
  7. 7. OTT and the New Generation 26% 25% 19% 17% 13% 30% 45% 55% 58% 66% 71% 76% 79% 27% 55% 54% 72% 41% 77% 68%SOCIAL NETWORKING EMAIL INSTANT MESSAGING / Chat MOBILE MESSAGING (SMS) MOBILE VOICE calls INTERNET VIDEO streaming/download MICRO-BLOGGING FIXED VOICE calls VOIP ((Voice over Internet) VIDEO CALLING Emerging Markets (age < 25) Mature Markets (age <25) 2014 IBM Global Consumer Survey •35 countries •22,000 consumers DAILY USAGE Source: 2014 IBM Global Telecommunications Consumer Survey
  8. 8. Daily usage communication channels in Asia 55% 71% 76% 77% 79%EMAIL SOCIAL NETWORKING MOBILE MESSAGING INSTANT MESSAGING / Chat INTERNET VIDEO 60% 60% 76% 78% 83%MOBILE MESSAGING SOCIAL NETWORKING EMAIL INSTANT MESSAGING / Chat INTERNET VIDEO streaming 60% 61% 76% 78% 82%SOCIAL NETWORKING MOBILE VOICE calls EMAIL INSTANT MESSAGING / Chat INTERNET VIDEO 44% 71% 73% 79% 81%MOBILE MESSAGING EMAIL SOCIAL NETWORKING INSTANT MESSAGING / Chat MICRO-BLOGGING 1 Instant Messaging 84% (WeChat, etc) 4 Micro-blogging 70% (Sina Weibo, etc) (2014 Global telecom Consumer Survey – all ages)
  9. 9. Global OTT / Internet players thrive 2004 data as of 9/17/2004. 2013 Market value as of 12/19/2013. 2012 Revenue is TTM. List excludes Alibaba ($75B), whose private market value would put it in the Top 10. List also excludes Skype (bought by MSFT in 2011 for $8.5B), YouTube (reported as part of Google) and Paypal (reported as part of eBay) 2012/13 2004 OTT and Internet category players What being Global really means
  10. 10. Global OTT / Internet players thrive 15 vs. 100 800M $100B+ 70% The top 15 global Internet companies have the same Market Value as the top 100 publicly-traded CSPs The top 5 – Apple, Google, Amazon, Facebook and Tencent – have more than $100B of Cash Apple iTunes accounts, most linked to a credit card Mobile Advertising Revenue controlled by Google and Facebook
  11. 11. CSP revenue per subscriber has decreased 162 519 2002/2003 2012/2013 413 1319 2002/2003 2012/2013 15 largest Global CSPs (Opcos in 10 countries or more, revenue > 5 US$ billion) 15 largest Single Market CSPs -69% -69% (CSP = Communications Service Provider)
  12. 12. CSP EBITDA margin has decreased 33,4%34,7% 2002/2003 2012/2013 15 largest Global CSPs (in 10 countries or more, revenue > 5 US$ billion) 15 largest Single Market CSPs -4% -22% 31,0% 39,9% 2002/2003 2012/2013
  13. 13. Growth CSPs is stalling Source: 2014 IBM report: What being global really means 15 largest Global CSPs
  14. 14. The implications for CSPs Soaring customer expectations CSP’s are behind consumer brands in customer experience and risk losing significant revenue year-on-year. Needs new forms of innovation A new kind of CSP is required that involves customers, employees and partners to co- create new kinds of products and services. With a new enemy New entrants in your market. Not your normal competitors, and they are innovating faster than you.
