While there are many benefits to living and working in our always-on connected world, there is one downside for business: It takes a lot more to impress mobile consumers than it did just a few years ago.
Those awestruck early adopters who interacted with smartphone content on first-generation mobile networks are now accustomed to lightning-fast speeds with seamless access across all of their devices.
Digital-savvy consumers expect a personalized, smooth experience regardless of where they are or what device they are using to access content. For many communication service providers, the ability to differentiate with the perfect combination of service offerings, innovative new products and a stellar customer experience is the only way to successfully navigate the digital world’s seismic shifts.
And, based on the latest industry projections, our mobility, connectivity and demands will only continue to rise as the number of devices we rely on skyrockets. In fact, research firm Strategy Analytics estimates there are currently 1.7 IP-enabled devices for every person on the planet. But by 2020, the firm predicts that the average consumer will own and use 4.3 devices – nearly double today’s estimates, and many tech-savvy users will probably own many more than that.
Naturally, wireless providers initially focused squarely on the front line of customer service – the applications, people and processes that directly touch customers. But recently, many have elevated one key priority in the success equation: their back-end systems and the internal resources that manage them.
Digital transformation triggers new era for mobile IT
While many companies haven’t yet fully defined what digital transformation means to them – and how they will transform – one thing is clear: Many wireless providers have already decided that they can’t compete – or differentiate – unless they start to let go of noncore activities and build a set of new partnerships with experts to help them evolve and transform their back-end environments.
As with any transformation, change brings with it the opportunity to reinvent the way in which business is done. New demands have created a perfect storm for change.
Years ago, the wireless industry had large IT staffs to manage massive infrastructures. They had the resources internally to manage existing systems and add new ones as the business demanded. Their internal IT teams had unique skill sets so they could support the specialized applications humming along in their infrastructure. Mobile operators focused on acquiring market share, then shifted gears to reducing churn, and ultimately put their efforts on growing average revenue per user and lowering the risk fraud as customers joined their networks in droves.
It’s now a completely different world for the wireless marketplace. While there is pressure internally to innovate within IT to support new services, IT budgets are only marginally growing to support new demands. In fact, industry research firm Gartner predicts that IT budgets will only grow by 2.4% this year compared to last. As a result, there is pressure to continue to look within the enterprise to do more with less, to become leaner and more agile to free up resources to innovate.
Three key drivers for the wireless industry’s new model of success
With all of these external demands and internal pressures, it’s no wonder that many CSPs – with mobile leading the way – are moving to a managed services model as they evolve into DSPs. By all accounts, it appears that managed services, once largely viewed as an option for only the largest of mobile providers, is becoming a more accepted way to navigate the next wave of transformation.
From our vantage point, we see three key drivers making managed services a viable model for the wireless industry across the globe:
Mobile providers want to shift large up-front capital expenditures to more predictable operational costs aligned with business outcomes. With shrinking profit margins on traditional telco products and costly rollouts for new digital services, lowering capital expense continues to be a big push for CSPs in moving to a managed services model. In fact, nearly 73% of IT executives polled in a recent Technology Business Research survey cited cost reductions through outsourcing as a key driver for shifting to this approach.
With lowered costs, operators can implement new services and the systems to support them; invest incrementally in other business priorities and reinforce their bottom lines.
Mobile operators must let others operate so they can innovate. A common theme we hear with our clients and prospective clients is “we don’t have time to innovate.” This sentiment is echoed by the TBR survey referenced earlier, in which 53% of operators surveyed said that the managed services model frees up additional resources within the company to support new initiatives.
With so many new services, the ecosystem of partners and content continuing to grow rapidly, innovation is critical to success in the next phase of mobile services. Operators realize that time spent on managing existing systems could be better spent on planning for the future, accelerating the rollout of first-to-market services and collaborating with internal stakeholders like marketing and customer service to create a differentiated offering and build a next-generation customer experience.
Mobile operators are moving fast – and they don’t want to go through the transformation alone. As the complexity of their business grows, many wireless providers are looking for experts to not only run core systems, but to help them manage the wave of change.
Mobile service providers are in the business of delivering services, not software. As a result, they are increasingly looking to partners to play this role. And it makes complete sense. Why not entrust the companies that actually make the software to operate, optimize and maintain it?
This will only become even more imperative as the consumption of mobile services continues its hockey-stick growth. According to Cisco, global mobile devices and connections in 2014 grew to 7.4 billion – up from 6.9 billion in 2013. Smartphones accounted for 88% of that growth, with 439 million net additions last year. And Cisco predicts that global mobile data traffic will increase nearly tenfold between 2014 and 2019.
Clearly, the growth in saturated markets will continue to change and evolve over the next five years while emerging markets present new opportunities and challenges.
So how will the mobile industry successfully navigate this new era? Each operator must define success in its own terms and create its own transformation journey. What better time for the mobile industry do things differently – and bring trusted business partners along on this incredible ride?
Editor’s Note: In an attempt to broaden our interaction with our readers we have created this Reader Forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but we maintain some editorial control to keep it free of commercials or attacks. Please send along submissions for this section to our editors at: dmeyer@rcrwireless.com.
