iot success strategies for communications service providers

IOT SUCCESS

STRATEGIES FOR

COMMUNICATIONS

SERVICE PROVIDERS

OPENOPTIMISTIC

UNSTOPPABLE

Copyright © 2017 Accenture All rights reserved.

THE INTERNET OF THINGS IS HERE –

AND EXCITEMENT IS RISING

Communications Service Providers are forecasting tremendous benefits from the internet of things (IoT), both for their revenue expectations and for society as a whole.

The excitement is justified: as providers of key connectivity – between sensors, devices, data centers and people – CSPs will be integral to the proliferation of the “internet of everything”.

A NEW REPORT FROMTHE WORLD ECONOMIC FORUM AND ACCENTURE SAYS:

The IoT is forecast to add

$14

trillion

of economic value to the

global economy by 2030.

Increasing bandwidth and data usage

could generate an additional

$65 billion

in operating profits for telecommunications

companies.

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http://reports.weforum.org/digital-transformation/telecommunications/

Copyright © 2017 Accenture All rights reserved. 3

SO - WHAT’S THE DRAWBACK?

For Communications Service Providers, commercial success from the IoT is by no means assured. Much of this potential new connectivity revenue will have low profitability and low Average Revenue per User (ARPU). Unless CSPs make fundamental changes to service offerings and business models, other companies will be reaping the benefits.

Offer solutions and services to customers

rather than just products and connectivity.

Create the right operational focus and

partner choices

Implement more sophisticated customer

support strategies

Excel in product and service design, brought to

market at speed

Reshape business models and sales team profiles.

BOTTOM LINE RESULTS AND INCREASED BRAND VALUE WILL FOLLOW.

CSPs NEED TO EXPLOIT OPPORTUNITIES TO DELIVER SERVICES ACROSS THE IOT VALUE CHAIN.


THE IoT COST OF SERVICE CHALLENGE

The proliferation of Low Power Wide Area Networking (LPWA) for IoT connections will cannibalize the existing cellular connections business (2G, 3G and 4G with higher ARPU).

CSPs are optimistic on LPWA, but in general they have not articulated the economics and profitability of this scenario.

To compensate for low ARPU per connection, CSPs will need to drive for significant volumes of connections to equal former revenues and returns. Meanwhile, there will be other challenges:

Increased competition from other technologies

and competitors who now have much lower

barriers to entry

THESE ARE CRITICAL QUESTIONS WHEN, FOR EXAMPLE:

THE COST OF HANDLING ONE CUSTOMER SERVICE ISSUE THROUGH A CALL CENTER COULD BE MORE THAN THE

PROFIT MARGIN ON THE ACCOUNT FOR THE YEAR.

Re-shaping and scaling CSP operations (supply

chain, provisioning, servicing, billing) to serve IoT customers

effectively

Creating optimum customer experience to safeguard growth and retention


SHAPING AND SCALING SOLUTIONS BEYOND

CONNECTIVITY

The IoT market is attractive, but

connectivity services only

constitute a small portion of the

rewards. To really take

advantage of the IoT, CSPs must

figure out how to offer more.

They must choose the right focus

areas, capitalizing on their core

strengths to ensure a

competitive, differentiated

product to a crowded market.

Then embrace rapid prototyping

to move offers from concept to

market at speed.

KEY QUESTIONS:

1. Which industries and verticals to target to

maximize ROI?

2. How best to leverage the growing ecosystem to

support this?

3. How to make the cultural and operational switch

from product to solution, effectively enabling

sales and service delivery?

4. How to build a new base of stakeholder

relationships, managed by sales teams that have

moved beyond their old comfort zone?


SUCCESSFUL CSPs ARE FUNDAMENTALLY

RETHINKING THEIR STRATEGY

The largest opportunities lie in providing the suite of consumer and enterprise applications and services that enable IoT to become a reality.

