Consumerization and the New World of Business Opportunity for Telcos

By Montgomery Hong and Christopher Hinitt

Summary

Consumerization as an Opportunity for Telcos

Telcos, along with other types of communications service providers, need to develop a new value proposition; and the phenomenon of consumerization offers them a significant opportunity to do this. We can define this term, consumerization, as the broad trend that is irreversibly taking hold as consumers and businesses engage with the new world of ubiquitous consumer electronics devices, and the contentrich digital servicesvideo, social content, calendar, convenience applications, and othersthat are accessible through those devices.

In sum, these devices and services are now changing the way customers live and work; and the ubiquity of consumer digital devicesboth at work and in consumers personal livesoffers telcos a new opportunity to take advantage of their unique command of customer channels. This natural sphere of influence includes telcos unique ability to access, track and bill for customer needs both digital and spatial/locational (i.e., mobility-related)using their mobile heritage as a channel to access customers.
In order to leverage this unique combination of capabilities, however, telcos need to reclaim their heritage of innovation. Its a heritage that has recently eluded them, as over the past five years they have frequently become mere passive observers of the cataclysmic changes in the digital ecosystem. And they face the added challenge of needing to innovate in areas that are outside their historical core competency of network-driven services. By reasserting their heritage of leveraging technology for customer benefit, however, telcos can address a fuller range of customers current digital needs. They can do this by offering what we may call consumerization as a service, a subset of software-as-a-service coupled with other managed services, that gives telcos a more central role in enabling employers to cope with the consumerization phenomenon. In addition to offering employers enhanced workforce agility, telcos can also expand their business-to-business offerings in the realm of consumer targeting and payment services, which will provide added value for many businesses, and deliver an expanded range of directto-consumer services, such as enhanced mobility services and social collaboration experiences. In general terms, by utilizing consumers digital footprints to target specific sales and service opportunities to their exact needs, telcos have the opportunity to provide customers with richer services; deliver enhanced convenience; and reclaim a more central role in the new, consumerized digital ecosystem.

Consumerization and the New World of Business Opportunity for Telcos 1

Background: Not a Mere Trend, But a Sea Change

It almost goes without saying that consumers and businesses have changing needs in relation to the rapidly expanding world of consumer electronics devices and the content-rich digital services (video, social content, etc.) that are now accessible through those devices. Consumerization is rapidly changing how people live and work, as consumers are becoming increasingly reliant on consumer technology for both work and non-work purposes. And this convergence of work life and personal life is creating potential issues for their employers. A report by Forrester Research, Inc. (December 2011) found that 48 percent of information workers buy smartphones for work without considering what their IT department supports.1 This is a prime example of the BYOD (bring your own device) phenomenon, which has posed significant challenges for corporate data security. So has the related trend toward BYOA (bring your own application). In fact, a recent survey2 by Accenture showed:

Employers, after an initial period of confusion, are now responding with increasing flexibility and are working to accommodate this trend more proactively. For example:

Apples CFO noted as early as January 2011 that more than 80 percent of the Fortune 100 were already deploying or piloting iPad.4 The global survey from Avanade also found that 73 percent of C-level executives report that the growing use of employee-owned technology is a top priority in their organization.5 That same survey reported that 60 percent of companies say they are now adapting their IT infrastructure to accommodate employees personal electronics devices.6

One in four employees worldwide (23 percent) regularly uses personal consumer devices and applications for job-related activities. Over a quarter of employees (27 percent) routinely use noncorporate applications downloaded from the Internet in the workplace, as they search for applications that help them work better. A large proportion of employees (43 percent) feel comfortable and capable of making their own technology decisions for work.

In addition, a November 2011 global survey conducted by consulting firm Avanade found that 88 percent of executives report that employees are using their personal computing technologies for business purposes.3

Its clear that businesses need to be able to provide access to applications and services on whichever electronics device or devices their employees need. Its also clear that consumerization will be a key factor in workforce enablement and (for many companies) revenue generation. Finally, its evident that consumers and businesses alike are increasingly open to using a wide array of applications and services that will deliver on the promise of consumerization by adding a new dimension of convenience and ease of access to content.

