Telefónica entered into an exclusivity agreement with Hutchison Whampoa regarding Hutchison’s potential acquisition of the Telefónica subsidiary O2 UK for £10.25 billion in cash, valuing the deal at an estimated 7.5 times 2014 EV/EBITDA. The Hutchison-O2 UK deal — should it complete — will entirely redraw the telco landscape in the UK in terms of market shares. The acquisition of O2 UK will transform Hutchison from the smallest mobile operator with 7.5 million customers to the largest with 31.5 million customers and reduce the number of mobile operators in the UK from four to three.
This development follows on the heels of the announcement by Orange and Deutsche Telekom that they have entered into exclusive negotiations with BT Group regarding a potential divestment of 100% of their shares in EE, their joint venture in the UK. The increased merger activity is not surprising, and we predicted as much in our report Predictions 2015: Telecoms Will Struggle To Align To The CIO's BT Agenda. Still, these deals raise important questions for the European telecoms markets:
In 2013 I wanted to help executives understand some of the fundamental changes that are happening in business because of the digital revolution. Big names capture the attention of the media – who in the USA could have failed to hear about the collapse of Blockbuster or Borders? Who in the UK could have failed to hear of the demise of HMV? When writing about these failures, most analysts highlight the disruptive companies that put them out of business; companies like Netflix, Amazon and Apple. But I wanted to know if there was something more fundamental going on that impacts the ability of an incumbent to defend against digital disruptors. So in 2013 I set out to research digital business successes and failures in an effort to uncover the secrets of digital mastery.
I captured insights from my research in reports published in 2014. Here’s my pick of the top four you should read to gain a deeper understanding of digital business (these reports are available to existing Forrester clients, non-clients can purchase them individually or download a summary from this page):
#1 The Future Of Business Is Digital - The results of 18 months of research into what lies behind successful digital businesses were first published in March in this report. Originally published for CMOs and CEOs, the report was subsequently republished for CIOs as “Unleash your Digital Business”. This report highlights how digital business differs from traditional business; provides an overview of the customer’s dynamic ecosystems of value; and offers six strategies to help transform any business into a digital business.
How does the CI pro responsible for marketing technology buying make an informed decision when faced with so many options? Well, to quote Ron Davies (feel free to summon the voices of Three Dog Night, David Bowie or Shelby Lynne, if you prefer), “It Ain’t Easy!” To help CI pros with their decision-making, my latest brief The Marketing Technology Buyer’s Dilemma provides advice on how to maintain customer focus while navigating market changes.
In “Unleash Your Digital Business”, I highlight the need for all companies to embrace digital business as a new business model – one in which the nature of the value exchange with customers is fundamentally changed. Since then, CIOs frequently asked me what they should be doing to help their firms become a digital business.
The answers lies in the difference between Business Technology (BT) and Information Technology (IT). BT focuses on the systems, technologies, and processes to win, serve, and retain customers. Whereas IT focuses on the systems, technologies, and processes to support and transform an organization’s internal operations. To become a digital business CIOs must adopt the BT agenda.
Our research on digital business highlights the need for the organization to focus on six core digital strategies that drive digital customer experience and digital operational excellencein support of customers. Each of these strategies is an integral component of the CIOs BT agenda:
Digitize the end-to-end customer experience
Digitize products and services inside the customer’s value ecosystem
Create trusted machines
Digitize for agility over efficiency
Drive rapid customer centric innovation
Source enhanced operational capabilities within a dynamic ecosystem
The Infrastructure and Operations (I&O) role is changing significantly: I&O pros are increasingly helping to drive business strategies with the technologies they choose and implement. Business leaders tell Forrester that technology is too important to leave to technology managers alone; they are pushing their I&O colleagues to explore the business value associated with the technologies they choose, implement, and manage. I&O pros, in turn, tell us that their jobs are changing. As one I&O pro put it, “I’ve been an infrastructure manager for 15 years, but only in the past 3 have I been asked to construct a business plan and be part of the business planning team.”
