Summary: The big prize in enterprise managed services today is supporting industries' digital transformation. With the growing 'softwarisation' of networking, this creates more impetus for vendors to compete with telcos as part of a shifting ecosystem. But does vendor software risk cannibalising the telco network? (Enterprise Cloud & ICT Stream, August 2017)
Below is a short extract from this Telco 2.0 Report that can be downloaded in full in PDF format by subscribers to the Enterprise Cloud & ICT Stream here. To find out more about how to join or access this report please see here or call +44 (0) 207 247 5003.
The enterprise market for telecoms vendors and operators is being radically reshaped by digital transformation. This transformation is taking place across all industry verticals, not just the telecoms sector, whose digital transformation – desirable or actual – STL Partners has forensically mapped out for several years now.
The term ‘digital transformation’ is so familiar that it breeds contempt in some quarters. Consequently, it is worth taking a while to refresh our thinking on what ‘digital transformation’ actually means. This will in turn help explain how the digital needs and practices of enterprises are impacting on vendors and telcos alike.
The digitisation of enterprises across all sectors can be described as part of a more general social, economic and technological evolution toward ever more far-reaching use of software-, computing- and IP-based modes of: interacting with customers and suppliers; communicating; networking; collaborating; distributing and accessing media content; producing, marketing and selling goods and services; consuming and purchasing those goods and services; and managing money flows across the economy. Indeed, one definition of the term ‘digital’ in this more general sense could simply be ‘software-, computing- and IP-driven or -enabled’.
For the telecoms industry, the digitisation of society and technology in this sense has meant, among other things, the decline of voice (fixed and mobile) as the primary communications service, although it is still the single largest contributor to turnover for many telcos. Voice mediates an ‘analogue’ economy and way of working in the sense that the voice is a form of ‘physical’ communication between two or more persons. In addition, the activity and means of communication (i.e. the actual telephone conversation to discuss project issues) is a separate process and work task from other work tasks, in different physical locations, that it helps to co-ordinate. By contrast, in an online collaboration session, the communications activity and the work activity are combined in a shared virtual space: the digital service allows for greater integration and synchronisation of tasks previously carried out by physical means, in separate locations, and in a less inherently co-ordinated manner.
Similarly, data in the ATM and Frame Relay era was mainly a means to transport a certain volume of information or files from one work place to another, without joining those work places together as one: the work places remained separate, both physically and in terms of the processes and work activities associated with them. The traditional telecoms network itself reflected the physical economy and processes that it enabled: comprising massive hardware and equipment stacks responsible for shifting huge volumes of voice signals and data packets (so called on the analogy of postal packets) from one physical location to another.
By contrast, with the advent of the digital (software-, computing- and IP-enabled) society and economy, the value carried by communications infrastructure has increasingly shifted from voice and data (as ‘physical’ signals and packets) to that of new modes of always-on, virtual interconnectedness and interactivity that tend towards the goal of eliminating or transcending the physical separation and discontinuity of people, work processes and things.
Examples of this digital transformation of communications, and associated experiences of work and life, could include:
In addition to the cloud and IoT, one of the main effects of enterprise digital transformation on the communications infrastructure has of course been Network Functions Virtualisation (NFV) and SoftwareDefined Networking (SDN). NFV – the replacement of network functionality previously associated with dedicated hardware appliances by software running on standard compute devices – could also simply be described as the digitisation of telecoms infrastructure: the transformation of networks into software-, computing- and IP-driven (digital) systems that are capable of supporting the functionality underpinning the virtual / digital economy. This functionality includes things like ultrafast, reliable, scalable and secure routing, processing, analysis and storage of massive but also highly variable data flows across network domains and on a global scale – supporting business processes ranging from ‘mere’ communications and collaboration to co-ordination and management of large-scale critical services, multi-national enterprises, government functions, and complex industrial processes. And meanwhile, the physical, Layer-1 elements of the network have also to become lightning-fast to deliver the massive, ‘real-time’ data flows on which the digital systems and services depend.
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...Members of the Enterprise Cloud & ICT Stream can download the full report in PDF format here. For non-members, to find out more about how to join or access this report please see here or call +44 (0) 207 247 5003.
Technologies and industry terms referenced include: Enterprise managed services, EMS, softwarisation, digital transformation, virtualisation, networking, SD-WAN, IoT, vendors, telcos, NFV, cloud, co-opetition, Nokia, Cisco, Ericsson, IBM.