Apr 3, 2013

Launch Strategies for Digital Business Units

Among the many announcements and presentations from Mobile World Congress 2013, one that caught my attention came from Matthew Key, the CEO of Telefónica Digital.

In a post-event blog post Key highlighted how the mobile industry is moving beyond the realm of “phone calls and pure connectivity” with particular reference to M2M and mCommerce opportunities. He observed that “Despite the realization by all telcos of the need to become digital to leverage these opportunities, there is a lack of consensus on how to get there. What then is the way forward?” His own position involves “driving open partnerships and using mobile and digital technology to address pressing social needs”. Partnerships, in a variety of forms, is something I have previously described as a key aspect of business model innovation.

Stepping back, however, what are the key characteristics of other mobile operator ‘digital’ initiatives? And, what does this imply as the way forward as other operators strive to become Digital?

The following table summarizes several key attributes for different operator Digital initiatives.

Comparative Assessment of Digital Business-unit Initiatives

The common thread to these initiatives is a focus on digital services beyond core communications. Some of these are addressed from a ‘top-down’ perspective (e.g. service offerings designed around social needs in areas such as finance, health, security). Others are addressed via a ‘bottom-up’ approach involving specific new customer services (e.g. infotainment, commerce, payments).

Across the different operators, SingTel and Telefónica appear to be the more advanced in terms of the specificity of their implementation plans and launch initiatives.

In terms of strategic commitment, sizable digital-revenue goals have been outlined by Telefónica (target of €5bn by 2015 in the context of 2012 Group revenues of about €62bn) and by Telenor (aiming for NOK10bn within four years relative to 2012 Group revenues of about NOK102bn). These figures are not just a measure of ambition but also a recognition that the trend for core communications revenues will remain flat or decline over the coming years. New services are essential to offset revenue stagnation and also to establish a platform for future market and revenue opportunities.

The ultimate objective of most of these Digital initiatives is a consumer-oriented, Services Model. However individual operators are on different journeys, sometimes involving intermediate stages, to reach this goal. In particular, three strategic models are apparent:

  • Customer Services Model - Telefónica, SingTel and AT&T are striving for this category in a single execution step although the scope of their respective offerings differs.

    • Telefónica Digital aims to address a number of key social needs primarily covering financial services, advertising, content distribution, security and cloud services, eHealth and M2M, all of which have been grouped under its Digital business unit.

    • SingTel’s approach has been to prioritize the most promising ‘value and revenue pools’ to determine the service categories vital to its digital future. These encompass; video, digital advertising, games, eCommerce, advanced communications and payments.

    • AT&T has a more narrowly defined focus on automation and monitoring services for the home. One could note that AT&T’s approach has the potential to evolve over time into a ‘place-specific’ [1] strategy. This would entail a progressive expansion of its services portfolio to include new and complementary digital services specific to the home. Examples include health, wellness and assisted living services.

  • Digital Competency Model - Deutsche Telekom fits into this category with its emphasis on key competencies to manage the product delivery pipeline and portfolio of digital services. This suggests that the responsibility for marketing, delivery of digital services and revenue responsibility would fall to separate operating business units.

  • Digital Capabilities Model – Telenor begins in this category. This is because it has a near term focus to build a global back-end to connect all of its business units in order offer a consistent and effective distribution and service management platform for its digital services. Over the longer term, Telenor should transition into the Customer Services category once the deployment and marketing of digital services takes precedence. Arguably, all operators need to develop their digital capabilities and it is a matter of emphasis and timing as to how this is implemented strategically. In the case of SingTel, for example, its strategy relies on enhancements to key digital platforms; these cover: marketing and advertising, pay TV, personalized infotainment, commerce and social interaction.
Ultimately, companies that embrace the Digital strategy are likely to adopt the Customer Services Model via some mix of B2C and partner-based B2B2C business models. This provides considerable food for thought to companies that are more strongly aligned to B2B business models. How should they position themselves in respect of new digital customer market opportunities? Furthermore, can the customer services model be achieved in a single transition from today's operating mindset?



NOTE [1]‘Place’ as a strategic factor is likely to become important as the IoT market starts to develop. This is because many new concepts and service opportunities will emerge in 'places' where large numbers of unrelated devices are connected. New value propositions will result through the cross-combination of data from different connected devices and sensors. In addition to the home, other ‘place’ examples are transport hubs (e.g. airports, coach and train station concourses etc.), retail malls, hospitals etc.

15 comments:

  1. Feb-2014 update - Telefónica has reorganized its Digital unit under a Chief Commercial Digital Officer (CCDO) business unit. This is intended to be a single, customer-focused, go-to-market function in order to reinforce Telefónica’s strategy of becoming a 100% digital Telco

    http://blog.digital.telefonica.com/?press-release=telefonica-ccdo-digital-opportunity

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  2. June-2014 update - Telenor states in a press release that "The aim of Telenor Digital’s Global Backend is to efficiently provide a large choice of digital services, on many devices, across our geographical borders. Six out of thirteen business units can today bundle services through Global Backend".

    http://www.telenor.com/media/articles/2014/global-backend-rigs-telenor-for-a-digital-future/


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  3. Sep-2014 Update - extract from Orange Business Services and its service offerings to enable enterprises to deal with their transition to 'digital'.