Figure: Burberry's Technology-Powered Flagship Store In London
For I&O pros in retail and related verticals like hospitality (or for anyone involved in creating in-person experiences), we’ve just released a report to help aid this transition. Along with my co-author Michele Pelino, we’ve just released the report “Infrastructure Will Drive The Retail Store Experiences Of The Future.” The report asserts that I&O pros have an important role to play in helping their companies engage shoppers in experiences that will drive loyalty and spending.
Carrier Ethernet aims to provide users with a wide-area service to connect sites, in the same way that asynchronous transfer mode (ATM), Frame Relay, and X.25 services from carriers have done in the past. While end user demand for carrier Ethernet services in Asia is relatively small, it’s growing year over year and is having an impact on service providers’ bottom lines: Carrier Ethernet services currently account for 8% to 10% of service providers’ total connectivity revenues in the region.
Last week I attended the excellent FutureStack conference. This was the first customer conference by New Relic, the Application Performance Management (APM) and Monitoring company. It was great to see how passionate their customers are and how they realize the strategic importance of monitoring. Well done New Relic! The keynotes and track sessions at this event were great because they did not just focus on technology but addressed the future skills and competencies required for today’s business technology professional.
There’s no doubt that, to consumer marketing professionals, data about the users of mobile network are highly valuable. But AT&T is finding that enterprise application designers, corporate security & risk professionals, corporate trainers and CFOs are very interested in this data as well - so much so that the US-based network operator is turning access to and collaboration on its data into a new business service.
Under the guidance of Laura Merling, VP of Ecosystem Development & Platform Services (and formerly of Mashery), AT&T Business Solutions is embarking on an ambitious plan for sharing its data in a secure programmatic fashion leveraging RESTful APIs. It had previously shared it data in a more informal fashion with selected partners and customers but found this approach difficult to standardize and repeat on a larger scale. It also has participated in data collaboration efforts such as the well-known hackathon with American Airlines at South by Southwest earlier this year.
Let's face it, IT often suffers from a bad reputation. And in many cases it's well deserved. Over the years many IT leaders attempted to change IT's reputation by empowering other departments to dictate what IT should be doing — and in the process they became order-takers. And the portfolio of projects from well-meaning business leaders mushroomed. To cope with the overwhelming demand, IT established rigorous process around governance, forming committees with the power to determine what IT works on. And almost inevitably, many of these committees are bogged down by politics — meaning IT is not always working on the right things — and at the same time slowing down the whole pace of change. No wonder then that many people across the business spectrum view their own IT group as a slow, unresponsive impediment to getting things done.
But CIOs the world over are actively engaged with their leadership teams in changing IT's reputation. The goal for these CIOs is to shift IT from order-taker to business-partner, helping shape future business strategy and using technology to increase the value their organization brings to the end customers of the business.
This transition is not easy. Nor is it guaranteed to work. Sometimes an IT organization's employees are simply unwilling or unable to embrace the change. Sometimes the reputation of IT is so sullied that nothing short of a cold-reboot will work (organizations going down this route will start by outsourcing all of IT, then they gradually hire back key skills needed to derive more effective business outcomes).
In advance of Forrester's Summit for CIOs in Singapore on August 30, I had an opportunity to speak with Paul Cobban about his successful transformations at DBS Bank over the past few years. Based in Singapore, Paul oversees business transformation, operational excellence, customer experience, IT project office, procurement, real eastate, operational risk and business continuity management. I've had a sneak peak at his event presentation and it is excellent. Paul is a progressive CIO at the forefront of BT innovation and business engagement with a lot of valuable insight to share.
1. What do you think IT departments are doing right and wrong these days?
In banking the IT departments have had to change enormously in recent years. On top of the usual relentless advances in technology, security challenges have escalated, the war for talent has accelerated and regulation continues to evolve with the challenges. I believe that IT departments have had to adapt well to these changes.
However, in most companies there is a lack of a truly customer centric design. Although there is some hype in the industry around service-oriented architecture (SOA), I believe that until budgets are allocated around customer processes rather than by functional units, systems will continue to be designed as applications for the department users rather than with the customer in mind. In addition, most companies fail to take usability seriously and have little concept of cross touchpoint consistency.