  15. 15. 93% of CSPs will focus more on “getting closer to the customer” over the next 5 years. - IBM CEO Study 56% of CSPs plan dramatic improvements in internal collaboration and 70% focus on significantly improving collaboration with other organisations in their ecosystem. 67% of CSPs to focus on industry model innovation to find new sources of revenue. - IBM CEO Study - IBM CHRO Study What Telecom CxOs are telling us
  16. 16. 3 key forces will drive changes FORCES Traditional telco model will disappear; new business models & partnerships required to sustain revenue growth Threats to revenue The growth in Internet services and subscription will not offset declines in fixed line, voice calls and SMS Information CSP’s have to manage a rich variety of data from both external and internal sources sources Data and analytics move from back-office to a critical profit enabler driving innovation in the front office Consumers Consumers want exceptional service from CSP’s as provided by consumer-oriented brands Innovate, partner, or die becomes an unspoken mandate as new entrants reach out directly to consumers and bypass the traditional CSP operator IMPLICATIONS IN 10 YRS
  17. 17. © 2014 IBM Corporation Challenge Need to innovate and create solutions faster Anticipate future needs such as 4G licensing Organise their business to leverage unified communication. Results Marketing teams can analyse new intelligence from consumers to launch new services using insight from that subscriber. Reduced costs and risk by expanding sources for new product ideas. Included 554 new “voices” in the development process during the first few months, with the publication of the first idea a mere ten minutes after launch IBM enabled us to deliver exciting products to the marketplace at a faster pace than ever before.” —Niu Gang, Associate Director, Shanghai Research Institute, CT China Telecom’s Innovation Platform
  18. 18. Major technological advances Program Learn Natural Language Analytics DeepQA Cognitive Computing “SyNAPSE” Silicon Devices Nano Scale 1 Billion Transistors 1,000X 1 Trillion Devices Nano Systems Workload Optimised Systems Exascale Software Defined Environments 1,000X Big Data 1,000,000X Real-time Inference & Knowable Future
  19. 19. Cognitive systems: Applications Sensor Networks / Internet of Things Infrastructure Buildings Vehicles Grids Metering Billions of end points 100K+ elements,10ms latency Multiple feedback time- scales Social Business Five-in-Five Watson Human and knowledge capital analytics TM Cognitive Sensing Technology: • Hearing and voice recognition • Extracting knowledge from pixels • Sniffing for healthiness • Haptic technology for retail • Healthier molecular based recipes
  20. 20. Some predictions of our own 5 to be precise IBM Reveals Five Predictions That Will Define the Future
  21. 21. How we see the world changing Human Society
  22. 22. How we see the world changing Machine-to-machine communication
  23. 23. How we see the world changing Internet for everyone Fully open, free to use Wi Fi in the Moscow metro
  24. 24. How we see the world changing Mobile as a remote for our lives To control home heating And home entertainment To manage home gaming Even to control toilet activities!
  25. 25. How we see the world changing The instrumented life
  26. 26. How we see the world changing True peer-to-peer
  27. 27. How we see the world changing Peer-to-peer innovation
  28. 28. In short: a new world • New classes of services • Connected lives/ mass personalisation • Business functions as a service • Industry value chains reconstructed • Disrupted competitive landscape Consumers Business Government/ Industries
  29. 29. 4 themes for CSPs Four Common Themes Cost Reduction Telco industry • Data dwarfs voice • High growth gone; fight is now for niches and markets further from the core • Digital, more demanding empowered customers shaped by experiences outside of telco • Industry consolidation just starting Media industry • TV everywhere: 195M tablets sold in 2013; and 5B smartphones by 2018 • Simultaneous consumption: 75% of consumers surf the web and use social media while watching TV • Audiences become collections of “ones” Customer Experience New Revenue Sources Reinvent the Enterprise
  30. 30. Four Common Themes Cost Reduction Customer Experience New Revenue Sources Reinvent the Enterprise
  31. 31. Cost Reduction
  32. 32. Cost Reduction
  33. 33. Achieving M&A objectives by global CSPs Group Revenue growth by expanding customer base Improve long-term competitive advantage Increase demand for products/ services by entering new markets EPS (increase/restore confidence of shareholders Risk reduction / diversification Economies of Scale / cost advantages Increase brand recognition Increase Innovation power Better serve global customers Improve potential for partnering Increase product portfolio Achieved to significant extent Hardly achieved 67% 45% 28% 40% 46% 27% 55% 26% 25% 38% 46% 16% 33% 36% 38% 31% 23% 20% 31% 33% 24% 31% 18% 22% 35% 22% 22% 50% 25% 45% 42% 37% 22% Only 27% stated that economies of scale has been realized to significant extent
  34. 34. Cost savings: Leveraging synergies In which AREAS was your organization able to CAPTURE SYNERGIES? (15 largest Global CSPs) Capturedsynergiestosome orsignificantextent Priority focus areas Source: 2014 IBM report: What being global really means
  35. 35. The road to ‘Global’ Integration Maturity Back-end Integration (Cost- focused) Front-end Integration (Revenue-focused) Low High High Low Organizational Enablement Global CSP Big-play Globally Integrated CSP Single- market/ Regional Player Market (DFO) Leader Moving from the lower left to the upper right requires operational and organizational alignment in order to improve a wide range of operational efficiencies. Global Integration Maturity. For CSPs to fall into this quadrant, they must have optimized their resources and assets across Opcos and seamlessly integrated their business processes and operations.
