Choose the appropriate operating model to achieve scalability through co-creation
The pandemic has undoubtedly been a great accelerator for key trends across all industries. In fact, according to a McKinsey report, sectors that were at the top of the economic curve before the crisis, such as pharmaceuticals and semiconductors, have been pulling ahead whilst less profitable industries have continued downwards.
Unsurprisingly, the telecoms industry stands in the middle range but has remained stagnant there ever since 2018! However, with the increased adoption and evolution of 5G, IoT and Edge, CSPs are at a pivotal moment in time where they can elevate their position. The question is how?
In the past, telecoms companies believed they were bound to two different business models the system integration model, where an organisation buys all the pieces, makes the solution and tailors it specifically to the customer, or the “App-store” model using a one size fits all approach to offer a central place where customers can buy generic services. However, although the former model usually creates high-profit margins, it requires a superior level of technical know-how which takes time to develop and is hard to scale. Equally, the “App-store like” model has its pitfalls with its low-profit margins despite its low capabilities and potential to scale.
Instead, CSPs need to adopt a non-linear and multi-sided business model focused on aggregating their own capabilities and those of their partners, says Angus Ward, CEO of Beyond by BearingPoint. And with customers no longer searching for horizontal solutions, it’s high time CSPs take the role of a solution-based provider. Enter, the co-creation model.
Share the workload and collaborate
For several years, the telecoms industry has been generating hype for 5G, but when it comes to delivering on its promise, it has been slow to adapt to market requirements.
5G cannot be a standalone technology. Instead, 5G offerings must be part of a wider solution designed to solve enterprise business and operational problems, encompassing a multi-technology, omni-partner, vertical-oriented approach. Through increased speeds and significant latency reductions, 5G will complement a breadth of technologies such as IoT, AR/VR, Mobile Edge Compute, Analytics and AI.
However, CSPs are not expected to be specialists in all of these areas. Co-creation solves this problem by taking away the complexity and harmonising the disparate elements for their customers within an orchestrated ecosystem that connects all the technologies that enterprises require to scale their business all in one place. Co-creating with partners allows CSPs to gradually develop a growing number of solutions with an increasing number of technology partners and vertical specialists.
As orchestrators of an ecosystem, CSPs have the potential to offer so much more given that virtually no other company can offer such a broad network of potential partners covering a wide range of needs via an already public network. And as more partners and customers come on board, CSPs can continuously scale their own business and that of the enterprise.
However, changing the business model alone is not enough. For CSPs to progress up the curve, they need to evolve their thinking and strategies by adopting a principle of openness. With a new level of determination of how to address customer needs, CSPs can build an ecosystem that provides endless ongoing value. Where this process begins by reaffirming customer relationships, it ends with a greater understanding of how to choose the right operating model and how to target the right customers. And here’s how:
- Reaffirming customer relationships
Changing the business model ultimately changes how CSPs interact with their customers. Involve them into the process and understand their needs after all, they’re the ears to the ground and can give insight to their digital experience and what exact problems they encounter.
SMBs often don’t have the necessary IT expertise in-house and need to be guided on how to buy the solution, deploy and implement it with minimal complexity. CSPs must lead with a deep understanding of enterprise and SMB customer’s needs to support them with a simple, consistent and frictionless end-to-end brand experience across teams, channels and ecosystem partners.
- Aggregating solutions
Customers don’t expect CSPs to do it all, but they do expect them to engage a variety of partners to aggregate various business solutions together. Prioritising continuous service experimentation with an agile approach to co-creating 5G-enabled solutions with partner ecosystems, with a laser focus on the customer, is key for success with this new generation.
By accepting the redundancy of traditional operating models and recognising the benefits of aggregation, CSPs can orchestrate an ecosystem where several partners can co-innovate and co-create business solutions that offer a more seamless digital experience for their customers. All resulting in solutions that can be supported and maintained for life saving time and investment in the long term!
- Partnering up
In our recent Beyond report, we found that CSPs expect to partner up with three or four businesses. Whereas their customers expect them to partner with eight or nine providers! This stark contrast further proves the lack of awareness CSPs have of the wider market. But it’s not the end of the road just yet. Collaborating with a multitude of partners can help demonstrate how CSPs can marry 5G capabilities and other assets with a variety of ecosystem partners to deliver profound value to enterprises in 2021 and beyond.
Partnerships reduce complexity and eliminate the need for CSPs to be specialists while enhancing the value of the 5G service. This is exactly what the co-creation model seeks to enhance and encourage. The saying that ‘two heads are better than one’, rings true, and through specialist partnerships, CSPs will see 5G from the customer’s perspective.
The author is Angus Ward, CEO of Beyond by BearingPoint.