NTT sets its sights on becoming one-stop-shop for enterprises

In recent months NTT has been busy restructuring its complex domestic and international businesses to create a one-stop shop for enterprises – and for a reason familiar to most telcos.

“[Connectivity] does not really give us too much revenue,” explains Zaif Siddiqi, Executive Director, NTT Communications. What’s more 5G, seen by many as a path to new revenue streams, alone can’t change that. “Not all solutions require 5G, and 5G in itself cannot deliver the real value,” he says. “It has to come together with different digital transformation pillars, such as AI, IoT service, XR [extended reality], and being in the cloud.”

Nevertheless, Siddiqi emphasizes the importance of 5G connectivity in helping enterprises use technology to improve how they do business. “Video transmission, live streaming, gaming – they all require a much more robust orchestration of the back end,” he says. “How we create that network and how we architect that network is something that NTT has invested in heavily.”

NTT recognizes it will have to partner on enterprise software and systems integration services “to make sure that the revenue mix…can be diversified as we go along,” says Siddiqi.

The company’s restructuring of its enterprise business – made possible by regulatory changes in Japan – brings together NTT Communications, NTT docomo, and NTT COMWARE under docomo Group. In addition, NTT has consolidated its overseas operations under NTT DATA Corp, with many Japanese customers continuing to buy international services in collaboration with NTT Communications. This combines NTT DATA’s systems integration, consultancy and application capabilities with NTT Ltd.’s infrastructure services, which include global data centers as well as networks.

The result is, according to Siddiqi: “A full stack story from connectivity to devices to the middleware to the software and also to the upper layer… and even third-party applications.” It allows NTT to offer enterprise customers a single point of contact, he says.

Another pillar of NTT’s enterprise strategy is Smart Life services, which are applications and content developed by NTT docomo and its partners to deliver finance, payments, insurance and healthcare services for which customers pay a premium. NTT docomo said it aims to double Smart Life revenues between 2021 and 2025 and in the nine months to the end of December 2022, Smart Life revenues were ¥798.4 billion, up from ¥722.2 billion in the same nine-month period a year earlier.

The operator now expects its enterprise strategy to target 2trillion yen of sales by FY2025.

Partnering on innovation

Today connectivity is still a major source of NTT’s enterprise revenues. For example, extended reality (XR) and video transmission which requires 5G’s large data capacity “constitute over 60% of our [5G-related] deals”, says Siddiqi, with XR accounting for 38% and video transmission 30%.

NTT is also partnering to add value. For example, among the many partners it collaborates with technology partners that offer enterprises live streaming security services at very high resolution, giving them instant access to live surveillance streams and security alerts based on data analytics.

Siddiqi sees opportunities to use 5G’s ability to stream high-resolution video to expand security services further, for example within plants that manufacture expensive goods such as vehicles. “With face recognition you know that a person shouldn't be walking in an area and [the system] can create intruder alerts,” he says.

This becomes more compelling when companies use the same 5G network to improve other areas of their business, he adds. For example, car manufacturers pay drivers to transport newly manufactured cars within a warehouse. With a 5G private network, they could deploy autonomous driving, believes Siddiqi, “which offers significant ROI in the long run”.

Essential to NTT’s role in such partnerships is the ability “to ensure that our back-end services, our orchestration our automation work on the network…And that's why introducing more standalone 5G networks…will be extremely important.”

Many more partnerships are either live or in the works. In Japan, NTT docomo group has set up a docomo 5G Open Partner Program, which is home to 850 projects, notably in the automotive and manufacturing fields, but also in healthcare. And it plans to make services resulting from the program available internationally when there is significant demand. Telefónica and NTT DATA, for example, are collaborating on the trial of a 5G-assisted logistics system for car parts manufacturer CIE Automotive at its factory in Itziar in northern Spain.

Turning innovative 5G uses cases into hard revenues can take time, however, especially when they involve strategic decisions that require C-level sign off.

“It's easy to say smart factory. But what does smart mean for a company?” asks Siddiqi. “Do they want a cableless factory where they can change the layout of the assembly lines? Or do they want to track and monitor different types of devices on the operations technologies, IoT side…and get more visuals on how they're operating? Or is it the actual connectivity that they want to monitor? Or is it the people in the factory?”

Bending the SME rule

NTT is therefore also developing cost-effective solutions to business problems that enterprises of all sizes can deploy tactically and quickly. Indeed, Siddiqi believes the company’s B2B2X model of co-creation and partnerships will finally make it cost-effective to deliver value-added services to small and medium-sized enterprises and elude the general rule in telecoms where “80% of our revenue comes from 20% of our customers”, says Siddiqi.

To this end the company has partnered on a number of services, including lower-entry IoT solutions for manufacturers. For example, equipment such as highly precise measurement machines are highly sensitive to vibration, and manufacturers employ people to monitor them. “Just by putting a simple sensor with a magnet and connecting it to the IoT gateway you are able to monitor your equipment in the factory for vibration, rather than pay people to do it, and we partner with other companies to deliver that solution to SMEs.”

And it’s a solution NTT can offer to both large and small enterprises. “It’s a very low investment. You're talking about $1,500 per month,” says Siddiqi.

Monetizing the metaverse?

Other areas of development include metaverse business models. NTT has created a company called QONOQ to develop XR services and solutions. It is an NTT docomo-led initiative, explains Siddiqi, and looks at how consumers interact with services as well as opportunities in health and education.

It is also exploring the potential for enterprise-based metaverse services. NTT aims to invite business customers to try out new business models on its platform, while also exploring how to tap into a telco’s strengths in authentication, security and data.

“The important thing will be how we make the experience different for users [and still deliver content] relevant for the market,” says Siddiqi.