|Issue:||North America 2009|
|Topic:||Co-creating the wireless revolution|
Sudip Nandy is Aricent’s CEO. Prior to joining Aricent, Mr Nandy was President of Wipro’s technology, media and telecom business unit. Mr Nandy has been an active member of the Institute of Directors; and is an active participant in the Global Executive Forum of the Economist Intelligence Unit. Mr Nandy holds a Bachelors Degree in Physics with Honours from the Indian Institute of Technology, Kharagpur and a degree in Electrical Technology and Electronics from the Indian Institute of Science in Bangalore. He also has an MBA from the Indian Institute of Management in Ahmedabad.
Rapidly growing voice and data traffic, and the race to rollout new infrastructure and services, place demands upon mobile operators and suppliers that few can meet. Few have the expertise to create a compelling user experience, build the infrastructure to deliver it and develop the administrative and operational systems to manage it. Traditional outsourced implementation services are fragmented and ‘siloed’. Suppliers that combine deep, sector-wide, knowledge with technological competence are needed to help operators migrate to the new operational environment.
Service providers today are grappling with a situation where their voice revenues fell by three per cent last year, while mobile data usage continues to rise – up 20 per cent last year alone. This represents a clear indication that legacy voice and SMS are no longer a sustainable growth engine and that service providers need to be prepared to handle massive demands on their data networks. At the macro level, the telecoms industry is somewhat insulated from the tumultuous economic times of late. While some operators and vendors have undoubtedly fallen on harder times, others are reporting significant growth. The continued rapid growth in access to mobile data is closing the consumer adoption divide across all ages, geographies and cultures. This bright spot in demand for telecommunications and networking services presents not only great opportunity, but also significant challenge. All this points to the fact that we are witnessing the dawn of the era of rich mobile value added services (MVAS). The mobile phone will replace the computer as a central piece in daily life, marking an era driven by comfort, ease of use and most importantly – the overall user experience. The winners here will be those who are able to overcome the multitude of interoperability, design and development challenges to deliver a seamlessly integrated, useful and accessible service to the end user. The changing landscape The world of wireless communications is going through unprecedented change. Massive advances in mobile phones, combined with users’ higher expectations, have shifted the competitive landscape for device manufacturers from hardware to software. Growth in high bandwidth multimedia traffic like YouTube is outstripping mobile network capacity, and driving equipment manufactures to develop new wireless infrastructure using emerging technologies such as femtocells, WiMAX and LTE. All of this change is having an impact on network operators, as they must evolve their operational and business systems to increase efficiency, improve service delivery and lower costs. While the wireless revolution is broad and encompasses a virtually unlimited number of challenges, three common themes have emerged garnering the majority of the investment and strategic focus of application, infrastructure and service providers: • Creating a compelling user experience – The phenomenal success of the iPhone illustrates the fact that user experience trumps technology and cost for winning customers. Increasingly, software and applications are becoming key differentiating factors; • Developing new wireless infrastructure – The existing mobile infrastructure was engineered and deployed long before iPhones and social media sites such as YouTube, and is not well suited for real time mobile broadband services. New machinery is required; and • Evolving operational and billing systems – to thrive in the wireless revolution, service providers must re-engineer operational processes and business systems, integrate new tools, add significant new resources, and acquire the appropriate expertise. This onslaught of new devices, technologies, services, standards and more, along with the associated integration complexity has created a significant need within application, infrastructure and service providers for comprehensive communications technologies, solutions and expertise. Owning the user experience Making a success of innovative new mobile user interfaces not only requires a broad understanding of user behaviour, but also a deep understanding of the complete mobile ecosystem. The increasing adoption of smart phones, combined with a variety of user interfaces (visual, aural, touch), requires sophisticated software capabilities to differentiate service provider offerings to end subscribers. A plethora of hardware options and multiple operating systems (Symbian, Android, Windows Mobile, LiMO etc.) make developing new devices a very expensive and arduous task. Significant investment in R&D, testing and certification and backend integration with operational and business systems is required. Taming wireless complexity Explosive subscriber growth, the mass market adoption of smartphones and the surge in high-bandwidth and delay sensitive video traffic – like YouTube – is quickly outstripping mobile operators’ network capacity. As a result, operators are putting tremendous pressure on equipment vendors to deliver new products with increased scale, performance and functionality. To compete effectively, wireless infrastructure providers must navigate a highly complex set of new technologies by increasing and optimizing R&D investments. Operational and business systems Wireless service providers are under enormous competitive pressures today to reduce costs, deliver and monetize new multimedia services and integrate new broadband wireless access technologies. To achieve these critical business imperatives, existing operational and business systems need to be evolved. Systems and processes should be re-designed for better efficiency, new tools integrated and additional expertise added to ensure a competitive wireless subscriber experience. The challenges faced by equipment manufacturers, device manufacturers and service providers can be categorized as creating compelling user experiences, driving product development in a rapidly evolving environment and deploying operational and business systems evolution to support new services. This is driving the need for a new kind of strategic supplier that provides services around the complete mobile ecosystem – from semiconductors, to UI design, to backend billing systems. A supplier is needed that combines the strengths of independent global innovation and design division, with communications design and engineering services capabilities, bringing together the complete value chain of operators, equipment manufacturers and handset vendors to address these complexities. Co-creation The traditional industry model of outsourced implementation and in-house innovation is ill-suited to meet the competing challenges of lowering costs and complexity while delivering the advances required to succeed in this ‘age of the user experience’. The lines between in-house and outsourced activities are blurring as companies now require strategic suppliers to deliver deep communications expertise with a breadth of services ranging from product/service innovation and design to integration, implementation, and support. These new requirements are a poor fit with the ‘mile wide inch deep’ multi-industry outsourcing approach offering silos of implementation-only activities such as technology or testing. Equipment manufacturers and service providers need a new type of ’DNA’ in their strategic suppliers that offer deep overall, sector-wide, expertise. More importantly, strategic suppliers need to be able to provide everything from innovation and technology to integration and support – and exclusively focus on the communications industry. That way, they can partner with customers to co-create innovative communications products and services. Historically, outsourcing engagements have been for implementation only and companies hired outsourcing firms to handle aspects of the development process that required only limited skills and basic processes. However, in today’s market, successful companies need much more from their strategic suppliers. They want innovation and implementation partners who can help with every phase of the product and service lifecycle, from the user experience and technology feasibility to development, testing and rollout. Rather than turning to suppliers simply to reduce costs or to speed up a specific phase of a product development cycle, equipment manufacturers and service providers can also get help at the ‘bar napkin’ phase – when brainstorming and sketching new ideas. This powerful combination of deep sector-wide expertise, innovation and services is becoming a best practice for equipment makers and service providers in a world where rapid innovation, complexity management, and cost containment are requirements for success. As a result, the trillion dollar ‘one-size-fits-all’ services market is segmenting into several, large strategic supplier segments with much more industry-specific orientation. Given its sheer size and the magnitude of change, the communications industry will be one of the world’s most dynamic industrial segments during the next decade.