wider economy services 20 oct 2009

© Copyright 2009. Yankee Group Research, Inc. All rights reserved.

www.yankeegroup.com

Capitalizing on Wider Economy Services

October 20, 2009

© Copyright 2009. Yankee Group Research, Inc. All rights reserved. October 20092

Agenda

Introduction

Setting the context

Rethinking the value chain: Telco as a platform

Wider Economy: Solution examples

Conclusion


Speakers

ModeratorAngeline Alexakos-Snow, Director of Programs & Content, Trendsmedia

Panelists

Yankee Group IBM Corp.

Benoit Felten, Principal Analyst David Mangini, Global Solution Owner,Service Delivery Platform

Brian Partridge, Vice President Seeta Hariharan, Director, Global Communications Sector


Agenda

Introduction

Setting the context



Conclusion


The reality of living in a globally integrated world is upon us

Economic instability and uncertainty. Shift in resources and growth opportunities from mature to emerging economies.Consumers increasingly empowered by online collaboration and communities.A proliferating “internet of things” communicating and generating vast quantities of data.Escalating personal and business reliance on telecommunications.Global awareness of industry’s impact on the environment.

The world is connected: economically, socially, and electronically.

Source: IBM


Infrastructure

Applications

Business Models

Business Functions

Processes

1. Improve what service providers do today by focusing on operational efficiency.

2. Apply the wealth of data and intelligence available today to focus on meeting customer needs.

3. Adapt to current and future changes by capitalizing on the opportunities for innovative new business models.

SMARTER TELECOM PROVIDERS• Provide connectivity, speed, and services

via personalized offerings• That are secure, reliable, and affordable • Delivered over intelligent systems and

infrastructure

The goals for smarter telecommunications are clear:

Start planning and implementing Smarter Telecommunications systems

Source: IBM


Smarter Communications Infrastructure: A horizontal enabler for Wider Economy Services

Wider Economy Services

Smarter Healthcare Smarter Utilities Smarter Transportation …

Wider Economy Services:New opportunities to capitalize on these trends and position Telecoms into adjacent markets

Anywhere Network: A seamless, intelligent, ubiquitous network with broadband capacity

Smarter Telcos / Anywhere Network

Smarter Planet:The planet will be instrumented, interconnected, intelligent


Exploring Wider Economy Services

Yankee Group and IBM collaborate to explore the wider economy services opportunities in both mature and growth markets:

– What are the services?

– Where are the short- and mid-term opportunities?

– What is the role of a Telecom Service Providers in offering these new services?

– What revenues can be expected to flow back to Telecom Service Providers?

The current webinar is an overview of our research and will be followed by more in-depth sessions exploring specific verticals.

Look for invites to future webinars addressing Telco opportunity in Healthcare, Utilities, Transportation, Home Management, and more.


Agenda

Introduction

Setting the context



Conclusion


ACCESS

TELCO SERVICES

INTERNET SERVICES

ACCESS

TELCO SERVICES

The model that Telcos have strived on for decades is seriously endangered by services migrating “off-deck”

Operators face a serious mid-term threat

Bandwidth increaseInternet innovationDevice normalization

Access revenue growth marginalConstrained bandwidthTelco-controlled end-devicesPC is only area of freedom

Abundant bandwidthServices migrate off-deckService revenue endangeredAccess is only stable revenue

Telco Share of Revenues Telco Share of Revenues

INTERNET SERVICES


Impacts Question Marks

Slowdown service disintermediation

Access revenue threatened by alternative networks (wireline & wireless)

Maintain customers captive to Telco services

Political and image cost too high to be realistic

More stable but lower margin revenues

Sensible role but how to transition from current model?

Currently envisaged strategies have drawbacks

Slow down/refuse bandwidth upgrade

Maintainwalled garden

Become Broadband Utility


Solution: wholesale Telco assets

Leverage existing network & organization assets for revenue by:– aggregating & enhancing internet services– powering third party non telecom centric services

Serviceslike...

Enablerssold...

ACCESS

ENABLING NETWORK COMPONENTS

Traditional retail

TELCO SERVICES

Video-communicationTV on-demand

Substitution wholesale

INTERNET SERVICES

BillingCustomer support

Interoperability

Cloud applicationsUnified communications

Incremental wholesale

WIDER ECON SERVICES

Video enablementReal-time alertingVoice integration

Home securityRemote healthcare


Two-sided business models require new skills, processes, and infrastructure

Net

wor

kA

sset

sO

rgan

izat

ion

Ass

ets

VOICE

VIDEO

BILLING

ACTIVATION

Telco Assets

…

DIRECT SALES

CUSTOMER SUPPORT

…

End Customers

CONS

UMER

SEN

TERP

RISE

S

TELC

O SE

RVIC

ES

RETAIL

$

3rd Party Service Providers

$

UTILITIES

TELCO

HEALTH

GOV’T

TRANSPORT

…

WHOLESALE

and

$


Evolution of Telco's must support…– Converged connectivity– 1000s of services supplied

mostly by partners– Large ecosystem

– Combination of open networks and closed networks

– Systems integration

Evaluating adjacent segments – solution fit

Telco Today

0

100

200

Connectivity

System Integration Expertise

Vertical expertise

Platform openess

Telco TomorrowSource: Yankee Group, 2009


Agenda

Introduction

Setting the context



Conclusion


Service Provider Capability Fit

Mar

ket A

ttrac

tiven

ess

Solution Segment: Priority Mapping

Monitor

Engage and Partner

Study and develop

HIGH

LOWHIGH

Source: Yankee Group, 2009

Real-time Traffic Mgmt.

In Car Services

Home Monitoring

Distance Learning

Smart Meter Home

Healthcare


Wider Economy Services: Smarter Health Care

Care CenterVideo conference with visiting nurse, Patient journal over TV, Sensor measurements

Home ServiceInformation on TV about planned visits, Medicine reminder, Alarm monitoring

HospitalVideo conference, Transmission of data at home visit, Supervision of analysis equipment

RelativesVoice controlled video phone using TV, Safety alarm


Increased LongevityIncreased % of aging populationIncreasing need forhealth monitoring

More and more elderly people go into nursing homesThe cost per patient is fast becoming astronomical (£25k+/y in the UK, $67k/y in US...)The cost is borne by patients, their families, insurance companies and the states’ healthcare systems

Keeping an autonomous elderly person requiring monitoring in their homes can therefore save considerable cost to the parties involved.

The Telco would provide not only connectivity and vital QoS but also monitoring systems, real-time interactive services into the home etc.

A 3rd party healthcare service provider (which may or may not be an existing player in the healthcare sector) offers service & assistance to the elderly person.

The service would be paid by combinations of the current playersfooting the nursing home bills. The economic space for the Telcowould be significant though.

Revenue opportunity: Elderly care service


« Smart »Meter

Appliances Electricity Grid

Provides real-time consumption feedbackControls energy usage of key appliances

Data Network

Legacy Metering

« Legacy »Meter

ElectricityGrid

Measures consumption

Smart Metering

Meter reading requires physical customer presence

Customer has no real-time consumption information

Aggregated consumption dictates energy company production/purchase strategy

Meter reading can be done remotely

Customer can adjust consumption on the basis of real-time information

Peak demand can be adjusted to avoid incurring peak production costs

Wider economy services: Smart Meters

Implications

Appliances


Revenue opportunity: Smart MetersRevenues for Telcos:

– Connectivity and network management: a few $/m per meter as per M2M pricing (if absolute real-time is key, might be somewhat higher)

– Service platform: yearly contract basis as per large network management and integration projects

Costs for Telcos:– Broadband usage costs with basic to advanced QoS– Service support for always on metering– Network monitoring and support of the end-points

Developing the service platform capabilities needed will represent an investment akin to a large integration project, but one that will be leveraged for serving multiple wider-economy customers in addition to utilities.

Meter Connectivity

Network Management

Platform and HostingT

elco

Tel

coS

IU

tilit

y


Agenda

Introduction

Setting the context



Conclusion


Evaluating the business plan requires a holistic view


The building blocks that enable wider economy services

Net

wor

k& IT

Ass

ets

Org

aniz

atio

nA

sset

s

VOICE

VIDEO

BILLING

ACTIVATION

Telco Assets

…

DIRECT SALES

CUSTOMER SUPPORT

…

CONS

UMER

SEN

TERP

RISE

S

TELC

O SE

RVIC

ES

RETAIL

$

$

UTILITIES

UTILITIES

INSURANCE

GOV’T

TRANSPORT

…

WHOLESALEDirect Sales Force

Single-sign on

Retail Shops

Billing

Call routing

Messaging

Marketing support

DSL/Fiber

Telematics

M2M

Collaboration tools

Content management & storage

Policy management

Video deliveryVideo storage

2G/3G/4G

Presence

Device management

Location

M-payments

Customer Trust

Indirect Distribution

Brand image

…


IBM’s solution strategy is aligned with the needs of telecommunication stakeholders

TELECOMMUNICATIONS PRIORITIES ARE . . . IBM IS INVESTING IN . . .

Enabling new business models.

Differentiating the customer experience.

Best practices helping develop and implement new business modelsGlobal outsourcing capabilities to fund innovative business approachesWorld-class service delivery platform based on SOA to accelerate service creation and deliveryR&D and Telecommunications Centers of Excellence to bring pioneering technologies to clients Global financing to support innovation and change

Analytics to reveal customer insights for better targeted services Churn-management and real-time campaign management solutionsLeadership in security and identity managementCustomer experience, service quality and service level agreement solutions End-to-end customer product catalog and master data management

Improving operational efficiencies.

Modernization and optimization of legacy systems Business, OSS/BSS integrations, process efficiencies & transformationsOpen, standards-based, integrated environments and processesApplication management and outsourcingCustomer Care and Billing efficiencies

Source: IBM


Final Word

Telcos are under tremendous pressure to transform their business or face disintermediation.

Telcos own or control valuable assets that they can use for wider economy services.

Pursuing these opportunities in the adjacent spaces require a commitment to openness and partner ecosystem development:

– Opportunities need to be viewed in aggregate – not in silos.

– Telcos will need to rely on their strategic partners more than ever.

This transformation requires a fundamental rethink of a Telco’s strategy, organization and network.


Next Steps

IBM and Yankee Group will be delivering three more webinars in the coming months, each of which focused on a specific vertical such as Healthcare, Smart Meters, and Transportation.

Final webinar will examine the implications for Telcos in terms of strategy, organization and network & IT investment.

Thank you

October 20, 2009