1 Copyright Forrester Research, Inc. Consumerization Drives Smartphone Proliferation: Employees Choices And Dollars Dictate The Rise Of Android And Apple Devices, December 2, 2011. 2 Rising Use of Consumer Technology in the Workplace Forcing IT Departments to Respond, Accenture Research Finds, Accenture news release, December 12, 2011. Also see The Genie is Out of the Bottle: Managing the Infiltration of Consumer IT into the Workforce, Accenture, October, 18, 2011, www.accenture.com/us-en/Pages/insight-managing-infiltration-consumer-it-workforce.aspx. 3 Avanade Research & Insights. Global Survey: Dispelling Six Myths of Consumerization of IT, January 2012, http://www.avanade.com/Documents/Resources/consumerization-of-it-executive-summary.pdf. 4 80 Percent of Fortune 100 Companies Onboard with iPad, MacObserver, Jeff Gamet, January 18, 2011, http://www.macobserver.com/tmo/article/80_percent_of_fortune_100_companies_onboard_with_ipad/. 5 Avanade, Global Survey: Dispelling Six Myths of Consumerization of IT. 6 Ibid.
2 Consumerization and the New World of Business Opportunity for Telcos

Consumerization and the New World of Business Opportunity for Telcos 3

Analysis: Developing a New Value Proposition

Given this undoubted sea change, consumerization represents a major opportunity for telcos to develop a new value proposition. And its one that cannot come too soon. For the central challenge to the current business model of telcos is the fact that their traditional bandwidth business is being commoditized; and they need to find new sources of revenue in the next five years, or risk extinction. Its true that telcos have a strong heritage of innovation; but over the last five years or more, trends in information technology have essentially happened to themrather than their taking control.

To counteract this reactive positioning, telcos need to redefine themselves and offer customers a new value proposition. One key aspect of a successful value proposition for telcos is likely to be their ability to understand customers full range of digital needs. For one potentially huge source of competitive advantage for telcos in the new ecosystem is that they have a unique ability to access, track and bill for customer needsincluding not just customers digital needs and communications requirements, but also, via mobility, their spatial location. Telcos need to take advantage of this unique ability and think in new, creative ways about how to capitalize on their position.

By leveraging consumer IT products and existing telco assetsspecifically, their unique access to their customer base telcos have the opportunity to become providers of digital services and overthe-top (OTT) services to both consumers and businesses. They potentially have the ability to leverage consumer IT to provide and monetize content, utilizing both mobile channels and unbundled services. In this way, by reclaiming their heritage of innovation and taking advantage of their unique capabilities, telcos can assume a more central role in the new digital ecosystem.

4 Consumerization and the New World of Business Opportunity for Telcos

Exploring Consumerization as a Service

Behavior
A users daily role and responsibilities will influence the applications they use.

Applications

Platform

Device
Underlying device is dictated by the platform (or OS); Blackberries cannot run Windows.

Applications will drive what platforms (e.g., iOS) can be used (e.g., needs IEG).

Behavior Sales Person

Spends most time on client sites

Applications
Mail Calendar Salesforce.com Microsoft Office

Platform
Windows 7

Device
Acer Ferrari Laptop

Office Worker

Uses standard software which requires minimal processing software

Windows Sharepoint Microsoft Office Lotus Sametime

BlackBerry OS Windows 7

BlackBerry Torch Dell Laptop

Figure 1. User-driven Consumerization To command a central role, however, its important for telcos to provide fabric or bundled services, rather than one-off products and services. They should be seeking to develop a service delivery model that is consistent with such overarching cloud-based concepts as Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). One approach they should entertain is what we might call consumerization as a servicei.e., turning consumerization into a revenuegenerating opportunity for use with their enterprise customers. Consumerization as a service, while largely derived from SaaS, also includes managed services, such as device management and technical support. Essentially, telcos can offer employers consumerization packages for enhanced ways of working together with their employees, offering customers the opportunity for their employees or customers to access an online suite of applications and services on demand, with the ability to be utilized on any device, at any scale.
7 Accenture Research.

For example, lets say there is a small firm of architects who are seeking to leverage the power of productivity applications Word, Excel, etc. Right now, they need to license those applications directly, and secure IT support themselves. But through consumerization as a service, their workforce could access fully scalable cloud services on demand, and pay by the hour for those services. Consumerization as a service, defined in this way, is of great potential interest to corporate IT decision makers (ITDMs). Accentures experience with ITDMs indicates that many view consumerization as potentially offering increased productivity and reduced costs. However, they also express concerns about data confidentiality and potential threats from malware, pestware and viruses. Consumerization as a service, which Accenture has shaped as a value proposition for a few technology service organizations, would enable

telcos to directly address the perceived opportunities and risks of consumerization. By providing services in this area, telcos can essentially become digital services providers, monetizing cloudbased services via broadband/mobile networks. Beyond improved workforce agility and management of the perceived downside risks of consumerization, telcos traditional expertise in managing billing services also offers them the opportunity to assist enterprises through split billing that separates business from personal charges, or new pricing plans that accommodate both business and personal use. Such services can also be offered on a tailored basis, enabling enterprises to calibrate offerings differently for sales people versus office workers (see Figure 1).7

Consumerization and the New World of Business Opportunity for Telcos 5

Providing a Broader Spectrum of Digital Services

Consumerization as a service, then, is the kind of managed service that is a logical starting place for telcos looking to invigorate their consumerization value proposition. However, achieving the full promise of consumerization also inherently means that when it comes to innovation, telcos need to think beyond traditional services and customer segments, and look instead at the broader spectrum of digital services that address all aspects of how consumers can use their devices.

