Four industry leaders came together to discuss why it’s time for communications service providers (CSPs) to adopt platform business models and federated platform business models – and how they can best capitalize on them. The discussion took place on October 15 at TM Forum’s Digital Transformation World Series and falls under the Forum's Beyond Connectivity theme.What’s stopping innovation?
While platform business models, promise an explosion of innovation and scalability for communications service providers (CSPs) what could hold them back? Martin Creaner, Author & Digital Transformation Expert, noted, “We've spent tens of billions of dollars over the years in trialling services around video on demand, retail, smart selling, and so on, but so far, we haven't produced any iconic digital services.”
Herbert Blum, Global Head of Telecommunications Practice, Bain & Company, pointed to CSPs' great progress in some established functions – as demonstrated by their outstanding response to the pandemic – but said regarding digitalization, “Telcos need to relearn or actually learn what it means to develop versus deliver. They’re fantastic asset managers but they're not really great with product development, the development gene is not really in telcos because they didn't need to put assets on the ground.”
There was agreement that platform business models alone won’t bring about the desired changes, and that a change in mindset is needed. Blum stated CSPs need a “leap of faith approach” which is difficult when it is so ingrained in CSPs to be deterministic about their investment opportunities.
He suggested that CSPs seek certainty, whereas with new business models, it’s more a case of, “We’re building something that we know is good for the digital economy at large. I'm actually not 100% sure yet how precisely I monetize that, but so much value is being created [that] we will somehow get our fair share”
A federation sensation
Federated platform strategies are where a number of CSPs cooperate to develop and deliver digital services on a global scale. Creaner commented, “Doing something like that gives us a real opportunity. Telcos can operate together [by developing] a platform that is operated regionally, they can act globally. That's one of the big challenges.”
He said achieving this falls into two parts. First CSPs need infrastructure-centric platforms like SD-WAN and edge platforms. Second, they need service centric platforms to support B2B, B2B2C or B2C models.
Creaner added that the key to making these platforms successful is governance: “If you've got multiple telcos and some enterprises all working together in the platform, who decides what needs to be governed?” He said defining the platform’s scope was important and establishing what that gave each stakeholder.
He pointed out that everyone in the industry is a competitor, but that they work together regularly already, so the necessary cultural shift is more about: how projects are approved and whether the necessary financial approval structures in place; what sort of skills the platform contains; and can it move as fast as OTT players?
The power of blockchain
Blum believes blockchain can smooth the workings of federated platforms, saying, “Why couldn't [blockchain] be a part of what the telcos do everywhere?” He continued, “[We should] actually help everyone to start incorporating the concept of distributed ledger and all the great things it can do like creating audit trails for anything that's connected on a network”.
He stressed this was not only for monetary transactions, giving the example of healthcare: “We can track medications, we can track health records in very different ways. We would know everyone who touched them and secure them in ways we [previously] couldn't. Yes, telcos could do this.”
Platform attitudes
Angus Ward, CEO, BearingPoint//Beyond thinks that working in a federated way means nurturing relationships with customers and adopting an agile frame of mind: “If you've got a close customer relationship, bring that customer into the room so that you're co-innovating not just with your partners, but also with your first launch customer.
He added, “It’s about a new way of working as well around agile; starting off small and maybe taking eight to 12 weeks to create the minimum viable products. Then in small increments experiment, adding more features and richness to that solution.”
The importance of ecosystems
Takashi Kato is Vice President, Corporate Strategy Planning Department, NTT COMWARE. His role is to create new business and partnerships. He thinks that ecosystems go beyond the idea of adding value to the core business to become the core business itself, that will be central to business strategy and successful platforms.
He said, “I think there will come a time when possessing a functioning ecosystem will be the key to maintain a competitive advantage [for] our business. It's not about creating a large ecosystem, and doing business with it. I envision that we are going to develop our business ecosystem with a number of different objectives and different ethics. So the ecosystem we are trying to create has to be flexible, and it must be able to combine and branch out in timely manner.”
