Back To The Future As BT Investigates Potential EE Acquisition In The UK

In a move that would boost BT’s standing as the leading integrated telco and increase pressure for competitors, Orange and Deutsche Telekom 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 purchase price of £12.5 billion on a debt-/cash-free basis would be split equally between Orange and Deutsche Telekom. At a price of roughly 7.8 times EV/EBITDA the deal isn’t outrageously overpriced. So what could this mean for the various market participants? Should the deal go ahead, we believe that the implications for the UK telco market would be significant as:

  • BT becomes once again the leading integrated telco in the land. A deal would have a larger impact on BT’s consumer than its business activities given EE’s customer base of 24.5 million mostly consumer mobile customers. As the strongest 4G LTE provider in the UK, EE would give BT a platform to deliver interesting new bundles such as dedicated sport channels for smartphones and tablets. EE would be an important asset to enhance BT’s already successful retail arm, in particular its IPTV activities, where BT is one of the few telcos that manages to offset the decline in traditional telco services with a new offering. The deal would fail to bring any significant new customer relationships in the business arena. Going forward, however, this would finally provide BT with the opportunity to develop mobile moments for its business customers.
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Your Business Customers Want You To Deliver Great Mobile Moments

Mobile is now becoming a mission-critical service for all businesses. CIOs must support mobile moments, which Forrester defines as points in time and space when someone pulls out a mobile device to get what they want in their immediate context. Mobile moments have spread well beyond consumer scenarios:

  • Your business customers are demanding them. Mobile engagement is critical for all customer relationships and better user experiences – irrespective of whether you are a business user or a consumer. Consumerization has changed this distinction forever. Today, we all expect a great experience – both at home and at work.
  • Your partners and suppliers are working on adjusting their business processes. To ensure smooth end-to-end workflows in these new processes, you need to ensure that your own organization adjusts to their mobile mind shift. Moreover, any mobile offering that depends on an ecosystem of partners relies on end-to-end experiences. Third-party providers can provide productivity improvements for collaboration and workflow efficiency to help with this.
  • Your competitors are exploiting the opportunities that mobility offers. Mobility is quickly becoming one of the most important battlegrounds for business innovation. Your competitors are readjusting and improving their business processes through mobility. Every CIO should have a clear strategy for a world in which every customer, worker, and supplier is hyper-productive, hyper-available, and hyper-engaged.
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Telstra Bets Its Future On All Things Connected

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.
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The European Mobile Workspace Will Transform The Way We Work

The provider of your mobile workspace solutions will be more than just a provider of technology. Rather, the right provider will have to bring the right assets and experience to act as a strategic partner during the mobile mind shift transition. Therefore, a critical first step to succeed is to understand the vendor landscape for mobile workspace solutions. Picking the right service partner is particularly hard across Europe where specific user requirements and a fragmented and heterogeneous vendor landscape make the selection a complex task. My new report, Market Overview: European Mobile Workspace Services, assists CIOs in drawing up a mobile workspace strategy by providing an overview of the market and the key vendors. It includes profiles of Atos, Computacenter, CSC, HP, IBM, Orange, Telefónica, T-Systems, Unisys, and Vodafone. The key takeaways are as follows:

  • Business processes define mobile workspace solutions – not vice versa. CIOs need to collaborate with business-line managers to analyze and define actual business processes that can be enhanced through mobile workspace solutions. Only then can CIOs define the business technology that is required to support the business.
  • The European mobile workspace market is heterogeneous. Forrester data highlights big differences in business requirements and approaches regarding mobile workspace solutions. These differences make it all the more important for the CIO to select a vendor that understands specific business requirements and national markets for mobile workspace solutions.
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Telcos Prepare For A Roller Coaster Ride In 2015 And Beyond

We predict that the telecom business model will undergo dramatic transformation in 2015: a minority of telecoms will manage to reinvent their business model and will enter new market segments and get stronger. Meanwhile a majority of telcos will be bought or go out of business, thus driving consolidation.
At the same time, for business leaders, having access to quality network infrastructure represents a vital underpinning for their digital business and their long-term competitive advantage. We predict that by 2015 and beyond:
 
  • The telco business model will shift from sustaining to enabling critical infrastructure. Traditionally, the telco business model focused on sustaining operational efficiency of network infrastructure. In the years ahead, we predict a shift toward enabling solutions that support telco clients to engage with their customers more effectively. This mirrors not only the CIO’s shift from IT towards business technology but will also be the overarching theme during the transformation of the telco business model.
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Vodafone Transforms Itself To Support The Business Technology Agenda

Today, Vodafone is already one of the largest global telcos, with direct presence in 60 countries and many more through partnerships. But while managed mobility remains at core of Vodafone’s strategy, the company’s ambition is to be “the world’s leading total communications provider in enterprise” and to “help customers to build better businesses.” Given its origin and history as a mobile-only telco, achieving this goal is a tall order.

