Asia-Pacific is a bright spot for digital services

Luc Grimond, Managing Director, Accenture Singapore, will participate in a panel discussion at TM Forum Live! Asia on Wednesday, Dec. 7. This article was co-authored by Janne Pajuniemi, Manager, Accenture Singapore.

The market for digital services such as over-the-top services, Internet of Things (IoT), cloud, mobility, and artificial intelligence is expected to grow at an accelerated pace in the Asia-Pacific region with a double-digit annual growth rate. Naturally, there are still huge differences between individual countries, but as the APAC markets continue to converge in terms of technological maturity, mobile and internet penetration, the potential prize is very lucrative.

Let’s look at the evidence:

• In 2016, APAC experienced a 12 percent year-on-year growth of internet users.


• Digital retail sales in APAC is growing faster than any other region, and more than 10 percentage points faster than the worldwide average rate.


• APAC is expected to host almost 9 billion connected things by 2020, giving a $600 billion IoT opportunity.


• The smart cities market size is estimated to grow to almost $800 billion by 2020, at an estimated compound annual growth rate 19.4 percent. Much of this growth is expected to originate from Asia and the Middle East.

Against this backdrop, the stage is set for telecommunications companies to continue expanding beyond their core business to capitalize on digital revenue growth.

Tapping into digital

Similar to what’s happening in Western markets, many companies are looking to ride the digitalization wave in APAC, for example by:

• experimenting with innovative technologies to improve the customer experience – electronics giant Sony is augmenting the gaming experience with its PlayStation VR virtual reality headset, while Samsung is planning to introduce a Virtual Assistant in Galaxy S8 in 2017;


• expanding beyond the boundaries of existing business – China’s Alibaba is rapidly expanding its ecommerce empire. In late 2015 it launched Tmall Box Office (TBO), an online video streaming service in China; and


• developing digital ecosystems – Toyota is collaborating with Microsoft and KDDI and planning to create its own self-driving and connected car service platform. The offering is likely to include such features as in-car services, telematics, and smart city integration.

Accenture research shows that even though digitalization is also at the top of telecommunications companies’ growth agendas globally, the biggest challenges relate to the ability to launch digital services fast enough and to shape digital into a profitable business. We found that although 90 percent of surveyed chief strategy officers believe new technologies will disrupt their industry in the next five years, only 19 percent feel they are very well prepared to cope with a sudden disruption.

5 critical success factors

Now more than ever, the focus should be on understanding how to build a new growth platform on digital that will generate a substantial percentage of future revenues through new services. We see five key success factors to becoming a leader in the region’s future digital services landscape:

1. Building the ecosystem and positioning to operate in the middle of the digital economy

Digital leaders have all managed to expand into adjacent industries through new business models. Finding the right partners is key to driving revenue growth through digital services. By establishing business relationships across industries such banking, insurance, retail, healthcare, government and entertainment, telecommunications companies can leverage their core assets and provide a variety of digital services to both business and consumer segments.

AT&T is providing connectivity for GE’s intelligent industrial machines and assets, partnering with Lutron Electronics, Samsung, and Qualcomm Life to fortify its Digital Life offering, and most recently has announced plans to acquire Time Warner in order to become more relevant in daily lives of the online consumers.

2. Monetizing the customer data asset

Telecommunications companies need to nurture and leverage the data and information they have on their current and prospective customers. Data is the backbone for building services that become part of customer’s everyday life and adapt to their changing needs. Analytics and data also enable monetization of customer interactions via targeted up- and cross-selling, not to mention the possibilities of developing business models around selling the data to external parties.

As with many other Western telecommunications companies, omnichannel transformation at Verizon Wireless in the US includes integrated capabilities to provide a unified customer experience via mobile, online and telesales, and drive monetization of customer interactions.

3. Re-imagining the customer experience

In particular, this means two things: Re-inventing how customers interact with the company and delivering ‘living services’ that seamlessly merge with the everyday life of customers. Globally, we see leading telecommunications companies digitalizing the retail experience and enabling wealth of interactions through digital self-servicing.

Circles.Life is a new Singaporean mobile virtual network operator that caters to the digitally savvy by enabling fully digital high level plan configuration and service interactions.

With regard to living services we believe that areas such as health, education, entertainment, and connected home will provide new avenues for growth for APAC telecommunications companies in the near future.

Telstra’s Smart Home offering takes telecommunications companies into the home of customers through digital enabled automation and monitoring solution.

4. Becoming fluent in IoT and moving beyond into the Internet of Everything (IoE)

Customer demand for connected services will continue to increase, and telecommunications companies will need to quickly establish baseline capabilities, expand the scope of use cases and vertical segments, and create more elaborate pricing models into use (for example, value sharing). The biggest APAC opportunities lie in connected home, agriculture, mining and utilities digitalization.

While becoming fluent in IoT, telecommunications companies need to future-proof their approach to capturing even more value through the IoE, which is characterized by high levels of automation and interconnectedness between things, people and processes. IoE will make it possible for everybody and everything to be interconnected all the time, receiving and utilizing information in real time. The IoE wave will result in new industries and new organizational structures – and mark the end for some of the old ones.

Smart cities are among the most interesting IoE developments. Telefónica is participating in numerous smart city endeavors. For example, it helped the city of Santander in Spain to develop and launch intelligent services such as real-time visibility to parking spaces, optimized watering in city parks, smart metering, traffic intensity monitoring and augmented reality app that integrates real-time information to bring the ecosystem of citizens and visitors together.

5. Capture the digitalization of small and medium businesses (SMBs)

SMBs are an important part of the APAC growth story. In the Association of Southeast Asian Nations, for example, they represent up to 35-60 percent of gross domestic product contribution. As we begin to see a digital shift in the SMBs, there will be huge demand for digital solutions to improve workforce productivity and automation, enable digital experiences and e-commerce, and provide access to assets such as finance and professional services. For telecommunications companies, it will be important to be able to communicate the value proposition clearly and provide flexible pricing models to accommodate the typical SMB’s growing pains.

Vodafone India, targets double-digit growth in the SMB segment by launching several new industry vertical solutions and one-stop shopping for SMB software-as-a-service business applications.

Room for growth

Overall, the level of maturity of the APAC region offers rich pickings for telecommunications companies, leaving ample room for future growth while providing hotbeds for testing. In this game the bold shall emerge victorious.

Given the nature of the market, telecommunications companies will need to adopt a two-speed approach when tapping into the APAC digital’s potential. Driving digital adoption in rural areas will require a very different set of tools and capabilities in comparison with servicing the digital desires of more developed markets.

Winners will also eliminate all obstacles for culture of innovation, foster a ‘fail fast’ mentality and promote leaders who disrupt the status quo and redefine the rules of organizational engagement and collaboration.