There are already clear indications of the kinds of services that telcos can position themselves to provide to consumers and enterprises in this area. More than eight years ago, NTT DoCoMo took a major step forward when it transformed its mobile phones into wallets by adding new transactional capabilities to its handsets. Since then, other types of companies have capitalized on this phenomenon. BSkyB, historically a media provider, has repositioned itself to offer a wide range of broadband and telephony services. Recognizing the power of iPhone and Android, the company has created a multiscreen offer called Sky Go, which enables TV subscribers to watch Sky

channels and programs on PCs, laptops, mobile phones and tablets. Customers can access their Sky channels wherever they are connected to a WiFi or 3G network, including Skys own public WiFi network, The Cloud. In some cases, too, companies in different industries altogether have beaten telcos to the punch. For example, a service developed by one major banking institution permits person-to-person money transfers via text messages sent via multiple devices, using mobile phone numbers. This concept has been available in some developing countries for several years and is now well positioned to be integrated into more developed economies.

There is a wide range of additional possible services. Some possibilities include:

The opportunity to purchase a laptop, tablet PC, smartphone or other device bundled with cloud-based services. Location-based discounts (e.g., using the mobile phones location as the basis for offering a limited-duration discount to the consumer). Offering consumers access to content via premium packages, e.g., light TV via mobile phone, or finding new ways for mobile advertisers to generate revenue through knowledge of specific customer needs.

In general, other broad-based possibilities include offering consumers enhanced mobility services and social collaboration experiences.

6 Consumerization and the New World of Business Opportunity for Telcos

Consumerization and the New World of Business Opportunity for Telcos 7

8 Consumerization and the New World of Business Opportunity for Telcos

Recommendations

Looking Beyond the Telco Industry Box

In summary, the new reality of consumerization offers potential opportunities for telcos seeking to reinvent themselves for the digital age.
The key for telcos seeking to take full advantage of consumerization is thinking systematically about utilizing their unique assets to target products to the full range of customer needsusing consumers digital footprints to target specific sales and service and advertising opportunities to their exact needs, as well as the needs of their employers. Recommended strategies include:

1 Have a clear view of what

your customer proposition is in digital servicesyou need to have a strategy.

2 Innovateand to do so, take

your insights not just from other telcos and media, but from other industries and emerging economiesi.e., think outside the telco box.

3 Think about the ways in

which consumers live and work in order to identify new opportunities for electronics devices and applications to make their lives more convenient.

Innovation in context-based servicesutilizing telcos understanding of consumers digital footprints and their specific needscan enable telcos to provide richer services and develop new sources of revenue. What is fundamentally required, however, is for telcos to let go of their traditional industry-driven orientation and to think of themselves as players in a broader digital ecosystemone that begins and ends with the evolving interaction between consumers, devices and applications, and that delivers an added spectrum of convenience, functionality and impact.

4 Make sure you articulate

your innovations in terms of business benefitsnot just cool stuffbut as offering specific opportunities to generate revenue, market share, and/or margin.

Consumerization and the New World of Business Opportunity for Telcos 9

About Accenture Communications Industry Group

Accentures Communications industry practice serves leading communications service providers in an increasingly evolving and dynamic competitive environment. Accenture helps Communications industry clients face the challenges to connect with the digital consumer, increase revenues, develop and launch innovative products and services quickly and optimize network performance while reducing costs. The combination of our consulting, technology and outsourcing experience, paired with our deep industry knowledge, helps us verify that we bring the right solutions and resources to enable our clients to unlock profitable growth, improve operations and achieve high performance.

Authors
Montgomery (Monte) Hong is Accentures global Communications Industry practice lead and also the lead of Accenture Customer Operations Business Service. Christopher Hinitt is Accentures Consumerization and Digital Media Capability lead in the UK/Ireland, and contributes to Accentures global approach and thought leadership to consumerization and social networking in the enterprise.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.

Contact Us
Please visit www.accenture.com/ customer-operations for more information about how Accenture can help your company deliver an integrated customer experience to improve customer loyalty and satisfaction while lowering the cost to serve. Or contact Monte Hong at montgomery.a.hong@accenture.com or Christopher Hinitt at christopher.hinitt@accenture.com.

Copyright 2012 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative.