Rise of Digital Enterprise Services

The rise of digital enterprise services is having a huge impact for existing providers. Research from Gartner suggests Communication Service Providers (CSPs) are creating new revenue streams and improving customer engagement through digital transformation. The report titled, “Research Roundup: Digital Transformation for Communications Service Providers” by Analyst Gyanee Dewarain, highlights key considerations and research for providers who are implementing digital services in their enterprise.

Digital Enterprise Services Opportunity

By 2017, Gartner predicts 8% of global revenue for CSPs will come from digital services. Digital enterprise services, or DES, include usage or consumption-based offerings such as Over-the-Top (OTT) streaming video, Internet of Things (IoT) or machine-to-machine (M2M) services. The forecast growth rate of these types of services is expected to grow at a rate of more than 30% between 2013-2017.

As traditional services are only expected to grow 2%, providers who want to future-proof their businesses are eager to enter the digital economy. They are strategizing plans to capitalize on the exploding opportunity that digital enterprise services represent.

The biggest growth opportunities in digital services revenue for CSPs, according to Gartner are IPTV and VOD, with a projected $40.6 billion worldwide CSP revenue opportunity in 2017. Mobile Payments and Remittance is the next largest opportunity with a potential $13.4 billing estimated revenue. An additional $11.7 billion in revenue is expected from M2M and IoT services in 2017.

Opportunity Impact

Digital services are likely to effect providers in three important areas, according to Garner: revenue generation, cost optimization, and enhanced customer experience. Adjunct revenue generation through targeted upsells and providing additional digital services to existing customers is an obvious win for any provider, although the impact of digital business is forcing many CSP IT organization to re-evaluate their current processes and technology.

In addition, to new services and revenue streams driven by digital transformation, the increased operational efficiencies and cost savings realized when implementing an enterprise digital service strategy can also be effectively applied to existing, traditional services as well. According to Gartner, the shift “demands a greater fusion of business and IT capabilities among executives.”

Improving customer experience can positively impact multiple key performance indicators, such as reducing churn, increasing average revenue per customer and monthly recurring revenue. Although Gartner points out that digital business will require a new set of metrics to measure success and new incentive schemes for sales, enhancing customer experience will have a significant impact on success, however it is measured.

Four Tenets of CSP Digital Transformation

Gartner suggests there are Four Tenets of Digital Transformation for CSPs:

• Strategy - Articulate vision and goals. Prioritize objectives. Develop a plan for digital transformation that encompasses overall business strategy.
• Technology - Move from products to platforms. Embrace open ecosystems. Adopt bimodal IT.
• Process - Tools and methodologies that increase agility, and customer- and data-centricity.
• People - Collaboration and teamwork. Recruit (and retain) digital talent.

Best Practices

When implementing an Enterprise Digital Services strategy, Gartner recommends the following best practices for CSPs:

Best Practices When Offering DES:

• Establish strong capabilities in product development and delivery.
• Employ open platform strategies.
• Define a differentiated value proposition and optimized customer journey.
• Augment talent with IT expertise.
• Implement centers of excellence for service domains.
• Develop deep industry vertical specialization.
• Form strategic partnerships and alliances.
• Revise incentives and performance metrics.
• Realize organizational synergies.
• Demonstrate stakeholder value

Conclusion

Providers are creating a shift in the Consumption-to-Cash^TM economy by implementing strategic Digital Enterprise Services. Research shows that with a clear focus on strategy, technology, process, and people, an agile CSP can grow revenue, reduce costs, enhance customer experience and future-proof their business by embracing digital services.