  36. 36. Four Common Themes Cost Reduction Customer Experience New Revenue Sources Reinvent the Enterprise
  37. 37. Today’s Consumer more Knowledgeable more Demanding more Relying on other customers more Collaborative more Empowered Consumers are becoming thanks to the popularisation of Internet-enabled devices and better accessibility to Internet content due to customers’s redefinition of what value means to them for news, reviews and recommendations for products, services and businesses (rather than turning to the CSPs) as they increasingly determine not just what services they want to consume, but exactly how they wish to consume those services as word of mouth enables them to seize control of CSPs’ reputations – and even some business decisions
  38. 38. Sources of information for today’s consumers in emerging markets access Social Media to evaluate telecom providers and their products /services 69% 9% 20% 25% 28% 34% 48% 60% 69% 72% 23% 19% 13% 31% 56% 33% 69% Internet SEARCH SOCIAL MEDIA RECOMMENDATIONS friends/family CSP WEB sites CSP EMAILS & promotional offers Traditional ADVERTISING Retail STORES Shopping PORTALS/auctions Emerging Markets Mature Markets Sources of information on telecom providers and their products/services (2014 Global telecom Consumer Survey)
  39. 39. Responses in case of good/bad experiences 20% 46% 35% 21% 46% 32% 29% 50% 21% 38% 55% 8% 40% 50% 9%Would TELL OTHERS about the bad experience Would COMPLAIN to my telecom provider Would DISCOURAGE OTHERS to use this provider Would post a NEGATIVE REVIEW or comment ONLINE Would COMPLAIN on SOCIAL MEDIA Always/Often Regularly/Possibly/Sometimes Never 29% 47% 24% 29% 49% 22% 29% 53% 18% 52% 41% 6% 53% 41% 6%Would TELL OTHERS about the good experience Would RECOMMEND my provider to others Would TELL MY TELECOM PROVIDER Would post a POSITIVE REVIEW or comment ONLINE Would spread on SOCIAL MEDIA What would you do in case of a POSITIVE experiences with your telecom provider? What would you do in case of a NEGATIVE experiences with your telecom provider? (2014 Global telecom Consumer Survey) United Break Guitars
  40. 40. Emergence of the consumer experience economy Mobile revolution Social media explosion Cloud Enablement Power of analytics Forces …… Social PersonalizedContextual My choice Perfect experience Always, anywhere connected SeamlessMy way ... resulting in the emergence of the consumer experience economy
  41. 41. Deliver with an EXPERIENCE in mind Competitive position Needs of customer Differentiated Relevant Undifferentiated Irrelevant Pricing / Market ValueLow High Commodities Goods Services Experiences make deliver stage
  42. 42. The overall customer experience Experience with the Brand Experience with the Product Experience with the Service Best Customer Experience  Experience with the Brand: To what extent does the company provide differential value to the customer through its brand  Experience with the product/service: To what extent do the products and services offered by the provider resolve the customer’s specific needs  Experience in interactions: To what extent are the various interactions the customers have with their company over the various channels easy and enjoyable. Customer Experience
  43. 43. Positive customer experiences drive loyalty 34% 55% 11% 34% 52% 13% 48% 45% 7% 51% 44% 6% 52% 41% 6%Would RECOMMEND my provider to others Become MORE LOYAL Would use my provider's services MORE FREQUENTLY SPEND MORE with provider AVOID considering COMPETITIVE products/services Always/Often Regularly/Possibly/Sometimes Never What would you do in case of a NEGATIVE experiences with your telecom provider? What would you do in case of a POSITIVE experiences with your telecom provider? 13% 62% 25% 25% 57% 18% 26% 59% 15% 29% 50% 21% 41% 49% 9%START considering services from COMPETITIVE providers Would DISCOURAGE OTHERS to use this provider Use the services of my provider LESS FREQUENTLY Would STOP making PURCHASING from my provider Would NEVER USE my telecom provider again