    Business VPN Internet is part of the Orange Business Services Hybrid Network strategy, which is designed to help enterprises cope with the predicted tripling of global IP traffic between 2014 and 2018. To enable their digital transformation, enterprises need to accommodate the new ways of working allowed by both VPN and Internet. They need a network that can manage different kinds of traffic and prioritize them based on importance, location, device and user.

    http://www.orange-business.com/en/press/orange-business-services-extends-network-to-drive-enterprise-digital-transformation

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  4. 23-Sep-2014 update - Singtel plans to invest $500m to extend its Digital Strategy.

    Singtel will invest $500 million over the next five years and hire 1,000 engineers as part of a three-pronged strategy to build strengths in cyber security, smart cities and analytics.

    http://business.asiaone.com/news/singtel-invest-500m-cyber-security-smart-cities-and-data-analytics#sthash.ek197AvL.dpuf

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  5. 25-Sep-2014 update

    The trend towards 'digital' is gaining pace. Here is Luxembourg-based Millicom, with operations in Africa and Latin America, describing its transformation into a 'digital lifestyle' company and how this will boost its long term revenue mix.

    http://www.mobileworldlive.com/millicom-says-digital-services-can-nearly-double-revenue-2017?utm_campaign=MWL_20140925&utm_medium=email&utm_source=Eloqua&elq=506a73363db04c24b8f538df21ac441a&elqCampaignId=2371

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  6. 2 Oct 2014 update

    Orange looks to be the latest operator to pivot to 'digital'.

    "Orange chief executive Stephane Richard announced a range of new digital services and products, including a move into the ‘connected home’ and a bigger push into mobile money, adding that the industry was at the “dawn of the era of connected objects”.

    http://www.mobileworldlive.com/orange-ceo-hails-dawn-connected-era-unveils-new-digital-services

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  7. 5 Nov 2014 update

    Axiata Group (Malaysia) is taking an investment approach to 'Digital' compared to its regional counterparts such as SingTel and Telenor Group, Axiata Group has set up up a US$30 million (RM100 million) venture fund with Malaysia Venture Capital Management Bhd (Mavcap). The fund that will focus on Malaysian entrepreneurs, with a particular focus on bumiputeras with about 70 per cent of the fund targeted at these largely Malay Muslims who make up about 60 per cent of the country’s population.

    http://www.themalaymailonline.com/tech-gadgets/article/axiata-gets-into-startup-game-via-us30m-fund-with-mavcap

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  8. 23 Jan 2015 update

    Orange has earmarked €20 million for an investment programme called Orange Digital Ventures which will fund start-ups “working on the new and next transformations of the telecoms and digital sectors” in all regions where the mobile operator is currently present.

    http://www.mobileworldlive.com/orange-launches-e20m-venture-fund-start-ups-digital-sector

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  9. 24 June 2015 update

    Singtel unveils plans to grow digital business

    Singtel has plans to sharpen its focus on three key areas of its digital business to “accelerate its transformation for growth and competitiveness”. The local telco identified digital marketing, regional premium video services and advanced analytics as its main areas of growth.

    http://www.marketing-interactive.com/singtel-unveils-plans-grow-digital-business/

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  10. 1 Feb 2016 update

    It's interesting to note Telenor's digital strategy progression through this acquisition of an advertising technology.

    Telenor Group has on 29 January 2016 entered into an agreement to acquire approximately 95% of Tapad Inc., a leading marketing technology firm. The purchase price is USD 360 million, on a debt and cash-free 100% basis. The acquisition enables Telenor to take a position within the rapidly growing market for advertising technology, and secures important competence within digital marketing and analytics.

    Telenor believes that significant value can be created from applying marketing technology to improve the digital capabilities of its core telecom business.

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  11. April 23 2016 update

    Interesting news from the multi-operator 'Go Ignite' innovation program; SingTel discloses its focus areas - Internet of Things (IoT), big data analytics, content delivery, cybersecurity and customer experience spaces.

    http://www.developingtelecoms.com/business/trends-forecasts/6462-singtel-seeking-innovations-in-iot-big-data-cybersecurity.html


    The Go Ignite programme is an initiative of Singtel Innov8, the innovation arm of Singtel, as well as the innovation arms of Deutsche Telekom, Orange and Telefónica

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  12. 21 Oct 2016 update

    Etisalat launches digital services unit

    Etisalat is hoping to boost revenue by offering digital transformation services for clients in the UAE, with the launch of its "Etisalat Digital" business unit.

    It aims to help UAE-based government and corporate clients to transform their businesses by means of technologies such as cloud computing, Internet of Things, mobile applications and big data services.

    Etisalat expects the market for such digital transformation services to be worth some Dh50 billion in the next five to seven years.

    http://www.thenational.ae/business/telecoms/etisalat-launches-digital-services-unit

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  13. 27 Jan 2017 update

    Useful podcasts from Telenor Digital - re-boot or re-focus of initial efforts?

    https://soundcloud.com/telenordigitalpodcast

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  14. 6 Feb 2017 Update

    News about DoCoMo Digital, which was launched in early 2016.

    http://eurocomms.com/features/q-a/12099-q-a-hiroyuki-sato-founder-and-chief-executive-of-docomo-digital

    Core proposition is based on billing and payments services.

    http://www.docomodigital.com/about

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  15. 14 Feb 2017 Update

    Telekom Austria launches digital services unit

    A1 digital to help European enterprise customers capitalise on IoT, cloud.

    The unit aims to help businesses undertake digital transformation; its initial focus areas are the IoT and cloud ICT services. A1 digital will initially go after customers based in Telekom Austria's Central and Eastern European footprint. It will also look for opportunities in new markets in Western Europe, particularly Germany.

    http://www.totaltele.com/496116/Telekom-Austria-launches-digital-services-unit

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