Home & Office

Cloud, software to further disrupt telecoms market

Telcos tend not to excel in software-related businesses or vertical channels, but they will need to work on these areas to stay relevant in 2013.
Written by Kevin Kwang, Contributor

SINGAPORE--The telecoms industry will continue to be shaken up by cloud computing in terms of the need to offer relevant software and build up a strong independent software vendor (ISV) ecosystem--both of which traditionally are not telcos' strong suit.

In addition, these market players will have to enhance their channel partner networks to scale their operations and reach out to more customers.

Other IDC predictions for telecoms market

Emergence of "frontier markets"
Countries such as Myanmar, Cambodia, Sri Lanka and Bangladesh bring better prospects as growth is faster and offer good returns on investment, and telcos should look to expand their presence there.

Inflection point for tablets
As more tablets enter the enterprise space, operators can capitalize on this by providing apps and content for these devices, or assume the role of an integrator to link the devices back to the corporate network.

Smartphone battle goes high-end
Consumer-facing telcos can look to content and service creation to generate business and loyalty, while enterprise-focused carriers should look at offering mobile device management and security services.

Digital content advantage
Offering services in areas such as financial services, machine-to-machine communications (M2M), and e-health will be key as these are high-growth markets in the medium- to long-term.

 Multichannel is the only channel
Telcos can look to tap non-traditional resellers such as contact centers to promote their cloud and software services such as big data analytic to end-users.

Makings of the next big practice--mobility
From infrastructure such as Wi-Fi infrastructure to services such as vendor integration and provisioning, telcos must recognize mobility as a lucrative opportunity to broaden their revenue streams.

Befriending OTT players
Instead of throttling over-the-top service providers such as Facebook and Whatsapp, operators can increase their revenue and move away from all-you-can-eat data plans by partnering these companies to offer bundled subscription plans.

M2M takes flight
The addressable market for M2M in Asia-Pacific, excluding Japan, is US$30 billion and operators need to strike up strategic partnerships, grow their app ecosystem, and partner companies in verticals such as healthcare and public sector to capitalize on this.

These were just some of the 10 predictions made by IDC Asia-Pacific for the telecoms sector between 2013 and 2016.

Speaking at the IDC Telecom Summit 2012 here Friday, Sandra Ng, general vice president of ICT practice at IDC Asia-Pacific, noted that just three years ago, few telcos would even consider working with or acquiring software developers and building out their developer ecosystems. This was not their core business and fell outside the comfort zone for many of these companies, she said.

Similarly, telcos prefer to do things on their own without involving the channel community and are known to not work well with partners, Ng pointed out.

However, these traditional mindsets and business models will have to be thrown out if telcos want to remain competitive and relevant in the fast-moving industry, she warned. This is necessary as cloud computing matures and IT services become a more lucrative market compared to selling connectivity packages, she said, and urged operators to adapt and make the necessary changes in the way they generate revenue.

Benefits, challenges in cloud business
Adrian Dominic Ho, principal analyst of telecom and managed services at IDC Asia-Pacific, went on to say one of the research firm's predictions for 2013 and the next three years is telcos will find it critical to utilize transformational ICT capabilities as "deadly weapons" to win over enterprise customers.

In terms of IT services, for example, telcos can excel in areas such as cloud orchestration and enabling multi-vendor integration. This might translate to operators helping companies to integrate all the different unified communications and collaboration tools to work together across the organization, Ho elaborated.

As an extension, IDC is also predicting telcos which successfully target vertical industries for their cloud offerings will trump their competitors, he said.

Citing an internal study, the analyst mentioned 42 percent of companies polled believed an understanding of their business and verticals was the most important selection criteria for cloud service providers.

Given the software-as-a-service (SaaS) market was worth US$6.1 billion and infrastructure-as-a-service (IaaS) US$6.5 billion, telcos should definitely look to target vertical industries and carve out a niche in these cloud markets, Ho urged.

Turkcell is one operator betting big on cloud, although there are operational challenges to overcome. According to Mert Basar, corporate customers marketing director at Turkey-based Turkcell, the company targets small and midsize businesses (SMBs) in the country to offer services such as data storage and backup, application development platforms and customer relationship management (CRM).

During his presentation at the IDC summit, Basar said many Turkish SMBs have seen how bigger enterprises are leveraging IT to grow their businesses and are keen to do so, but they do not know who to turn to for such services. Turkcell, in recognizing this, is deploying its sales force to hit the streets and "tap SMBs' feeling of missing out", to sell them on the operator's cloud services, he explained.

That said, he also highlighted the difficulties the vendor is facing in skilling its people to sell cloud services when the majority of its 1,200 business-to-business (B2B) sales staff are only familiar with selling products such as mobile lines and broadband services.

Basar added: "Now, our sales people have to sell to IT people they have never spoken to before. Unfortunately, they also have to answer deep, technical questions by the tech departments and many are not equipped to do so yet."

To better equip their employees, Turkcell is offering role play-based training sessions and sending product managers out with the sales staff to model ways to sell cloud services, he revealed.

Editorial standards