Info Image

In 2020, Five Gaps Stand Between Asian CSPs and Enterprise Service Success

In 2020, Five Gaps Stand Between Asian CSPs and Enterprise Service Success Image Credit: Wrightstudio/www.Bigstockphoto.com

In the ongoing race to roll out 5G and gain new subscribers, Asian CSPs are among the global leaders. In Spring 2019, South Korea was one of the first countries to launch a nationwide 5G network: by August, the number of 5G subscribers using it had surpassed two million. CSPs in China are currently testing 5G across all major cities and provinces, including Shanghai, ahead of commercial launches later this year. The GSMA forecasts that 24 Asia Pacific markets will have launched 5G services by 2025.

Already CSPs worldwide have said publicly that it will be services to enterprise markets that will generate the majority of their 5G revenues. A recent study of enterprise ICT buyers and telecom executives in Asia by BearingPoint//Beyond has found that enterprise services represent a huge opportunity for CSPs.

But the study offered a stark warning. With 5G network build-out costs around four times the cost per square kilometre compared to 4G, CSPs must adapt their business models if they want to make a success of the opportunity presented by enterprise services.

The study reveals five critical areas of improvement - or “gaps” - that CSPs in Asia must close to win over enterprise customers

Gap #1: Divergence between CSP priorities and enterprise demands

A massive 84 percent of CSP executives expect Asia’s enterprise market - both large corporates and SMBs - to be their organization’s main revenue source in two years’ time, versus just 16 percent who believe it will be the mass consumer market.

However, only 39 percent of CSPs in the study identify the enterprise segment as their main focus for funnelling internal investment. It seems that CSPs’ ongoing preoccupation with consumer markets is holding them back from properly investing in the enterprise opportunity.

The study also found a significant divergence between what enterprises want versus what CSPs are prepared to sell them.

For example: Artificial Intelligence (AI) is a priority investment for 20 percent of enterprises today, growing to 26 percent in 2021 - however, just 3 percent of CSPs see it as a focus. It’s the same story for cloud compute: 34 percent of enterprises see it is a priority investment area versus just 23 percent of CSPs.

If CSPs want to monetize 5G effectively with enterprise services, it’s vital that they invest in enterprise markets and bring their customers precisely what they want to buy and how they want to buy it.

Gap #2: A clear “knowledge gap”

The study also uncovered what amounts to a “knowledge gap” by Asian CSPs around the changing needs of enterprises. CSPs acknowledge their shortcomings when selling to enterprise customers: 20 percent believe they lack a proper understanding of the different industries they want to target. A further 20 percent believe their organization is still too focused on selling connectivity only.

In an increasingly digitalised world, enterprises want technology partners and solutions that will transform their businesses, improve efficiency, and accelerate their own rate of innovation.

It’s positive that CSPs know what they don’t know. But they must now work much harder with partners to fill this gap in understanding of the solutions their customers want to buy.

Gap #3: Outdated IT impedes innovation and time to market

Nearly half (49 percent) of Asian CSP executives recognise that even if they were to co-create with partners the right new Enterprise offerings, their organization’s existing IT systems don’t give them the flexibility and agility they need to rapidly launch and sell them.

Poor time to market has serious consequences for CSPs, especially when we compare CSPs’ agility to the agility of digital disruptors like Amazon and Google.

The study found that Asian CSPs tend to follow what competitor’s offering, for example 67 percent don’t use innovation labs to devise new offerings. Likewise, just 17 percent work with partners or incorporate customer feedback as part of the development process. This is not surprising, given that Asian CSPs culturally prefer to keep development in-house rather than bring in external resources for ideas like their international counterparts.

Before CSPs look to solve their enterprise customers’ IT challenges, they must firstly address their own. This starts with emulating OTT providers and adopting digital business platforms and a more experimental mindset - using lean start-ups to innovate faster with shorter iteration cycles and frequent customer interactions.

Gap #4: Failing to create and grow a partner ecosystem

The majority of Asian CSPs - 93 percent - recognize that third-party collaboration is important. But when asked how advanced they are in building out partner ecosystems for the enterprise market, just 13 percent have them in place today.

Forty percent are “fully engaged” in starting to develop their ecosystem, which is higher than the global average (33 percent). A further 27 percent of CSPs are planning ecosystems, and 20 percent are either in early stage analysis or considering whether or not to build one.

From the customer perspective, 97 percent of Asian enterprises want CSPs to work with technology partners including digital disruptors to provide the features and services they need. However, today only 26 percent of enterprises see CSPs as key players in the vendor ecosystem.

Gap #5: Choosing the wrong partners

CSPs in Asia must reassess partnering if they want to meet enterprise customer expectations. CSPs are focused on start-ups or a few very large tech providers like Cisco and HP. But these aren’t necessarily the only organizations that enterprises want to work with: only 31 percent identify large tech providers as a special focus.

Enterprises instead regard digital disruptors such as Google and AWS as key sources of products and services. And yet only 30 percent of CSPs currently partner with these companies currently.

CSPs seem reluctant to collaborate with Google and AWS, preferring instead to team up with partners they are more used to working with on networks, like Cisco. Many CSPs probably see the digital disruptors as competitors but the study suggests that this position will hurt CSPs as they are turning away from partners their enterprise customers actually want to buy solutions from.

Experimentation, innovation, and faster time to market

Two thirds of all 5G use cases are predicted to be business- or industry-focused. As 5G continues to gain momentum in Asia, CSPs in the region must have strong enterprise businesses in place ready to capitalize on the opportunity.

However, CSPs are currently substantially under-investing in creating the enterprise offerings their customers want to buy. And enterprises won’t wait. If CSPs don’t reallocate their resources and make necessary changes - even at the expense of their consumer businesses - they’ll lose enterprise customers to more agile digital players.

5G requires a fundamentally different business model to 4G. CSPs in Asia must demonstrate vision and courage to abandon traditional restrictive product development processes. They need to adopt digital business platforms that are fully frictionless and that facilitate more agile operations in which multi-partner experimentation, innovation, and rapid time to market are the priorities.

CSPs must also significantly improve their understanding of enterprise customers’ needs and the industries in which they operate. CSPs must aim to become the “destination” for their customers to fulfil all their different technology needs.

Finally, ecosystem partners are crucial if CSPs want to, firstly, plug their knowledge, technology and solutions gaps: and secondly, properly address the broad range of technologies and solutions that enterprises want to transform their operations and their businesses. In so doing, CSPs can encourage the fresh ideas and new ways of thinking that will deliver sustained success and returns.

Author

Angus Ward is the CEO of Beyond Now, bringing 30 years of consulting and solutions experience to his role, supporting organizations across multiple industries to shape strategies and adopt platform-based business and operating models with differentiating partner ecosystems. He became CEO in 2017, after championing the creation of the business as part of BearingPoint Capital. 

Angus’s extensive experience and knowledge of a range of fields has established him as a trusted advisor to Senior Executives at companies such as AWS, Google, Accenture, Boeing, Jaguar, Landrover, Ministry of Defence, BT and NTT, as well as an industry thought leader often quoted by prominent industry publications such as Forbes, Light Reading and Mobile World Live etc. By working closely and collaborating with industry bodies such as TM Forum, analysts, research firms and academic organizations such as MIT and Wharton, he is often invited to speak on stage at events such as MWC and DTW on the key trends and issues affecting telecoms and technology. Angus has a degree in Economics from the University of Bath and is a Chartered Accountant.

PREVIOUS POST

Disaster Recovery as a Service: Everything You Need to Know

NEXT POST

The Quiet Telco Army