On October 22, 2016, AT&T announced its intention to acquire Time Warner for an equity value of $85.4 billion. The deal is essentially about the combination of quality content and content distribution, as it transforms AT&T into a content producer and owner — rather than just a distributor of content. Many telecom regulators restrict revenue growth opportunities for telcos in highly regulated telco markets. As a result, telcos are increasingly looking outside their markets for growth opportunities. This deal is evidence of this trend.
Telco CIOs Must Become More Strategic To Prepare For The Content Opportunity
The AT&T-Time Warner deal deserves special attention by telco CIOs. The deal needs to be seen against a challenging backdrop for the telco industry, where revenue growth from traditional revenue sources is hard to come by. Yes, AT&T already operates the largest US pay-TV business through its ownership of DirecTV. The Time Warner deal — should it materialize — would enable AT&T to offer its own premium entertainment programming to its pay-TV, mobile phone, and internet customers. AT&T’s intention to acquire Time Warner opens a new chapter for telcos, because the combination of quality content and content distribution potentially helps telcos to:
However, at $2.4 billion, the Fleetmatics deal is much bigger than most telcos have been willing to contemplate to date, underlining Verizon's commitment to the IoT space. But this deal won’t transform Verizon’s enterprise revenue composition overnight. While it will help improve Verizon's position in terms of IoT revenues, Fleetmatics had revenues of $285 million in 2015 – compared to Verizon’s $132 billion.
The price it is prepared to pay for Fleetmatics shows that Verizon expects to see impressive long-term benefits from the deal. Forrester expects that Verizon will ultimately extend Fleetmatics’ business model beyond global fleet and mobile workforce management solutions to more general tracking and tracing solutions for nonpowered objects like skips, agricultural equipment, machinery, and other connected assets.
Verizon has its work cut out: The acquisition is the easy part. But successful integration will be much harder, as this deal is about supporting customers with their business processes rather than just selling them new products.
At a recent event in Sydney, Telstra, Australia’s incumbent network solutions provider, provided new insights into its strategic activities under its new CEO Andrew Penn. Overall, Telstra’s strategy remains in line with that communicated last year; we suggested then that for European CIOs and technology managers, Telstra represents an attractive network solutions provider for their organizations’ activities in Asia. But Telstra has evolved since then. Discussions with Telstra executives have provided us with new information and have led us to several new observations:
Telstra’s digital strategy is beginning to take shape but remains fragmented. Like many other telcos, Telstra has created a digital division to develop digital retail offerings for SMBs and consumers. In its current shape, this approach carries some risks, as Telstra’s Global Enterprise Services and Software divisions are also pursuing separate digital activities. As a result, duplicate and potentially contradictory digital offerings could emerge. Although Telstra claims that it is coordinating these activities, the current set-up underlines the fact that Telstra doesn’t yet have a digitized strategy; it is instead pursuing several digital strategies. This could cause confusion for customers, inefficiencies for Telstra, and flawed end-to-end customer journey mapping, thus undermining the value that Telstra can deliver to CIOs as a business enabler.
Several Forrester analysts attended Huawei’s 12th global analyst summit in Shenzhen recently. This post will focus on the perspective of European CIOs; in our view, they should take note of Huawei due to the firm’s growing strength in the European enterprise segment. For Forrester’s global perspective on the event, please refer to our upcoming report. For European CIOs, the main takeaways of the analyst summit are that Huawei is:
Strengthening its financial performance. Huawei’s enterprise divisions — which the firm just announced in 2011 — impresses with its strong growth rates. Huawei grew its enterprise activities by 27% to $3.1 billion in 2014; two-thirds of that growth came from outside China, with Europe accounting for the largest share of that. Huawei’s goal is to grow its enterprise business to $10 billion by 2019. Outside of China — which still accounts for 38% of Huawei’s revenues — EMEA will continue to play a critical role for Huawei, as it accounts for 35% of revenues. In EMEA, Huawei reported revenue growth of 20%.
I recently visited Telstra’s “Let’s Connect” Analyst Summit 2014 in Sydney, the analyst event of Australia’s incumbent telecom provider, Telstra. CIOs of MNCs who have been tasked with finding the right provider in Australasia need to balance their requirements for true end-to-end solutions that many tech services providers promise with the need for reliable collaboration and connectivity services as well as cloud and services solutions. Telstra brings attractive assets and strengths to the table regarding these core focus areas. My main takeaways are that:
Telstra is a strong network services provider in Australasia. European CIOs who require a strong network service provider in the developed markets of Asia and Australia find a solid partner in Telstra. There Telstra stands out through high-quality network infrastructure and local teams on the ground.
Telstra provides telco industry benchmark offerings in healthcare. Telstra is dedicated to becoming a strong provider of healthcare solutions that rely on connectivity. CIOs in the healthcare sector should look to Telstra for solutions such as hospital-in-the-home partnerships, medical care in remote communities, as well as telemedicine services.
Telstra takes organizational and cultural transformation very seriously. Telstra is fully aware of the need to transform its organizational structures and operating culture and to transform toward a more service- and software-focused telco. Although this transformation will take time to implement, CIOs will find a network service provider that is committed to transformation at the very top of management.
