Operator digital transformation isn’t purely dependent on technology

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Tom Platt, Commercial Director at BCSG, asks if operators are fully embracing the business opportunities presented by the SMB sector.

The global rise of cloud technology and software as a service (SaaS) is driving widespread digital transformation across the operator community. The virtualisation of key network functions and processes is having a profound impact on an operator’s agility and flexibility in embracing new innovation. This is extending to how they run their networks, how they engage their customers with new products and services and the quality of experience they deliver.

A successful transformation for an operator used to be about successful technology integration or upgrade. It was about overcoming a multi-vendor environment so new services could be effectively delivered and monetised. The rise of cloud orchestration platforms has changed the game and provided operators with an opportunity to overcome much of this complexity and deliver ‘plug and play capability’ for a raft of new services. This has enabled wider choice in terms of the services they offer.

A fresh perspective

The pressure on operators to diversify is well documented, but with so many customer segments to address, where should they start? The consumer market is dominated by the internet giants and so-called OTT players. The voice market is in decline, messaging is fading and data is becoming more and more commoditised. The enterprise market is awash with super vendors trying to redefine the enterprise mobility landscape to suit their own purposes. With so much marketing muscle on display from so many IT players, margin for operators in this space is increasingly hard to come by.

So what of SMBs? World Bank estimates that SMBs account for 95 per cent of all existing businesses worldwide. It also estimates that SMBs make up almost half of the total global economy. It’s surprising therefore that this segment remains very much undeserved by the global operator community – especially given that the SMBs of today very often become the multinational enterprises of tomorrow.

Technology will open doors

Over the last few years, operators have begun to realise the size of the SMB opportunity that is staring them in the face and are maneuvering globally to capitalise. The emergence of the operator-branded business application marketplace is evidence of this. These operator controlled cloud platforms enable operators to pre-select leading business applications and offer them to SMBs. These market-leading applications can be used to ensure security best-practice, drive collaboration or provide accounting services – and the operator can be responsible for delivering the value.

But why should operators get involved? Well because the SMB cloud market is incredibly lucrative and continues to grow aggressively. McKinsey predicts that the SMB market for cloud-based software is currently worth around $28bn globally and growing at 20 per cent per annum. What is perhaps more interesting however is that when it comes to convincing SMBs of the value of cloud business apps, operators appear to be pushing at an open door. BCSG ran its own SMB survey which revealed 45 per cent of respondents would be more likely to purchase SaaS applications from a large brand they trust, like their telecoms operator.

But technology alone won’t herald a transformation

A more open and collaborative technology environment, like a business application marketplace, will only succeed if it’s the by-product of an equivalent boardroom environment. History has taught us that operators are often prone to technology-led sales. They are very good at articulating technical capabilities and have grown up on a ‘build it and they will come’ mentality. Now this is a perfectly feasible and understandable strategy when trying to monetise a LTE network. It won’t however, hold much sway in whether a SMB owner/manager decides to follow a cloud migration strategy at the behest of its incumbent operator.

There are a few examples of business application marketplaces failing because operators and their partner vendors have aggressively pushed the technology and not worked to build a compelling go-to-market proposition. Most SMB owners will perceive making technology investments they don’t understand too much of a risk. Operators therefore need to go beyond servicing transactional requests for their SMB customers and start to understand how they can proactively use what they know of the latest technology innovation to make a genuine difference to their businesses. Most operators, after all, only speak with their SMB customers when being asked to help solve a potential issue related to a core service. What better way to interrogate everyday working practices to identify where business apps could make the most difference – and in a non-intrusive way? In order to succeed however, operators must know how to speak a SMBs language consistently – from the call centre agent to the operator boardroom itself.

This means the CTO and CMO departments within operators need to start talking to each other more and work together to demonstrate they genuinely are in-tune with their SMB customers’ needs. Success will not come by blinding them with technology – if all SMBs understood all that cloud has to offer, they wouldn’t have time to invest in running their core businesses. Cloud technology is moving at such a pace that SMBs must place trust in partner organisations to keep them abreast of change. This is the opportunity for all operators and the business application marketplace – they really can be the catalyst for SMB digital transformation.

Tom Platt is responsible for BCSG’s sales, business development and service provider and ISV partnerships. He has worked with global banks and telcos including EE, Virgin Media, Barclays and Santander, to help them deliver cloud services to their SMBs. Prior to joining BCSG, Tom was Head of Commercial at Barclays small business innovation team. Tom holds an MA from Cambridge University.