The suspicions have been confirmed: CTOs hate disruptors

We all knew it to be true, but new research from EY has confirmed disruptive business models are the biggest pet hate of CTOs and CIOs around the world.

In its latest report, Digital transformation for 2020 and beyond, the EY team asked various decision makers around the world what they would consider the biggest strategic challenge facing the telco sector currently. 74% placed disruptive business models in their top three challenges, while other headaches included organizational agility (47%) and lack of return on investment (37%).

“Over-the-top (OTT) communications players such as WhatsApp, Facebook and WeChat have redefined the customer experience in messaging and video services, luring traffic away from telco offerings such as SMS,” said Prashant Singhal, EY Global Telecommunications Leader.

“These trends are playing in response to a market in which consumers and enterprises increasingly see value in multiservice packages, with quad-play and cloud packages driving new opportunities.”

Now EY may have focused on the OTT players causing these headaches, but you can look at little bit closer to home as well. T-Mobile and Jio in particular.

Over in the US, T-Mobile’s Uncarrier plans have forced other players in the industry, most notably AT&T and Verizon, to abandon plans to move away from unlimited data plans, and a promise from CEO John Legere for another Uncarrier offer towards the end of the year will keep people on the edge of their seats. Rumours have emerged it will surround a revamp of the subsidized handset business model, another move against wider industry trends.

In India, the challenge Jio has posed to the traditional market players has been very evident as hordes of customers jump ship. The result has been a €3.7 billion write down on Vodafone’s business and Bharti Airtel’s revenues slumping for two consecutive quarters.

If we have a look at the UK market, it wasn’t long ago that Three introduced an unlimited data, SIM only plan, as well as contracts which would eliminate roaming charges in various places throughout the European Union. In France, Iliad’s Free Mobile threw a spanner in the works with offers which promised free voice calls and SMS to customers.

In each of these circumstances, the operator identified a customer pain point and built a business model around it. You could say they put the desires of the customer at the forefront of the offering. Perhaps it is a sign of the sluggishness of the telco industry, and the pressure facing traditional operators as profits erode, but one could argue that many offers are for the benefit of the operator, not getting the best value for customers.

It’s an environment which encourages the entry of disruptive business models, so no-one should really be that surprised.