Five years? Is that all we’ve got?

Written by on June 9, 2016 in Guest Blog with 0 Comments

 “Five years – that’s all we’ve got

Five years – my brain hurts a lot!”

David Bowie, Five Years (1972)

In technology, as in pop music, five years is a long, long time. In pop music, the years from ’72 to ‘77 moved us on from concept albums and rock music to three-minute singles and punk, and the techno-funk David Bowie of 1977 was barely recognisable from the Starman of 1972. Bowie survived – for reasons that we’ll return to – but the content, the proposition and the business model radically changed, and there were many casualties.

Five years is a long time in tech too. Five year intervals typically see successful innovations – think mobile phones, smartphones, tablets, in-car GPS, or MP3 players – move from the shiny new (very expensive) thing to the everyday commonplace and affordable. Five years have been enough to totally transform, and sometimes bring down business colossi of the stature of Blackberry, Nokia and Alcatel too. Five years is a long time in telecoms.

  “News had just come over, we had five years left to cry in…”

As is now abundantly clear, telecommunications is on the cusp of radical ch-ch-change – from a buoyant and highly remunerative industry, dominated by a relatively small number of players, to a digital services business where operators will compete on a much more open, global playing field, against many powerful internet giants and an unceasing tide of ‘native digital’ organisations.

The next five years will see operators redefine their role in this emerging digital economy – or have it redefined for them. Developing and launching new products, tough enough in itself, will be only a part of the challenge. Establishing their role in the complex value networks that will characterise the emerging industrial internet will be even more significant.

The good news is that telecommunications will never be irrelevant. Machine-to-machine communications and the Internet of Things won’t work without networks.

The bad news is that operators will find that traditional strengths such as network ownership and reach, engineering rigour and standards compliance – will count for much less. Instead, like every other kind of digital business, CSPs will live or die by the strength and appeal of their value proposition to a changing market and the quality of experience that they can offer to customers and partners. Innovation on all fronts will be vital – but in this they will be going head-to-head with younger guns and leaner competitors.

Traditional network services will of course continue to be important. Like golden oldies, they’ll have a ‘long tail’ of revenue, albeit drawn from increasingly ‘budget’ compilations – but there’s little doubt that traditional telecommunications business models face a slow decline in terms of revenue. Future profitability depends on finding success in the digital economy and in particular, a significantly monetisable role in the industrial internet.

So, many operators are now facing a dual challenge – to defend vulnerable margins in their communications services, while improving agility and market responsiveness in their future business. It’s not going to be easy.

“My brain hurt like a warehouse, it had no room to spare
I had to cram so many things in, to store everything there”

In these confusing and uncertain times, it would be tempting to spin traditional and future businesses off into separate silos, with separate support systems – but misguided. For all the change that we anticipate, there will also be commonality between the legacy and the future business– particularly in terms of customer experience management, and in the development of products that combine digital content with the operator’s USP – network capability.

Telcos don’t need to set up a completely different set of business support systems for their digital future. But they need a different approach that will give them the resilience needed to face future uncertainty and efficiency in how they handle those ‘long tail’ legacy services. An approach that combines real-time agility with the raw performance needed to process very high numbers of network and digital transactions. Perhaps most importantly, an approach that is open to new and more efficient ways of managing the back and front office – out of the cloud, for example, or as a managed service – reducing cost, enabling focus and innovation, and mitigating the investment risk of new ventures.

Notwithstanding the many challenges arising from change and transformation, there has never been a more exciting time to be in IT and communications, and operators are very well placed to take advantage of emerging opportunities. If the right choices are made, there are many ways for CSPs to move towards future profitability while maximising the lifetime revenue of their hard-won legacy – but time is starting to run out for those choices to be made.

“I still don’t know what I was waiting for… and my time was running out”

As it happens, Bowie was one of the few that survived the ch-ch-changes of pop in the 70s, largely through his famed chameleon-like qualities – what we might now call ‘agility’ – but also because he was a leader and an innovator, who continued to innovate and exploit the best in emerging technology even as the industry around him transformed, as his competitors fell off their platform boots and became part of pop history. Could it be that there’s a lesson here for CSP survival as we move from telecommunications to whatever we end up calling the next era in ICT?

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About the Author

About the Author: Robert has worked in the telecommunications industry for more years than he cares to remember and is a regular contributor to industry forums, conferences and publications, most commonly on the impact of new technologies on billing, charging and the customer experience. He is currently helping Openet to develop its proposition to the wholesale and virtual operator market. .

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