Yet, Vodafone has changed dramatically in the last few years. It acquired Cable & Wireless Worldwide in 2012, which gave it access to a larger global network and to a larger customer base of multinational customers. In 2013, Vodafone sold its 45% stake in Verizon Wireless, which provided it with significant cash assets for M&A-related activities. At that time, Vodafone also launched its infrastructure Project Spring, which added another £7 billion to an existing planned spend of £12 billion.

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Don’t Wait For Governments To Pave The Way For Digital Business

Digital transformation will fundamentally affect all aspects of business and society, which makes it a key theme not only for business leaders and CIOs but also for governments. Over the past few years, several governments across Europe, as well as the European Union (EU) itself, have each developed their own respective initiative to address the opportunities and challenges that come with digital.

However, from the CIO’s perspective, these digital agendas often fail to meet the requirements that businesses encounter as part of their digital transformation projects. While the digital agendas emphasize infrastructure and regulatory initiatives such as broadband coverage and Net neutrality, CIOs and their business partners would also benefit also from a focus on “soft issues,” such as promoting an interdisciplinary approach in university education and driving digital innovation across industry sectors. We believe that:

  • Governments recognize the digital transformation of businesses and society . . . Governments across Europe, as well as the European Commission of the EU, have recognized the importance of digital transformation to their constituencies and citizens. Various digital agendas have been developed and rolled out over the past few years with great fanfare. But in the end, most digital agendas remain high-level discussion papers.
  • . . . but governments underestimate the magnitude of digital transformation. Most digital agendas lack any real insights about broader business requirements for being successful in the digital economy — let alone any technological insights. Digitization is treated like one of many initiatives rather than the overarching theme for business and society.
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Observations From IFA 2014

I recently visited the oldest and largest global consumer electronics trade fair, Internationale Funkausstellung (IFA), which took place in Berlin. IFA highlighted that the technology sector retains its appeal. On IFA‘s 90th anniversary, about a quarter of a million visitors attended, and orders for products worth about €4 billion were placed at the event. IFA’s floor space was sold out, despite a 3% expansion.

Electronics companies from around the globe showcased a wide spectrum of connected devices ranging from the smart stove to the latest smartphones and computerized wristwatches — just a few days ahead of Apple announcing its latest gadgets. Although IFA primarily focuses on consumer products and services, many themes are of increasing relevance for CIOs. Leading CIOs recognize that consumer electronics have an impact on their business and that:

  • Consumer electronics offer a new customer engagement channel. Traditional businesses are facing opportunities to use the emerging possibilities for closer customer engagement that consumer electronics in combination with social media channels offer. For instance, smart TVs allow media companies to communicate in real-time with their customers while they watching or listening to the “product.” However, this requires a dramatic rethinking of marketing and sales techniques — something most of the traditional companies are struggling with. This underlines the need to view the “consumer electronics” opportunity as part of the wider digital transformation process.
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Digital Transformation Is Changing The Market For Consulting - Observations About Internal Cultural Transformation At PWC

Professional services firms must go through their own digital transformation before they can truly help their customers. In this comment we highlight some observations we made during a recent analyst event of one of the leading global professional services firms PWC.

Digital strategies will not translate into sustainable business models for the digital age

PWC is right to state that customers do not need digital strategies. Instead, they need support to prepare themselves for the digital age. But digital transformation projects are not so much about technology as about redesigning business models and changing the style of doing business. Hence, successful CIOs recognize that:

  • Cultural transformation is the main challenge for digital transformation. Digital businesses map out customer journeys and ensure that products turn into plug-ins for broader digital propositions. These propositions are connected through data, communities, and collaboration. This allows the business to understand who the customers are and how they use products. It’s easier to implement technology innovations than to change habits and culture. Technology is only the catalyst for cultural and organizational transformation. The transition of Philips towards a vendor of digital propositions is a case in point.
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Customer Privacy Is A European CIO Priority

With Enza Iannopollo

Customers value tailored offerings. And consumers are increasingly aware of what Forrester calls the “privacy-personalization paradox” — that is, the paradox between their desire for personalization and their desire to keep their data private. A 2013 survey by Populus for Sky IQ of 3,097 UK adults found that 51% believe it is useful for brands to know some information about them, and 53% trust brands to act responsibly with their data. The same survey reveals that 79% respondents are careful about the type of information they pass to organizations, 63% worry about how much personal data they have revealed online, 48% say that data privacy is an issue they think about, and 46% do not trust social networks with their personal data.

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