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Service providers not keeping up with digital transformation

Wed 6 Jul 2016
FYI, this story is more than a year old

Three years ago, vendors and service providers commonly cited cloud, big data, and mobility as the top technology drivers in the ICT market. Today the most-cited drivers are cloud, virtualisation, and digital, according to Ovum research. These three labels are certainly not exclusive: Virtualisation is helping to deliver cloud services; mobility is part of digital channel management; and digital channels are generating more data that needs to be analysed and utilised. Indeed, defining “digital” is itself a challenge. In Ovum’s view, digital implies the use of ICT to transform an existing business process from end to end, or it involves doing something that could not be achieved with existing IT systems, such as offering a new service or a service to a new audience in a new way.

Cloud, mobility, virtualisation, and digital are important because they signal new priorities that will inform investment decisions. Although mobility and virtualisation are well understood, digital business transformation is a bit trickier to promote. Service providers and enterprises are undergoing digital change together, but in a mutually uncertain manner which challenges the established supplier–buyer chain.

Companies also 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 services to the business are now saying they have reversed that equation, through increased use of cloud resources and better management of shadow IT and personalised mobility, for example.

Yet in Ovum’s view, despite marketing efforts, many service providers still need to develop and match their offerings to the new digital imperatives. Why could this be the case?

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

In Ovum’s view, digital transformation will not happen until network-oriented 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, but others lag behind, and a few are without even a unified strategy around digital transformation services. There are points of light, though: An increasing number have solutions in automotive (connected car) and healthcare (e-health), and insurance and retail business requirements are also being addressed to some degree, if not comprehensively. These digital business models are at least emerging.

Ovum believes that cooperation between service providers over industry standards and B2B service management is necessary to drive the formulation of industry-relevant digital services, but this will prove difficult for some suppliers. BT’s contract with Gallerie Commerciali Italia, which will provide the shopping mall landlord with Wi-Fi–based ICT infrastructure to support retail data analytics, is an example of a vertical services application we think will resonate. The same goes for Telstra’s new mining services unit, which uses industry expertise gained from its acquisition of network design and consulting business CBO Telecommunications. 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, Ovum Analyst 

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