Sunday, February 26, 2012

Telco 2.0 Business Model as a means of Telco Operations Improvement



Telco's the world over are under increased pressure to sustain and grow the business particularly to serve the burgeoning data business brought on by the growth in mobile smart phones, and myriad other services coupled with data. This I speak of a network a decade ago was designed for voice centric and data service with low data rates such as SMS.

Suddenly the operator has to experience a Transformation of their business and operations to meet a changing expectation of the customer. Central to this transformation from the business/opportunity perspective is a business model called Telco 2.0 espoused by STL Partners UK. (The above image sourced courtesy from M/s STL Partners). The said company presents this Telco 2.0 Two sided business model as follows. (see http://www.stlpartners.com/).

The Opportunity

Fortunately telecom's companies possess a whole host of assets that could be exploited much more to support new, sustainable market growth. The key is for telcos to create open platforms that help other service providers (enterprises, SMEs and government) interact with end-users in more efficient ways than they can today.

Telco 2.0™ 'two-sided' telecoms business model


We call this the 'two-sided' telecoms business model, delivering value to and generating revenue from 3rd party service providers as well as end-users. The 'two-sided' business model has consequences for the design of existing services such as conventional voice, messaging and data/broadband products (e.g. see Voice & Messaging 2.0 "What to learn from - and how to compete with - Internet Communications Services") and also creates opportunities to create new revenues and B2B Platform Services.


Notwithstanding the need to Transformation, the greater concern for a typical Telecom company
is how best to transform, amidst a range of internal operational challenges brought on by the decadence of existence. In order to mitigate these challenges Telco's turn on to IT Enterprise Resource Management tools, and intend to make investments in IT with a view to increase operational efficiency. Too often not knowing the outcome of such investments.

Taking a cue from the above Telco 2 business model, I propose a multi faceted approach of a customer, in that the same business model can be applied inward with the customers being the internal customers/functional department of the relevant Telco.

So for instance, the Telco could host the internal ERP system as an asset/capability in this model, and maintain upstream supplier (of goods and services) relationships. This would conceptualize the whole organization function as services (eg. Planning, Finance, Procurement) and map on to the above business model. Another scenario would be the Telco obtaining Media/Advertising services from prospective agents using a hosted CMS tool. The one-to-one functional relationship between departments (eg. Planning and Finance) will be based on this model.

This would meet the operational expectations of the Telco, and would provide a basis to scale up on demand with the growth of the customers/networks. With the appropriate security measures and optimization of the resources, the Telco could market these services to downstream enterprise and SMB customers. By this also the Telco is de-risking his internal IT investments.