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As the digital ecosystem expands, network operators are transforming into digital service providers. Here are the top reasons why.
May 10, 2016
The only way for service providers to grow and more effectively compete is by changing the way they do business. Consumers value the companies providing digital services and content more than they do the network operators enabling those digital connections. Service providers now understand that their weight is no longer valued solely in being a provider of bandwidth; it is in being an enabler of services. This means they must undergo a digital transformation; they have no choice.
The need to become digital enterprises is real and service providers are starting down that path for several distinct reasons. According to a recent survey Netcracker conducted with ICT Intuition and Coleman Parkes Research, we found that there are four primary reasons that traditional network operators are becoming digital service providers (DSPs):
1. Customers Demand It
Smart mobile devices, connected homes and cities and the exploding Internet of Things (IoT) all support the way customers live: connected anywhere at any time on any platforms. This demand for connectivity not only requires operators to be more proactive in where they enable connections, but also the forces them to provide services everywhere. According to our survey, 63 percent of respondents said their top reason for becoming a DSP was because their customers demand it.
The continued growth of Netflix, Amazon and other web-scale companies like Google, which are offering connectivity and digital services anywhere, underscores the growing push for digital transformation. If telecom and cable network operators want to meet customer expectations, providing their own digital services and building out new partnerships with other digital companies will be critical.
2. Competitors Are Doing It
The competitive nature of the telecom and cable industries requires businesses to keep up with their peers that offer similar services. The results of our survey validated this, as 50 percent of businesses said they are pursuing digital strategies because their competitors are doing the same.
3. Digital Business Services Require It
Our survey revealed that 48 percent of respondents said the accelerating demand for digital business services is encouraging them to transform into DSPs. In order to fully capitalize on the growing B2B market, going digital is a must.
4. Revenue Streams Depend On It
Roughly 46 percent of service providers said one of their primary drivers to becoming a DSP is because their bottom line depends on it.
Service providers seem to be well aware that whether they are providing an integrated, omnichannel, personalized digital experience to their end customers or digitally connecting the workforce, it is critical for them to become digital service providers. They want to be capable of providing networking capabilities and new digital services on demand, at scale and in the cloud.
The Netcracker survey of 115 service providers revealed that of the 24 percent of respondents that said they are not currently executing a DSP strategy, only one-third expect to have something defined in the next 12 months. This means that many CSPs haven’t even cemented their plans.
Regardless of the reasons for embracing a digital transformation, service providers will need a plan and they need partners that can help them navigate the changes that new technologies will bring to the way they do business. For more on this topic, please download our e-book, Partners and Priorities: Overcoming the Obstacles to Becoming a Digital Service Provider.