New technology is a double-edged sword for telecom providers

VENDOR VIEW – Huawei partnered with Telecoms.com Intelligence to detail how it works with telecom operators to focus on specific Industries and foster the development of a strong enterprise ICT ecosystem.

The irreversible emergence of new and evolving technologies such as cloud computing, big data, mobility, and the Internet of Things (IoT) has presented traditional vertical industries with significant challenges. Almost all traditional industry leaders are affected by this pervasive trend and are wondering which industry will be the next to be disrupted by technology.

Innovative technologies are forcing industry leaders to adopt new technology to improve legacy production processes, services, and operation systems. With this, the demand for new technologies by Governments and enterprises has driven a wave of ICT market growth around vertical industries.

According to a report released by IDC in December 2014, global ICT spending will grow by 3.8 percent in 2015 to exceed US$3.8 trillion. The growth in spending will be generated around 3rd platform technologies including mobility, social media, cloud computing, and big data. However, this increase in ICT spending will come with new challenges.

A growing number of new industry players are aggressively competing in four key sectors of the government and enterprise ICT market including basic network connections, enterprise communications, enterprise IT services and system integration, and consultancy services. Below are two examples:

The rapid development of new technologies has placed telecom operators in a difficult position. These operators are striving to grow in the government and enterprise ICT markets, faced with increased competition, and are struggling to protect their market share in the legacy enterprise communications services and basic network connection services markets.

The best defense is a good offense: focusing on specific vertical industries is the best approach

Telecom operators have inherent advantages within the government and enterprise ICT markets as they have rolled out traditional basic network services and accumulated expertise through system integration and providing ICT consulting and services.

However, it is difficult for telecom operators to stay competitive in the government and enterprise ICT markets as there are many industries and complicated processes and investments could become scattered. Compared with telecom operators, individual software vendors (ISVs), over-the-top (OTT) service providers, system integrators (SIs), and managed service providers (MSPs) are more industry-driven due to their business nature. This means that telecom operators in the government and enterprise ICT markets are faced with competition from all directions.

Currently, telecom operators in the government and enterprise ICT markets are hoping to leverage the benefits and competitive advantage of innovative technologies without overinvesting in human resources in non-core businesses. Driven by this approach, telecom operators have been focused on providing “innovative”, “one stop”, and “lightweight” ICT solutions that can no longer meet their customer’s ever-growing needs.

The best way for telecom operators to tackle this challenge is to establish end-user-oriented and one-stop ICT solutions by focusing on specific industries and maximizing existing customer relationships, networks, and capabilities to seize opportunities that have resulted from the convergence of information and communications technology.

Working together to build a strong ecosystem for industry-specific innovation

For many years, telecom operators have focused on developing partnerships and have resulted in some success in the consumer sector but has had limited achievements in the government and enterprise ICT markets. This is largely due to the inherent nature of the government and enterprise ICT markets. Large enterprises and multinational companies (MNC) usually spend a relatively large percentage of their revenue on ICT investment and construction each year.

As such, Chief Experience Officers (CXOs) of enterprises often choose the solutions and products adopted by their competitors without spending time to compare the difference between various products. Therefore, collaborating with the best application system providers and infrastructure providers is the best approach for telecom operators in the government and enterprise markets. Below are two examples:

There are many similar examples to demonstrate that in-depth cooperation between industry-leading ecosystem partners in specific industries can result in innovation and new trends for the ICT industry.

In the future, competition in the government and enterprise ICT markets will evolve and the main competitors will be industrial alliances and ecosystems, rather than individual enterprises. In response to the ever-changing and fast-growing ICT market, Huawei is committed to leveraging its expertise in communications, computing, storage, and networks to help telecom operators better position themselves and foster the development of a strong ICT ecosystem.

Huawei will showcase its comprehensive technology capabilities and innovations at Mobile World Congress 2015 in Barcelona, Spain. For more information, please visit: http://www.huawei.com/minisite/mwc2015/preview/en/index.html)