Ward highlighted a troubling statistic from Beyond by BearingPoint’s
recent research conducted with analyst firm Omdia: Only one in five (21%) of early enterprise 5G deals is being led by CSPs, while secondary CSP suppliers such as hardware suppliers and systems integrators are leading 40% and large enterprises themselves are leading about a third.
“I think most people would be hugely surprised with that number – if you’re in the industry you may or may not be [because] you see the reality of it,” Creaner said. “But if they’re only getting one in five of the deals, and all of the extra jam in those deals is going to people who lead the deal, then that’s not a good model.”
Indeed, CSPs are missing out on a huge opportunity because the companies that lead 5G deals typically pocket about 15% more of the revenue, Ward said.
“That 15% revenue bump really comes from being a solution provider and earning that customer relationship,” he said. “That’s the value you get by orchestrating value for a customer, so that’s really, really where you want to be.”
Ward argued that CSPs need to more than double the 21% of 5G deals they control: “I would say that CSPs – if they want to be big in 5G and grow their revenue – that 21% really needs to be above 50%.”
What customers want
A different Beyond by BearingPoint survey of 250 executives from large enterprises and small/medium businesses (SMBs) found that 62% of enterprises and 68% of SMBs want to buy a 5G solution that is “ready to go”, which means they don’t want to buy components.
“They don’t want to buy connectivity separately from the IoT or the digital twin,” Ward said. “They want to buy something which is easy to try, easy to buy and easy to consume.”
To deliver what customers want, Ward believes CSPs must upend their traditional business models and adopt platform models. There are two paths they can choose:
- Become a full solution provider that really understands what customers in specific verticals want and co-creates applications and services with them
- Or take an enabling approach that keeps the focus on connectivity but creates an ecosystem of partners to deliver a full solution
“If I look at where carriers actually are in terms of the journey, today only 33% are actually actively developing [5G] ecosystems,” Ward said. “I think part of that is because they haven’t yet got the use cases. And this idea of innovating around what customers want to buy is not going fast enough.”
Reaching the right audience
Creaner suggested that the data Ward shared in his presentation should impress key decision-makers within CSP organizations. “Like, you get...15% more of the deal if you’re leading the solution rather than participating in it – things like that really catch the attention of the key decision-makers,” he explained.
Ward agreed, noting that CSP leaders must listen to customers in order to figure out how to monetize 5G networks.
“I think that’s absolutely right because if you look at the next five years, $1 trillion is going to be invested in 5G networks,” he said. “And at the same time, if connectivity is growing by 1.6-2% per year across the globe in both developing and developed markets…how do you monetize a 5G network unless you make some decisive moves now – not just to move out and pioneer and innovate on the technology axis, but also pioneer and innovate around ‘What do our customers really want to buy?’”
You can watch Ward’s DTWS presentation and his conversation with Creaner on demand. Not registered yet? There’s still time. Join 12,000 of your peers online through November 12. CSPs receive complimentary passes. Sign up here.