  44. 44. Customer Experience: CSPs are not leaders by any customer measure No CSPs in Top 25 Telecom lowest among 7 industry groups No CSP in Top 50 No CSPs in Top 50 No CSP in Top 100 Wireless industry ranked 44 of 50 industries No CSP in Top 50 Only one CSP in Top 100, O2 at #46
  45. 45. Customer Experience: Look outside the industry for leadership
  46. 46. Business impact of Customer Experience 28% 49% 21% 1% 1% 15% 35% 37% 12% 0% Significant Positive Moderately Positive Slightly Positive None Negative Expectations for 2014 Results 2013 “What impact have customer experience efforts had on your company’s benefits results this past year and what do you expect in 2014?” Source: Temkin (February 2014: % of respondents from companies with at least $500 million in annual revenues)
  47. 47. Outperformers ánd Customer Experience Focus 29%more 54% Outperformers 42% Underperformers Focus on improving the customer experience
  48. 48. C-suite working relationships 17% Underperformer 30% Outperformer Close Telecom CMO-CIO relationship Where Telecom CMOs have a close working relationship with the CIO, the organization is performing better overall
  49. 49. Customer Interaction Channels 145% more “It’s extremely key to have an Omni- channel Platform to interact with the customer (Web, Forum, Business Stores...).” Directeur Général Business, Telecommunications, France 33% 88% 69% 69% 81% 67% 60% 46% Digital Channels Call Centers Face-to-Face Traditional Media Today 3 - 5 years Telecom CMOs intend to interact digitally (social, mobile, Web) with customers to a much greater extent in the future
  50. 50. How to connect with your customers? Reset the overall Customer Experience Build Innovative Compelling services Build Smarter Capabilities
  51. 51. Starts with getting the basic rights Get the basics right Consistently deliver the experience Differentiate the experience Delight customers Years Loyalty Make sure the fundamentals (delivery comms services, billing, customer service, etc) are done right Consistently deliver the same message and performance through all touch points and lines of business Personalize and do something distinctive for your customers that goes beyond satisfaction Positively surprise your customers with an experience that helps form an emotional engagement Reset the overall Customer Experience
  52. 52. Collaborate with: Consumers, Employees and partners Build Innovative Compelling services of respondents like to interact with their provider on improving an existing product 60% 60% 56% 38% 26% 22% 22% 21% 6% IMPROVEMENT EXISTING Product/Service IMPROVEMENT CUSTOMER CARE DEVELOPMENT NEW Product/Service FEEDBACK on COMMUNICATION to market FEEDBACK on Overall STRATEGY IMPROVEMENT of Existing CAMPAIGN DEVELOPMENT of New CAMPAIGN Other 98% 97% 97% 97% 95% 93% 66% Topics customers are willing to communicate on with their provider % of respondents willing to provide feedback or input Global
  53. 53. Building and Deploying Smarter Capabilities Build Smarter Capabilities Analytics Cloud Social Mobile Security Key CSP capabilities to improve customer experience
  54. 54. Analytics / Big Data Objectives 66% 15% 11% 8% 0% 49% 14% 15% 18% 4% Customer- centric objectives New Business Models Risk/Financial management Operational optimization Employee collaboration CSP respondents All-Industry respondents Customer-centric outcomes Understanding behavior patterns and preferences provides organizations with new ways to engage customers Providing a greater customer experience, every time, is vital for limiting churn, building loyalty, and for competing against over-the-top players, including Google, Apple, Facebook, WhatsApp and Skype, companies that have proven adept at dreaming up compelling online experiences for consumers.