One of the developing trends in computing, relevant to both enterprise and service providers alike, is the notion of workload-specific or application-centric computing architectures. These architectures, optimized for specific workloads, promise improved efficiencies for running their targeted workloads, and by extension the services that they support. Earlier this year we covered the basics of this concept in “Optimize Scalable Workload-Specific Infrastructure for Customer Experiences”, and this week HP has announced a pair of server cartridges for their Moonshot system that exemplify this concept, as well as being representative of the next wave of ARM products that will emerge during the remainder of 2014 and into 2015 to tilt once more at the x86 windmill that currently dominates the computing landscape.
Specifically, HP has announced the ProLiant m400 Server Cartridge (m400) and the ProLiant m800 Server Cartridge (m800), both ARM-based servers packaged as cartridges for the HP Moonshot system, which can hold up to 45 of these cartridges in its approximately 4U enclosure. These servers are interesting from two perspectives – that they are both ARM-based products, one being the first tier-1 vendor offering of a 64-bit ARM CPU and that they are both being introduced with a specific workload target in mind for which they have been specifically optimized.
There’s a good chance that you’re a Verizon customer. I am; I get my cable TV, Internet access, and home phone service from it.
All in all, there are 130 million of us Verizon customers — and that’s a daunting challenge for Verizon. How do you — how can you — create a high-quality, consistent customer experience for all those people when they’re buying and using such diverse products?
The answer: business process discipline. And that’s why we invited Nancy Clark to speak at Forrester’s Forum For Customer Experience Professionals East, 2014. Nancy is Verizon’s senior vice president, operational excellence, a business process maven, and the sharp point of the spear for the company’s customer experience improvement initiative.
Nancy was kind enough to answer a few of our questions about what she’s doing. Read on for insight into how Verizon rose in every category of our Customer Experience Index that it’s in this year.
Those of you who’ll be with us in New York on Tuesday, June 24, can hear even more from Nancy. I hope to see you there!
Q: When did your company first begin focusing on customer experience? Why?
A: Verizon’s history dates back more than a century in some parts of our business. Like all good companies, we’ve always had a philosophy of putting the customer first. At the heart of this is a shared credo — our aspirational statement about who we are as a company. It fits on one page, but the word “customer” appears 10 times, and the first line is, “We have work because our customers value what we do.”
Some 80,000 visitors ventured to Barcelona to attend the annual congregation for the mobile-minded, the Mobile World Congress (MWC). Long gone are the days when one single theme dominated the show. My main impression of MWC was that compared with last year, there was surprisingly little true news. I see evolution not revolution, which is somewhat odd as the overall business environment is clearly changing faster than ever.
Of course, everybody again claimed that they are active in the obligatory fields of cloud, analytics, and customer experience. However, if anything, I feel this convergence of marketing messages creates too many platitudes and undermines the practical use case scenarios that define the mobile mind shift. I went to MWC with several questionsin mind, and my main takeaways of MWC are that:
With Henry Dewing, Henning Dransfeld, Katyayan Gupta, Brownlee Thomas, and Michele Pelino
Vodafone hosted its annual global analyst event in London recently, and it was a good event. Vodafone’s CEO Vittorio Colao kicked it off with a passionate endorsement of Vodafone’s enterprise ambitions. But will Vodafone’s market position as a leading mobile telco give it a tangible advantage in the broader enterprise global telecoms marketplace? We believe there is a good chance it will because:
Vodafone’s integrated pitch is credible. Vodafone comes up in nearly every conversation with Forrester enterprise clients that want to consolidate vendors for multicountry or “global” mobility services. Increasingly, our clients also are asking about Vodafone’s wired services. And those based in the UK and Germany are the most interested in learning about what’s available and what’s coming with respect to fixed-mobile bundling. Vodafone made a big play on fixed-mobile integration, most notably with the acquisitions of Cable & Wireless and Kabel Deutschland. Its network now covers 140 countries, 28 of which support MPLS networks for mobile backhaul. Vodafone also has big plans for refreshing and expanding its international IP backbone network to more than 60 countries.
With Dane Anderson, John Brand, Tim Sheedy, Clement Teo, and Bryan Wang
During his keynote at Telstra’s recent annual analyst event in Sydney, the CEO compared Telstra’s customer advocacy strategy to a triathlon that the firm has just begun. We believe this is a fitting analogy for progress communicated at the event. Our main observations are:
Telstra’s transformation remains a work in progress. Telstra is not unique from other incumbent telcos that transform away from traditional — and declining — sources of revenue. Its strong domestic position seems secure for now. But its prospects in new market categories, both inside and outside of Australia, are less certain. Telstra is not particularly innovative compared with telcos in the US or Europe. Yet Telstra benefits from a credible transformation strategy, which it is gradually implementing. For instance, Telstra has built a large IP-based digital media file exchange platform to serve global broadcasters and content providers.
Telstra ought to use its Net Promoter Score to drive cultural change. Its strategic goal to push for world-class customer advocacy is a key differentiator and convincing. However, we believe Telstra needs to use the NPS also as a driver of internal cultural change. For instance, Telstra should analyse transactional processes of device purchasing from branded retail stores. Moreover, Forrester research indicates that NPS has limits when it comes to explaining the “how” and “why” of customer experience.