Michal Harris, SVP Global Marketing at Beyond Now, specializes in telecoms and software. She drives thought leadership sessions and business strategy workshops across verticals covering key market trends in her core area of expertise, including 5G, AI, and other industry X technologies.
Mei Lee Quah: What are some of the key trends changing the telecoms industry?
Michal Harris: We are experiencing a critical milestone for the industry, i.e., a tectonic shift where technology innovation is developing at an incredible pace, generating many possibilities with many new emerging technologies driven by technology players. Ironically, over the past 20 years, the telcos have experienced a shift in roles from owning innovation to enabling innovation, and now they need to step into the role of orchestrating innovation. Despite these changes, gaps still exist, e.g., between what is possible and what is needed and between what technology can enable and what end users are able to understand, manage, and utilize. On one hand, some solutions are not ideal, while on the other hand, an ideal solution may be too complex with too many factors to consider, making end users feel overwhelmed from the knowledge and capabilities gap. To bridge both gaps, technology players and telcos need to collaborate to bring these technologies together to create simpler solutions that are easier to adopt and use.
To address the new paradigm, the telecoms and technology worlds are morphing from hubs of innovation and enablement to spheres of ecosystems. This can create opportunities for telcos, and we are seeing that they are aware of the changing tide and understand that there is a need to act and either develop their partner ecosystem or transform into a platform player. This observation is more prevalent amongst business leaders. In 2022, our conversations with telcos shifted from driving high-level awareness that “the ecosystem play is coming, and you need to get ready” to being centered around the details of “how can you make this work?”
However, change management is a challenge for telcos as it requires the ability to get the entire organization on board to support the business transformation that is needed. This a task that is much harder than it sounds, as even though many telcos have announced that they will transform into techcos or become platform businesses, the reality is such that transitions are too slow and limited. There is a need in the market for how we can make it easy for telcos to adapt, how we can simplify the transformation for them, what we can do to offload some of the transformation tasks and, most importantly, how we can help them reduce the risk and time involved in getting the organization on board. Having invested time in learning from our telco customers about what their enterprise customer challenges and preferences are, we have engaged with potential partners to onboard the necessary technology solutions to our platforms to better serve those needs, thus reducing telco’s effort in finding and developing these solutions.
It was a light bulb moment when we identified that the way forward for telcos to support the business and operational needs of the enterprises will require them to develop a digital marketplace that focuses on building outcome-based, multi-partner technology solutions. What enterprises really need are digital marketplaces offering technology solutions to help them drive growth while also taking away the overhead challenges and the complexity involved in adopting new technologies. As digital marketplace owners, the responsibility falls to the telco to make the solutions as simple to buy and consume as possible. This will help to incentivize repeat purchases with a growing pool of enterprise customers.
What are your views on the legacy mentalities of control within the telecoms industry, and how are they impacting telcos?
Control is a big topic! The world has shifted from telcos having complete control of the way they worked with customers to a world requiring partnerships and close cooperation, sometimes even with competition, with more equal ownership of outcomes and co-creation. The word co-creation gets bandied around a lot, but few grasp the essence of it, i.e., it describes partnerships where a product or service is built, sold, and supported together.
Technology is not an island, and companies are seldom able to leverage it alone. Growth in current times stems from collaboration and co-creation. Increasingly, companies are going to customers with partners that complement their strengths and working together as a team with customers within mutually beneficial ecosystems. Future growth of the telecoms industry depends on how well companies can collaborate, but progress is slow, and the scope is limited. Carefully managing risks to overcome the pandemic uncertainty, companies often start with solving pain points in selected areas, e.g., manufacturing, and then aim to action a wider scope after they are sure their approach works. The rate at which this approach is taken does not fit the fast pace of the market. Less than 37% of telcos are involved in developing and managing ecosystem-based solutions, even though the demand is there.
A recent survey uncovered that 97% of enterprises believe that it is more important for telcos to collaborate with technology players to build solutions that address their needs rather than selling 5G or fiber solutions. Telcos are not expected to become resellers of third-party services, as we often see happening in markets. Instead, the requirement is for telcos to work with partners to design a solution based on a few technologies integrated together, with a clear outcome for the customers leveraging compatible elements and tools like AI to achieve increased outcomes, e.g., increased automation. The reality is that telcos must relinquish control, act, or risk losing out on revenues to agile digital-native companies with skin in the game that understand how to position themselves and their relationships around what customers truly need.
There is little disruption and only a handful of disruptors in the telecoms industry. Will this change, and what can we do to drive more disruption?
Well, things are changing. Disruption is going to happen in bigger ways, triggered by stakeholder expectations. For example, disruption is happening in infrastructure and connectivity, triggered by customer expectations. The exponential rise of the alternative network providers (AltNets) is an indicator of this trend, as broadband infrastructure is being provisioned cost-effectively with superior customer experience to the communities that need it. Separately, changes in shareholders, with more private equity (PE) firms on telco boards, are pushing telcos to reassess diversification and rethink the business model. Telco will slowly but surely realize the need to prioritize growth in the enterprise segment as these new shareholders demand better performance, faster reactions to market dynamics, debt or cost reduction, etc., and better returns on investment over short durations.
Over the past four years, we have seen telcos merge or sell their network assets to help address the lack of differentiation and gradual decline of their stock market valuations. In 2022, Vodafone announced it will sell up to half of its 81.7% stake in towerco Vantage Towers and needed to replace the CEO, while Telefónica is considering selling its stake in UK towers firm Cornerstone. It is now decision time, where telcos embark on new business models and partnerships and collaborate with other members of the ecosystem to co-create and exchange solutions or get left behind. Telcos still have valuable assets, especially related to their access to customer information data and the ability to adapt to and overcome complexity to deal with challenges faced. Forced to change, they can become strong partners and collaborators.
What can we do to encourage more innovation within the telecoms industry?
Collaboration, co-creation, and co-innovation are key to driving change and innovation in the telecoms industry. Telcos suffer from incredible inertia, so to overcome a lack of innovation and lackluster R&D spend, we will inevitably see more telcos turning to partnerships in 2023.
Telcos will not only partner with hyper-scalers, but they will also take the meaning of collaboration with a partner ecosystem more seriously. We will see this lead to increased partnerships with telcos, with parties tapping into each other’s innovation pool and R&D investments while also collaborating with smaller, more agile specialist technology players. Moving in this direction helps to broaden telcos’ capabilities to co-create technology solutions and win enterprise revenue on a global scale. To address the need to bring the telecoms ecosystem together, Beyond Now helped to co-found eXchange, a telco-to-telco wholesale marketplace for technology solutions created to accelerate telco B2B and B2C portfolio development and revenue growth. The aim is to encourage collaboration between the telecoms industry and innovators where they can co-create, co-innovate, trial, and monetize technology solutions that will support the digital transformation needs of enterprises, vertical organizations, consumers, and households.
Through eXchange, we ensure that telcos have access to a growing repository of technology solutions and to new channels to go to market. With eXchange, there will be a system, a process, and a platform that can underpin collaboration that helps to build the right factory to house innovation. eXchange utilizes our Infonova Digital Business Platform’s advanced and automated ecosystem orchestration and monetization capabilities, enabling frictionless trading between the different members. Each member can directly onboard and manage their own services and solutions, which can then be made available to all members of the community, pending commercial agreements between the different members. In this way, members can source services from other members to resell to their customers that include complete localization, i.e., in terms of language, currencies, taxes, etc. Its agility and openness ensure that the ecosystem has the flexibility to expand and adapt to change in the industry, thereby encouraging process and platforms development that can cope with the changing needs of the customer.