  55. 55. Providing a distinctive experience As an example, if high value smartphone customers are experiencing pour thru put performance, big data analytics enables the CSP to know that immediately and distribute it to the most appropriate stakeholders in the organization so they can take the necessary steps to alleviate the issue and ensure customer experience is not affected, or at least acknowledged Monitoring network performance to improve customer experience As an example, the subscriber’s phone usage could be automatically analyzed to determine what free add-on offer they are most likely to value. The provider could then instruct a customer service representative to call the subscriber and offer them the free add-on. The goal would be to improve customer satisfaction by demonstrating that the provider values the customer’s business. Intelligent market campaigns to offer promotions useful for customers The ability to respond to customers with next best action As an example, automatically authorizing a call center representative, who is speaking to a customer known to be having problems with their service, to present the customer with an offer that compensates them for their trouble and helps retain them as a customer. EXAMPLES
  56. 56. Understand sentiment and digital influencers • Assess Social Media Impact • Segment Social Media Audiences • Discover new ideas…and risks • Identify Relevant Relationships • Influence Influencers Generate Positive Word-of-Mouth
  57. 57. Apply Cognitive Computing Dato’ Sri Shazalli Ramly CEO, Celcom Axiata Berhad “Celcom will harness the power of IBM Watson in analyzing raw data to provide deeper customer insights and preferences in near real time.”  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. changing plan features.
  58. 58. Four Common Themes Cost Reduction Customer Experience New Revenue Sources Reinvent the Enterprise
  59. 59. New Revenues Sources Enter higher growth adjacent spaces AT&T and IBM announced its Internet of Things / M2M alliance to initially focus on creating new solutions targeted for city governments and Midsize utilities. T-Mobile USA Network analytics for operations and CEM Leverage on differential insight Cannibalize before being cannibalized iO lets you make calls, chat and share images with other iO users over the Internet for free (WLAN and 3G/LTE) Partner with OTTs Selling data to 3rd parties Telefonica designed a service to provide insights to retailers to help them tailor local offerings for existing stores, and determine the best locations and most appropriate formats for new stores. …Many Possibilities for growth
  60. 60. Four Common Themes Cost Reduction Customer Experience New Revenue Sources Reinvent the Enterprise
  61. 61. The New Enterprise Model Developers ISVs Banking Consultants/ SIs Healthcare Media Social business Personal comms Security Policy Analytics M2M Etc… Etc… Managed customer interface, services, platforms and networks Service providers and partners CSP solutions Consumers Business Government/ Industries Example Players in the services economy today $1.5B revenue of10K+ Affiliates Expecting $10B transactions on mobile in 2012 40% total units sold by outside sellers 40% new business comes from non-CRM offerings API only company reaches 150,000 developers and 1.5M calls a day 4.5M API invocations per month In 2020 up to 60% of today’s IT market is addressable through this delivery model
  62. 62. Over to you What does YOUR future look like?
  63. 63. The CSP role in tomorrows world 1. Lean and mean Network provider OR Smart Teleconnect / Ecosystem provider? 2. Follower OR Leader? 3. Customer driven service company OR Product supplier? 4. Differentiated OR Commoditized? 5. Need for Vertical AND/OR Horizontal integration? 6. Work with new entrants OR Fight them 7. Do it Yourself OR Co-create? 8. Local OR Global? 9. Consolidator OR be consolidated? Or overperform and remain independent?
  64. 64. Thank you Rob van den Dam Global Telecom Industry Leader IBM Institute for Business Value rob_vandendam@nl.ibm.com www.ibm.com/iibv

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