In our overview of day one at London Telco Cloud, we looked at the competitive dilemma that Telcos face, with shrinking margins on core services and with stiff competition in newer converged services and cloud. The answer appeared to be the development of converged services and cloud-based apps that could be delivered easily and affectively via marketplaces to the SMB sector where telcos retain a critical footprint.
On day two specialist consulting firm mm1 delivered a realty check: explaining why SMBs don’t (yet) buy cloud or IT from telcos. The key points that they made were:
- Telcos are not the natural partner for SMBs to talk about cloud. Mid-size companies usually have other partners for IT
- If mid-size companies talk to telcos about cloud, currently the telco sales forces aren’t able to sell it very well
- Customer understanding is key – telcos are accustomed to transaction sales at scale, but cloud needs to be a consultative sale which smaller IT service companies are more used to delivering
- While cloud can be simple to provision, the customer lifecycle remains complex (inc. design, implementation, migration, training, and in-life support)
- SMBs are looking for worry-free management throughout this lifecycle complexity and see their local IT suppliers as the most trusted partners for this – not their telco.
The conclusion from mm1’s pitch was that telcos cannot win with stand-alone cloud offerings, and instead need to address SMBs with credible, converged telco-cloud offerings instead. These are a combination of not only classic telco services with fixed and mobile access, but also cloud and professional services.
Currently however, while most telcos offer “fixed” and “mobile” and “cloud” services for SMB customers, few provide them as truly converged offerings. This will require a fundamental business and operating model transformation by most telcos, say mm1, but don’t worry, they say they’re here to help.
Another fascinating keynote on day 2 of Telco Cloud was delivered by Goran Car, Director of the Professional Services and Solutions Strategic Business Unit in Combis and CTO ComCloud, one of the leading system integrators in the Adriatic region. He introduced us to the Flynn Effect – coined by James Flynn who in his TED 2013 paper looked at why our IQ levels are on average higher than our grandparents. Already panicked by all these talented millennials, I wanted to know if there was any hope of competing with them. Are successive generations really brighter and more talented that those before them?
As Goran explained: in 1865 you’d be lucky to shoot a target from distance once a minute, in 1898 you’d expect to be able to do so several times a minute and in 1918 you’d have been able to hit a target 50 or more times. This wasn’t down to any inherent evolutionary advances. Instead it was down to the move from the musket to the repeating rifle and then to the machine gun. The ever-improving capability of the technology at our disposal is enhancing our potential, as is our familiarity with it and our ability to get the most from it. Cloud is just such a technological evolution and the more that we harness it, the more this will lead to further innovations.
The point was endorsed by David Andreasson, head of product and technology at Teliasonera when in his keynote he predicted that “the winner in this business is the one who creates the most compelling offering based on services that others have innovated.”
So what is clear to us is this:
- We don’t have to worry about all those pesky and highly-talented millennials as they will innovate and create new services that we can then capitalise on.
- We do need to incorporate these services into compelling, credible, converged telco-cloud offerings as mm1 outlined.
- We can deliver them to our hungry SMB clients easily and effectively via marketplaces.
At least I think that this was what I learned from Telco Cloud, or maybe the hospitality got to me too much.