According to a new report from the World Economic Forum and Accenture, the figures look promising:

The market opportunity from enterprise services could be more significant:

Potential of an additional

$100 billion

in operating profits across the

industry by 2025.

Of this, network operators and device manufacturers

could together capture up to

15% of the

market

for consumer IoT services

This would mean an operating-profit uplift of

$23 billion

Up to

$75 billion

in operating profits across consulting, implementation and operational services.


DISRUPT, OR BE DISRUPTED

Open platforms are the key to success in the digital economy. They enable businesses to move away from the traditional linear relationship models with suppliers and customers, to one that is more dynamic and fluid, one that easily connects an entire value chain through well-designed APIs (application program interfaces), and thus empowers new operating and revenue models, sometimes across industries. When platform providers build ecosystems around their core business, the ecosystem members use the platform to create innovative services for the platform provider’s customers, and bring their own customers too.

While tech companies that are born digital have long understood the power of platforms, there is very little evidence that CSPs are taking radical steps to embrace this transformational power to capture new growth opportunities.

They now face a stark choice: disrupt or be disrupted — and many are doing both at the same time. The technology exists today to launch and operate platforms, as well as the platform-based business models and the strategies they enable. Industry players need to relinquish control over supplier and customer relationships, thinking and acting in a whole new way.

TECHNOLOGY CHANGES ARE ONLY THE BEGINNING:

A PLATFORM BUSINESS MODEL REQUIRES A COMPLETE CHANGE IN CULTURE AND MINDSET, PROCESSES,

GOVERNANCE AND LEADERSHIP STYLE.


Move at speed to a platform based approach with focus on technology, operational excellence and innovation, to reduce costs and to maximize the profitability of each connection. (e.g. automation, robotics in provisioning, billing, customer service, etc.).

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STARTING THE TRANSFORMATION: SIX STEPS

FOR CSPs

Build robust ecosystems and partner communities to develop connectivity sales channels. Crucially, embed connectivity within partners’ solutions through new business models (specifically platform ecosystems), differentiated propositions and connectivity management platforms.

Consider customer support. It’s just not realistic that CSPs will be able to cost-effectively offer traditional levels of customer service, onsite support, etc. on a $1 per-year connection. Look at self-serve options and automation. Consider overall support models for the IoT business.

Build end-to-end solutions into products. Do this through ecosystems and partners, white labelling and mergers and acquisitions.

Consider new business models associated with white labelling partner products and services. Don’t just sell connectivity, sell the outcomes it delivers to its users. Value-based selling isn’t just for big B2B deals these days. Consumers think that way too; make them offers to meet those expectations.

Enable more strategic sales forces to sell business solutions.

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4 5 6


CONCLUSION

The IoT market is moving at high speed. Winners

and losers will be apparent in the next two years.

Traditional, long-tail product development is obsolete here; CSPs will need rapid

transformation, prototyping and delivery.

Successful CSPs will identify and exploit

opportunities to move across the whole IoT value

chain, employing a platform business model to

offer more ‘solutions’ that deliver a tangible

outcome to customers.

That's the path to getting a worthwhile slice of the

enormous potential revenues on offer.

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AUTHORS

JAMES PAUL

Digital Business Integration Consultant

Accenture Digital

PHILIP VANN

Global Managing Director, Connected Devices & Embedded Software

Accenture Digital

FRANCESCO VENTURINI

Global Managing Director

Accenture Communications & Media Industry Group

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ABOUT ACCENTURE

Accenture is a leading global professional services company,

providing a broad range of services and solutions in strategy,

consulting, digital, technology and operations. Combining

unmatched experience and specialized skills across more than 40

industries and all business functions – underpinned by the world’s

largest delivery network – Accenture works at the intersection of

business and technology to help clients improve their performance

and create sustainable value for their stakeholders. With more

than 394,000 people serving clients in more than 120 countries,

Accenture drives innovation to improve the way the world works

and lives. Visit us at www.accenture.com.

iot success strategies for communications service providers

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