Tuesday, 23 October 2018

Telcos expect partner ecosystem revenue bump, but technology challenges threaten gains

posted by BearingPoint
Thursday 17 May 18

BearingPoint today unveils the findings from a comprehensive study into partner ecosystems in the telco industry. Partner ecosystems: the silver bullet for telco woes? reveals that Communications Service Providers (CSPs) have high expectations of the value partner ecosystems will deliver to their businesses – 50% anticipate a 16%+ revenue bump in just two years. However, CSPs are yet to embark on the execution of ecosystem strategies, frustrated primarily by a series of technological challenges. In short, while CSPs realise the strategic importance of partner ecosystems to their future, they are failing to overcome internal barriers preventing successful execution…

BearingPoint today unveils the findings from a comprehensive study into partner ecosystems in the telco industry. Partner ecosystems: the silver bullet for telco woes? reveals that Communications Service Providers (CSPs) have high expectations of the value partner ecosystems will deliver to their businesses – 50% anticipate a 16%+ revenue bump in just two years. However, CSPs are yet to embark on the execution of ecosystem strategies, frustrated primarily by a series of technological challenges. In short, while CSPs realise the strategic importance of partner ecosystems to their future, they are failing to overcome internal barriers preventing successful execution.

Partner ecosystems: an unrealistic cure-all?

CSPs are under pressure to innovate in order to counter commoditisation, win customers and grow topline revenue. Few innovations (improvements or new services) are created solely in-house and so the right partner ecosystem is paramount. All the more with digital, where services can be seamlessly added and combined at speed. Co-innovation and co-funding of more sophisticated and harder to replicate offers to which CSPs add their own service wrapper and experience is the only practicable model. CSP expectations on the contribution from ecosystem partners are running extremely high.

Six out of ten CSPs expect partner ecosystems to drive cost-effective innovation. 59% to help them remain competitive. Just over half (51%) expect ecosystems to improve customer experience. CSPs also expect them to create direct customer relationships, enhance their own internal ecosystems and improve efficiency.
However, the most telling finding is that half of CSPs expect their revenues to grow by more than 16% over the next two years on the back of successfully building partner ecosystems. Even more extreme, 12% of CSPs anticipate revenue growth of more than 25%.

“Revenue, innovation, competitive positioning, customer experience and more. CSP expectations of the step change in business performance from adding partner ecosystems are very high. Our research also shows that companies adopting digital platform-based business models grow at twice the rate of those that don’t, simply because this allows them to generate value from their partner ecosystems. Considering that fact, perhaps partner ecosystems are the closest thing to a ‘silver bullet’ we’ve seen in telco in years,” says Angus Ward, CEO, Digital Platform Solutions at BearingPoint.

Progress report: telco lags on ecosystem execution
Despite their importance, CSPs are significantly behind in implementing the new business models and digital offerings based on partner ecosystems seen as vital to future success. Only 26% of CSPs have embarked on execution versus an average of 34% across industries surveyed. 27% of CSPs are about to embark on execution, 31% are analysing their options and 14% are at the very start of their journey. 2% have not even considered business model innovation and the development of new digital offerings.

“That a third of CSPs appear ‘stuck’ in the analysis phase is concerning. It reflects how much CSPs rely still are on rapidly commoditising products rather than proactively moving to differentiate to win new customers and protect revenues and profits,” says Henri Tcheng, Global Leader Consumer Industries at BearingPoint. “It’s important they begin to develop their ecosystem by putting the right strategy in place. Crucially, this should complement business objectives, identify appropriate partners and go-to-market offerings, and move to execution quickly, if the benefits they expect are to be realised.”

Ecosystem inhibitors: tech challenges loom large
Three of the top four challenges facing CSPs in curating ecosystems are technological in nature, asking deeper questions on CSPs’ capacity to deliver the right technology, skills and business agility:
1. Having the right technology in place to manage monetisation across the partner ecosystem (55%)
2. Overcoming a complex IT environment that cannot support a minimum viable product or fail fast concept (51%)
3. Ability to manage ecosystem partner relationships (49%)
4. Having the right technology and digital business platform to manage the partner ecosystem (48%)

“While business benefits drive the appeal of digital platform-based business models, technology challenges are frustrating CSP attempts to execute – be it making sure that partners get paid, creating agile environments for experimentation or simply providing a platform to bring together partners to create new services and exchange data and ideas,” continues Henri Tcheng.

“Ecosystem expectations are high but the execution is only commencing. Without a shift to new underlying digital business platform technologies that are designed to facilitate partner ecosystem-based innovation and more sophisticated offers, CSP efforts to introduce new business models will surely fail,” concludes Angus Ward. “It’s time to stop talking about the potential of the ecosystem and start realising the benefits.”

An executive summary of Partner ecosystems: the silver bullet for telco woes? is available for free download via the BearingPoint // Beyond website here: https://www.bearingpoint.com/en/partner-ecosystems/


View more of the latest press releases from across the industry or post your company's news.

Since you're here...

...the Telecoms industry is characterised by constant change and evolution. That's why it's crucial for telecoms professionals to keep up-to-date with what is happening. Join 35,000+ of your peers and sign up to our free newsletter service today, to be in the know about what is going on. PLUS, as a member you can submit your own press releases!

See all membership options

Please enable JavaScript to view the comments powered by Disqus.

Newsletter signup

Quickly get on board and up to date with the telecoms industry