Telco Transformation: An Industry Shaken, Not Stirred

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3 minutes read

Every industry seems to be talking about their digital transformation these days but the Communications industry has been feeling the effects of this for some time. 94% of CSP execs say that this transformation is affecting their business in a significant way and is driving massive change in the way they do business, interact with their customers and drive revenue. The opportunity for CSPs to be the enabler of change for other industries is enormous for those that are able to harness the power of their networks, data and relationships. In this article, we look at the results of a recent industry survey and discuss how the industry is changing to take advantage of these opportunities.

Obviously, the concept of a changing world is not a new one, but it is one that is certainly shaking up the telecommunication industry and prolifically affecting communication service providers (CSPs) around the globe.

The truth is there is hardly anyone in the telco industry that is not affected. In fact, in an SAP survey, industry executives showed not so surprising results. Nearly all of them (94%) believe that the changes in this industry are impacting them significantly – and most believe the impact is pretty considerable.

The statistics are staggering

CSPs are the backbone of the telco industry – and they are attempting to effectively manage exponentially growing numbers of connected people and devices and huge volumes of data. Take a look at some of the numbers, which collectively are a bit staggering:

  • By 2030, the middle class will almost double in size to close to five billion people
  • Two billion people will be equipped with smartphones by the end of this year
  • There are 1.3 billion people on business and social networks today
  • There is 5.2 million gigabytes of mobile data generated each and every day
  • By 2020, there will be 50 billion connected devices, and 90% of that will most likely be hosted on the platforms of CSPs

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So what does this all mean to CSPs?

In the survey, we also asked the people we talked with to share what they think the biggest challenges are, given their current business models. The one most frequently cited was the threat posed by the over-the-top (OTT) content players, like Google, WhatsApp, and Facebook. Companies like these are well aware of the immense opportunities behind the statistics mentioned above and are positioning themselves as the providers of value added services to customers, a spot that telcos must own if they want to move up the stack and retain ownership of the customer relationship.

And right behind the OTT challenge is the task of dealing with new technology trends. Given the explosion of data, this is not surprising. After all, CSPs are the ones delivering it around the globe and they must find improved ways to keep it moving efficiently as the volume grows at a rampant pace.

At the same time, CSPs also looking at technology as a means to harness the power of the massive amounts of data being generated. They want to not only do this to create new revenues streams for themselves, but also better services for their customers.

The opportunities are here and now

Analysts say that the revenue opportunities from all this are enormous – an IDC forecast says that the worldwide telco industry IoT revenue alone could reach $164 billion by 2018. And STL Partners predict that by 2020, over 30% of telco revenues will come from entirely new digital services, with digital and non-human services growing to $351 billion.

To understand more about the telco transformation, take a look at my video discussing these changes and more. Or follow us at @SAP_Telco on Twitter to join the discussion.

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