In this article, I discuss the impact of changing digital ecosystems and the need to re-think processes from the ground up – especially in the context Quad play convergence post IMS deployments.
In the next few weeks, I have two major talks coming up – both in the United States.
I always refine my thoughts through discussions either on this blog, or on forumoxford or with the number of people I actually meet as a part of my speaking globally. Hence, I seek your feedback to these ideas. They also give a flavour of my talks at Web 2.0 expo and MIT. Note that, although this article refers to meetings and discussions I have had with a number of companies, the analysis is mine and I have also used insights from other sources and previous blogs.
The central theme of this blog (and also my two talks in the US) pertains to the ‘shifting of digital tectonic plates‘.
Processes change when you are working in a converged world. More importantly, your leverages of power change and consequently the ways you can leverage your assets in a converged digital world also change.
What that means is: We will have to re-engineer/re think our processes to win in this world.
In this article, I focus on Mobile Web 2.0 and the Web, but I will extend this to Quad play in general in future .
It is a recurring theme I encountered last week in three separate meetings – SK Telecom, Infosys and Swisscom.
I spent last Friday as an invitee of Swisscom innovation in Berne (many thanks to Julie Stewart and Dubravka Widmer of Swisscom innovation for hosting me for the day). In an effort to get feedback on my thoughts at Web2expo and MIT, I introduced some of these concepts in my talk at Swisscom on Friday.
If you don’t know already, in general, Swisscom is perceived to be an innovator in the Operator community – in the sense of introducing new concepts to the market. (But NOT according to Mr Schmidt at the reception desk of my hotel in Zurich. When I told him that Swisscom is perceived to be an innovative operator – he went: ‘Innovatif! Swisskom? – nein, nein – ze charge too much .. Wayyy too much’ …)!!
However, leaving aside the objections of Herr Schmidt in Zurich .. this was indeed a fascinating day for me. Our meeting room had a wonderful view of the Alps. In typical Swiss fashion, five minutes before the starting time, there was no one in the room and at the exact starting time, the room was full!
Converged Digital processes and a shifting of power structures
It is not every day that you get to interact with most of the major departments of a major European mobile Operator(and uniquely with Swisscom, there is a component of fixed line business as well through Bluewin who were also present).
The talk was broadly about Mobile Web 2.0 but also extending more to ideas of Convergence (a theme more related to my talk at MIT/Sloan). Specifically I was working with ideas which typically span the Web and the Mobile Web domains and the consequent shift in dynamics between the players in such a scenario (we did not have enough time to cover Convergence in it’s fullest sense i.e. Quad play – so this discussion was only about Web and the Mobile Web – but the same principles can be extrapolated to Quad play)
What do I mean by converged business processes and a shifting of power structure?
In a nutshell:
Currently, an Operator’s core asset is voice. I believe that VOIP and other technologies will cannibalise the Voice revenue. This is already happening. Hence, the core assets of a Telco will shift from Voice(current) to others like Identity, Location(which will power location based advertising), customer history(datamining complex customer segmentation) , billing etc. All of these new assets will be ‘sold’ to third parties i.e. independent applications developers through APIs(Application programming Interfaces). Services themselves will be ‘Plug and Play’ and the Operator will be the orchestrator of services(and not a pipe).
Of course, this vision is not new. I have spoken about this before such as the Long tail and Mobile Web 2.0 applications, as have others.
When you introduce ideas like VOIP cannibalising Voice revenue in an Operator setting, the audience smiles cynically at you. Of course, they have heard it all before and there are valid counter arguments to say that it not happening in a hurry. Take Fixed VOIP vs. Fixed line revenue. If Chickens little were to be believed, we would ALL be using VOIP ONLY by now. True Skype has had a phenomenal uptake – but the fixed line business has not capitulated as some would have us believe.
So, Operators may not face a near death experience as Kodak faced when the world switched to Digital vision but Kodak continued to see the world with analogue eyes.
Hence, the cynicism to VOIP cannibalisation.
However, the next concept I speak of is definitely a concern in boardrooms across Operators in the West. The slide I use is as below.
The left hand side shows stock prices of Google, Microsoft and Yahoo. The right hand side shows a ‘City type’ guy with a bowler hat who represents the investment community. The point is: the Web guys have high market valuations because they can demonstrate growth. Yes, Telecoms is a mature business with assured revenues through Voice – but the City/investment community does not see growth – hence poorly performing stock prices and this leads to an investment community sceptical about the potential of the Telecoms industry as it is today.
This is a much more difficult argument to refute. If you still doubt this, think about the acquisition mindsets of Operators from countries with saturated markets who are buying into Operators in less saturated, high growth economies.
That’s buying future growth.
