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!