The New New Competition

For some time, we have been hearing that there is no such thing as full

service provider; mobile and fixed business are two different ballgames, and

that you have to choose between running a network and providing service, and so

on. From thought leaders like Dr Jagdish Sheth to executives from the over-hyped

research firms, everyone seems to agree that there was something terribly wrong

in how the telecom companies set out to ‘conquer’ the world–by trying to

be everything to everyone. What they were lacking is something whose importance

has been emphasized upon since the days of Mahabharata in the form of Arjuna’s

aim at the eye of the fish–focus.

Now that some of the service providers throughout the world–developed

markets, to be more correct–have taken the tough decision to get out of some

of their businesses that they thought were not yielding them much, they face

another harsh reality. Even after having that focus, money is not coming to them

the way they were hoping for it. The overall state of world telecom affairs

continues to be that of gloom.

So, what is the problem?



One, of course, is the unrealistic level of expectations. "The

pessimism of our age is generally explained as being due to the bad state of the

world," observed an English critic, "but I believe it is quite as much

due to the boredom which we all endured due to the optimism of the

Victorians."

One thinks that aptly describes why the industry is still in such a gloom.

The expectation was just too much. But then, that is a philosophical question,

not a business issue.

Of business concern is what the carriers are trying to do–get out of a few

businesses to remain focused. But remaining focused is not an end by itself. It

is just a means. The objective is to do better business and of course, make

money. Staying focused helps. But it should be supplemented by adequate measures

to better the service. And that does not mean just better SLAs and customer

care. That could mean a fundamental change from being a utility to a business

partner.

A company that decides to focus on business-to-business areas like managed

network services must act like one–it should manage the network of the client,

not just offer a permutation and combination of packages to choose from.

On paper, many carriers do promise that today. But in practice, few do it.

Fewer still do it the way it should be done.

For a corporate, that work involves mapping the business needs to

communication needs (consulting); designing network accordingly (design);

building the network (network integration); managing all its components

(facilities management).

Not that carriers do not know it or have not tried doing it.

But unfortunately for them, there is one community that does most of the

above mentioned jobs far better than they are able to.

That community is the traditional system integrators–the likes of IBM, EDS,

and CSC. (Wipro, TCS, and Infosys are yet to catch up, but they will.) What is

more, they are being asked by the users to handle their procurement of

connectivity, thereby forcing the telecom operators to sell to the SIs and not

directly to clients. According to market research firm Analysys, in Western

Europe, this has already become a reality. Today, "telecom operators are

having to sell to SIs rather than to the end customer; with whom they have

traditionally enjoyed a dominant direct relationship." The firm concludes

that operators cannot undermine the rising power of SIs and should defend their

market position by focusing on their managed service solutions, using their own

system integration business.

Or, one must add, they could concentrate on the network side and remain pure

network operators. But then, that would be a low-value, and even low-growth

business. The only companies for which that makes sense is the big

government-owned telcos that have huge networks.

Those new companies that want to grow faster, will have to take the total

solutions route by managing the network and offering all the associated

professional services. Not just by proclaiming about their capability but by

actually building it.

A thought: the first step probably is to start by outsourcing their own

non-core low-value processes so that they become leaner and take up higher-value

work!