There are very few places left in the world where mobile devices aren’t a central part of daily life and, as consumers, we expect that connection to come with flawless network quality, lightning-fast data speeds, personalised service and a world of entertainment options at our fingertips.
While mobile, digital services are certainly a path to revenue, the market is young and still maturing. So how will communications service providers (CSPs) truly create wealth from digital services in the short and long term? Here, Phillip Yoo, the president of global carrier business at CSG International shares some answers.
VanillaPlus: When it comes to digital services, how much of the evolving CSP landscape is talk and how much is reality?
Phillip Yoo: The CSP landscape has been in a constant state of evolution since its inception – as an industry, we have grown from wireline to wireless, to messaging and data services and now to streaming video content, geo-location and an app for everything. Today, the digital transformation is causing a new level of business disruption – CSPs are dealing with a different set of competitors than ever before and expectations for service quality are at an all-time high. All of this is driven by the consumer demand for digital services, and CSPs are working to predict the services that consumers will want to buy and take proactive action to serve them in real-time. This necessitates an internal disruption for the CSP, to develop a new supporting strategy and architecture, designed to better serve the always-connected consumer.
As with setting any connected lifestyle strategy and architecture, making consumers’ lives easier should underpin any new service. This means that a service provider needs to think holistically about product, market segmentation, care, price, and customer engagement. If you neglect one of these elements, you can turn a great new service into a nightmare experience for customers. Plan on getting to market, gaining insights and making adjustments. The digital customer experience overall needs to be constantly evolving. The biggest risk is in standing still.
VP: How are you seeing approaches to creating wealth in the digital economy develop and in what ways are these impacting CSPs?
PY: In the digital economy, consumers not only want to be connected to each other, but also to their digital services like movies and music on the go, and to things, like their home thermostat or home security system. The big question lingering around serving the connected consumer as they connect to both people and things is: How do we make money – particularly in IoT, and how do we create wealth?
In 2012, there were approximately 2.5bn connected devices and Gartner predicts 30bn by the beginning of the next decade. This will add US$1.9 trillion to the global economy. Monetising this US$1.9 trillion is the next big move for CSPs, this is their next big opportunity to generate margin-rich revenue streams. In 2016, CSG partnered with an independent research firm to poll CSPs about their plans for future growth. In the survey, 57% of respondents said monetising and facilitating IoT is biggest revenue growth opportunity over the next three years. To do this, they need to rethink their go to market model and the systems, processes and people required to execute – not only on IoT opportunities, but the revenue potential of the digital economy.
VP: What do you see as CSPs’ inherent strengths – aside from providing bandwidth – in the digital economy?
PY: Within the digital economy, we see the CSP role playing out in two broad directions: 1) being the utility and connectivity for IoT and other connected consumer transactions, creating a smaller revenue opportunity but still requiring significant investment in the networks, and 2) service aggregation, offering a bigger revenue and margin opportunity.
The service aggregator builds its own services, aggregates other partners’ services, and provides end-to-end managed solutions to customers, everything from consumers to businesses and as a wholesale provider. This service aggregation role will drive an approach that we call the B2B2X model, and we believe the ability to execute on this model will be a CSPs biggest attribute and a reliable path to creating wealth – if the model is executed correctly.
VP: To what extent are B2B2x models necessitating changes in CSP infrastructure?
PY: B2B2X means the CSP takes a controlling management role in the digital ecosystem, provides solutions and leads the monetisation across the ecosystem in multiple directions – consumers, business, wholesale, distribution. This role allows them to use their core capabilities in network, customer care and billing and other core areas to work with specific partners to launch and drive services and help monetise the digital services opportunity across the industry.
We see many CSPs moving in this direction right now, investing in building digitally-focused organisations and partnerships but, one of the main challenges for many CSPs is they are often hindered from taking this role because their back-end systems are built for traditional CSP services like voice and SMS that are products and services generated from their own networks. Third-party offerings means the catalogue of offerings and bundles becomes infinitely broader. Legacy infrastructure is not fit for purpose with these broader digital services, particularly when it comes to serving the connected consumer.
On the systems front, service providers need a digital service platform that provides flexibility to launch quickly and integrate offers in interesting ways. This usually requires new, adjunct systems to engage the customers across devices and collect insights about how the customers use the service.
Culturally, service providers need a new level of agility to get offers out to market quickly and provide a mechanism to listen to what customers like and don’t like about the offers. Customers using the service is the most effective feedback loop, but culturally you have to be prepared to launch and then quickly evolve a service.
Big data analytics and customer insight models are an important toolset that service providers can use to better understand which up-sell, cross-sell, next best offer and even promotional items may best encourage a consumer’s loyalty to the brand. Many of the large internet brands drive everything from the data they collect around a consumer to create a personalised experience to make life easier for consumers. These companies have not just upped their game, but have changed the game when it comes to anticipating what a consumer will want which can drive real long-term brand loyalty.
To manage all this in real-time and provide high value services to customers, CSPs will need lightning fast plug and play type business systems, highly flexible with carrier-grade scalability, that makes it easy for partners to collaborate on and that ultimately drives a specific connected consumer experience. They need business processes that are highly automated, and manual labour needs to be focused on innovating and creating new business models, not manually driving the back-end systems. They need to be able, both from skills and technology perspective, to lead the creation of new business models and manage monetisation across the digital ecosystem.
VP: Are you seeing the need for vendor business models to change as a result of digital transformation? What does this mean for CSG International?
PY: The rollout of all-IP networks and 5G networks means CSPs can expect more video traffic, more data traffic and even more growth of sophisticated, connected services. The challenge for CSPs is to develop strategies to be more nimble, to quickly launch new services in line with what new network speeds can enable.
For CSG, which is listening to the market and investing significantly in R&D to enhance our portfolio and developing new solutions that will support the unpredictability of tomorrow’s business, key questions to ask have become: How can we help our customers innovate and how can we help our customers launch new digital services quickly and create wealth from those digital services?
Many customers are looking to utilise a cloud-based, Software-as-a-service platform that can overlay a CSPs existing infrastructure to help them get to market quickly with new services and realize new revenue streams right away. No CSP wants the pain involved in the rip and replace of an existing BSS infrastructure, but they can’t be hampered – vendors have to be focused on offering new ways to empower their customers to be nimble and innovative without having to re-build an entire operating architecture.
VP: How is CSG International positioning itself to reflect the changes in the CSP market and to help customers harness all the opportunities of the digital economy?
PY: CSPs are under relentless pressure to compete in the digital economy, pitted against digital-savvy companies like Amazon, Google and Apple which have set the bar for the customer experience very high.
To help CSPs not only compete, but create wealth in the digital economy, CSG has developed the Ascendon digital services platform which enables providers to participate in the federated digital economy right now while moving purposefully toward a business model that dramatically reduces operational expenses, fully digitises front and back offices, and unites a portfolio of services – existing and new – into a single customer relationship. A cloud based, SaaS platform, Ascendon gives providers the ability to launch, monetise, and scale new digital services in 60 to 90 days.
CSG is strategically focused on helping our customers connect consumers to each other and to the services they care about. We believe that with the right alignment of people, processes and technology within a CSPs operations, creating wealth in the digital economy is achievable in the short term, and over the long-term evolution of the digital services yet to come.
