Telecom operators find themselves in challenging waters in recent years, stiffed by competition from new market entrants and the impact of waning cash cows. For those that want to stay on top of their ball game change is key, with a transitioning to a data activator model one of the key strategic ways forward, suggest a new study by Atos Consulting.
Every year Atos Consulting, the consulting arm of IT services giant Atos, conducts research into the main trends and developments in the telecom, media and technology industry. This year’s edition, titled ‘Telecom operator: activate your gold’, looks in particular at the rise of data in the telecom space, and elaborates on how operators can tap into what is dubbed the industry’s new gold.
The research shows that the telecom sector is being faced with a wide range of simultaneous and high-impact changes, of which some are so disruptive they have the potential to reshape the fundaments of the industry. One of the key central trends is that of connectivity. Humanity, in particular in Western societies, has embraced internet and online devices (smartphones, tablets, etc) with an extraordinary speed, and as a result consumers are online virtually non-stop, regardless of what they are doing and where they are. According to the researchers, by 2018 the globe will see 25 billion connected objects, of which 4.5 billion are smartphones.
While the rise of connectivity brings with it several major challenges to operators, such as increasing stress on infrastructure, investments required in new technologies and changing consumer demand – topics which have dominated the media for a number of years now – the upside is that it too paves the way for an entire new market. This new economy, dubbed ‘the Economy of Data’, holds a mountain of value, which if monetised successfully, will bring forward a range of prosperous business models.
The mountain of added-value waiting to be capitalised sits, say the authors, mainly in the space between the consumer and provider. On the one hand consumers have needs which they are seeking to fulfil, and on the other hand there are providers anxious to provide the demanded products and/or services. For both parties the match between the two represents the value, and it is that role – the matchmaker, named ‘data activator’ by Atos Consulting – that is ideally placed to succeed in the new economy of data.
From a consumer perspective, two aspects stand at the heart of their value. Firstly, throughout the search process they want to be provided with relevant, ideally fully tailored, information. The matchmaker here plays a role in ensuring the seller base is aligned with consumer demands. The role of digital footprints is in this respect paramount – through their behaviour and decisions, connected consumers provide a mass of information on for instance preferences, personal interests and location. On the back of amalgamation and time, this creates a rich consumer profile, which should feed-in to the matching process to ensure maximum relevance. At the other end of the spectrum, a connected consumer is also open to receive information, such as for instance service messages, or tailored promotions.
From a seller’s viewpoint, the value centres around two key dimensions: fit and conversion. Sellers want to reach their addressable market, and through the use of digital footprints they can target their approach to their bull’s-eye. With relevance for consumers on the rise, so too will the quality of conversion and client relationships, creating value across the value chain, from sales to after-service.
By merging these two worlds in the digital space, the data activator can unleash a massive potential which can bottom-line run into billions of euros. To illustrate the value: according to Compass Intelligence the value of a relatively complete consumer profile is now worth $55, with the price forecasted to rise further in coming years as improved Big Data techniques bolster the opportunities of data capture and analysis. Another benchmark, from Facebook, shows that the implicit value of a single user on its platform has grown from $10 a few years ago to more than $50 this year, as the social media giant has among others been able to enrich the footprint of Facebookers worldwide. “The new economy of data calls for a new matchmaker, to bring the connected consumer and the connected offerer together,” says Tom Konings, Principal at Atos Consulting and one of the authors of the report.
The opening space will naturally not remain unnoticed in the marketplace, with a range of companies positioning themselves. “Tech companies, telecom operators, governments, large social sites, and at a smaller scale in certain niches even independent platforms are behind the scenes preparing themselves for the role of data activator,” says Konings. A synopsis of the market forces however reveals that telecom operators are best equipped to end up on top, he says, building on their natural role in the chain, and the pole position they have in terms of access to personalised client data.
He bases his reasoning on a number of factors. Operators are in his view “trusted, and rather independent parties”, and have the luxury that consumers are continuously connected to them, in essence providing them with digital footprints at literally no extra cost. They in addition can relatively easily create the mirror image for businesses, nurturing effective matching, and can build on a strong heritage of managing enormous amounts of data and serving millions of customers. For operators which can successfully transform their business model to include the data activator role, the future is bright he says, while on the downside, those that miss the digital boat are set to face a grim future. “Our forecasts indicate that those that observe the trend from the sidelines will find themselves in a very difficult position by 2020.”
It is however not all about the blunt monetisation of data, warns Konings. There are a number of governance factors that will play a pivotal role in dividing the wheat from the chaff in the heating up marketplace. As an intermediary, managing timing is key, so striking the right balance between frequency (income) and long-term client demands should be top of mind when drafting matching strategies. “Good timing encompasses next to timing delivery also the right frequency, the right context and ensures a message is received in the right place, for example at walking distance from a store,” says Konings. Transparency is another important area. Against the backdrop of growing data usage versus privacy concerns, providing transparency on data management to consumers and businesses is imperative. “This provides insight, creates understanding, and allows users to control their data settings, as element that ensures the data ecosystem maintains a sustainable place within society.”
For executives at telecom operators, Konings concludes by saying that it is time for action. “With traditional business lines under threat, findings new revenue streams is important. Analysts alike agree that entering the market for data activation is one of the most promising new markets around, and if executed successfully, it welcomes a lucrative line of business. We believe now is the time to dig for and activate your gold.”