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Service providers must tune in to digital business transformation

Mon 4 Jul 2016
FYI, this story is more than a year old

Article by David Molony, principal analyst, enterprise services, Ovum

Systems integrators, IT and software vendors, and telecoms operators all need to think of themselves as digital service providers to the same shared enterprise customer or risk being sidelined by enterprise self-service providers. The technology supply chain is being seriously shortened, and cloud and digital technology transformation are challenging the old relationship between suppliers and enterprise buyers, as the latter define the services they need for business outcomes.

Digital business transformation needs more than a change in culture

Three years ago, the top technology drivers in the ICT market commonly cited by vendors and service providers were cloud, big data, and mobility. Today the most-cited drivers are cloud, virtualisation, and digital, according to our survey research. All of these are labels and they are certainly not exclusive: Virtualisation is helping cloud services delivery, mobility is part of digital channel management, and digital channels generate more data that needs to be analysed and utilised.

They are important because they signal new priorities that will inform investment decisions. But while mobility and virtualisation are irresistible, digital business transformation is a bit trickier to promote. Service providers and enterprises are undergoing digital change together, but in a mutually uncertain manner that communicates itself across the supplier-buyer chain.

That was well-illustrated at a recent seminar in London hosted by The Guardian newspaper and sponsored by NTT Communications. The digital roadmap was no clearer to service providers or enterprises on the seminar panel or in the audience. It is a complex undertaking, and according to enterprise delegates, getting buy-in from 10% of their managerial colleagues or decision-influencers in their organization would be a good result.

Fragmented, myriad, and just plain old legacy systems create a big barrier. But the re-engineering task is less onerous than changing corporate “culture,” at least in the minds of many attendees who despaired of interdepartmental and boardroom-shopfloor communications fear. Service providers should answer this with more examples in their case studies of customers who changed their minds about the effectiveness of digital projects, were won over by them, and do not mind admitting it.

Digital services must deliver more vertical-relevant offers

There are more indicators of digital business transformation “success” at least. Companies expect ICT to serve commercial purposes more explicitly than it once did, and IT managers who used to spend 70% of their time in operations and maintenance and 30% delivering service to the business are now standing up to say they have reversed that equation through increased use of cloud resources and better management of shadow IT and personalised mobility, for example.

But most transformation stories aired at this seminar were still about either online business (digital marketing) or the digital media industry, and the operators (NTT Com), systems integrators (PwC), and technology vendors (Mosaic Island, Symantec) at the seminar did not get much outside the media industry vertical (Sony, Microsoft, or Pearson) with their use cases.

Lack of an end-to-end systems offer is one reason service providers have not got a bigger story to tell. There are signs that formerly separated IT and telecoms providers are getting ready for a more digitally unified business process; configure, price, and quote technology from IT vendors such as Oracle and network operators like Expereo could simplify enterprise procurement and operations cost management across an enterprise digital platform, for example.

However, it seems like the big digital transformation will not happen until service providers have established more vertical solutions and business cases for digital ROI in sectors outside media. Some providers received this message early and are well on their way, others lag behind, and a few are without even a unified strategy around digital transformation services.

Some providers already have point solutions in automotive (connected car) and healthcare (e-health), and insurance and retail projects got honourable mentions in the seminar discussion. But these digital business models are at least emerging. They are going to need more cooperation between service providers over industry standards and B2B service management, and that’s going to be hard for some.

BT’s contract with Gallerie Commerciali Italia to provide Wi-Fi-based ICT infrastructure supporting retail data analytics for the shopping mall landlord and Telstra’s new mining services unit with industry expertise based on the acquisition of network design and consulting services business CBO Telecommunications are examples of vertical services applications we need more of.

In the meantime, some multinational corporations, including Daimler (Moovel), GE (Predix), and Samsung (Tizen), are planning or building their own digital platforms for their own supply chain-based business transformation purposes. Service providers need to tune into these, too, to stay relevant.

Article by David Molony, principal analyst, enterprise services, Ovum

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