The same logic underpins the interest in FMC(Fixed to Mobile Convergence) in more mature markets – because Mobile Operators hope to get customers from fixed line networks through FMC (and Vice versa). Again a quest for that elusive growth. See my blog about a gedankenexperiment when a fixed to mobile salesman would come calling at your door - (Interesting to talk of Gedankenexperiments in Berne – a town associated with Einstein )
A new ecosystem and a process led approach
Everyone agrees that the current ecosystem is changing. In general, everyone loves ecosystems because they conjure up images of lush green trees. A more worrying image is that of whales and planktons i.e. where in the ecosystem/food chain do you fit(Plankton being the lowest in the food chain)
In previous blogs like the Long tail and Mobile Web 2.0 applications, which I have spoken before and also this one, I outlined a vision of a API(service layer based) ecosystem where the Operator will be the orchestrator of services(and not a pipe).
However, before we get to that, we need to rethink processes. The Web (specifically Web 2.0) has taken the first step in the form of Mashups . The equivalent of Mashups for Operators(both fixed and mobile) implies creating and exposing a service layer with the possibility of creating a digital ecosystem around those APIs.
This is a two step process :
a) First there is the step of dis-aggregation (call it mashups/APIs/service layer etc)
b) Then there is the step of orchestrazition (i.e. creating a new, service led organization from the granular services)
This requires different mindsets and skillsets – for instance domain expertise spanning current silos.
The first steps in this transformation is the deployment of IMS(IP Multimedia Systems) . For most organizations, IMS is about OPEX reduction. Hence, just because you are undertaking an IMS implementation, does not mean that you can win in a fixed to mobile strategy – let alone master Quad play).
The real fun starts AFTER the IMS installation.
For instance, most organizations when asked, ‘What IMS services are they exploring?’ – will mention ‘Video calling’ or ‘Push to talk’. While there is nothing wrong about such applications, they lean towards Henry Ford’s famous horseless carriage analogy i.e. If you think of a new concept in terms of the existing knowledge base, you come up with the ‘faster horse’ instead of the automobile.
In contrast, I think a process driven approach is necessary where processes span the Web and the Mobile Web. For instance, my course at Oxford University on Mobile Web 2.0 and IMS , takes a process driven approach.
The steps involved in this approach are:
a) Understand Business / consumer process i.e. what people or businesses are trying to do
b) Identify the components inovolved
c) Identify the organizations affected
d) Then drill down to the network layer – which may be IMS or other equivalent networking technologies.
e) In it’s widest incarnation, processes are Quad Play, cover both consumer and entreprise and span geographies.
There could be other terminology for the same ideas. For instance, the discussions with SK Telecom about Digital Home, Infosys about ‘making convergece less abstract’ and with Swisscom about Digital ecosystems – all lead to the same process driven priciples spanning existing silos.
The ideas of process re-engineering are also not new. What is new here is – their application to a converged scenario – components of which span companies, technologies and even countries through a service oriented architecture.
In fact, in my previous life prior to 1999, I worked with the professional services division of PeopleSoft(now Oracle). Rethinking your existing processes during an ERP implementation is the norm rather than the exception. For instance, you don’t think of ‘Procurement’ or ‘Payment’ – but rather you think of the whole process from requisition, purchasing, receiving goods and then paying (called Procure to Pay) for example this link on procure to pay (pdf)
I am simply applying the same logic to a Digitally converged ecosystem but across network types and organizations.
Why the ecosystem approach cannot be ignored
This vision is ‘access mechanism agnostic’( i.e. does not matter what network you use – Cellular, Fixed, Wifi or even IPTV, DMB/DVB-H etc).
This is not a comforting thought for organizations whose core asset is their network itself.
For instance, I am not optimistic about Mobile devices in themselves, transforming the world because I believe that convergence will be driven by the Web and not the Mobile Web. Yes, there are billions of devices globally – but the only two things they have in common are Voice and SMS. For most part, neither of these are programmable and that’s the real problem.. The third (in addition to voice and SMS) component that could span mobile devices is the Web. Globally, the Web unites us all and an extension of the Web to the Mobile Web seems logical, inclusive, global and holistic. That’s why I speak so much about Open standards, Web standards etc. I believe that convergence is not an option – it is already happening all around us.
The risk lies in becoming ‘Kodak’ – being caught in rapid digitization driven by players not currently in the value chain
Further, we are not likely to see an emergence of a single entity – like Microsoft – in this new world. So, by definition, this will be working with a complex ecosystem with many players sometimes co-operating, sometimes competing in a global setting.
This is an ongoing discussion and I will continue blogging about it based on feedback. There are no ‘conclusions’ as such and I will evolve these ideas as we go along.
A more pertinent question is: how can an organization win in this ecosystem?
I believe that the answer lies not in a killer application but in a ‘killer ecosystem’ – if that phrase can be used. If we take this line of thinking to it’s logical conclusion, we are talking of a global, flat, process driven organization(or a federation of collaborating organizations) – interlinked at the service layer.
Please contact me at ajit.jaokar at futuretext.com with feedback/questions and / or if you are attending web20 expo
See my book at Mobile Web 2.0