Telco 2.0 Transformation Index - Methodology and Approach
-
Upload
simon-torrance -
Category
Business
-
view
2.371 -
download
0
description
Transcript of Telco 2.0 Transformation Index - Methodology and Approach
Growth through Innovation
Telco 2.0 Transformation IndexMethodology and Approach
Chris Barraclough, Chief Strategist, STL [email protected]
- 2 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Introduction
• This is an introduction to the methodology and analysis for the Telco 2.0 Transformation Index – the first detailed analysis and benchmarking of Communication Service Providers (CSPs) as they move to future sustainable business models (Telco 2.0)
• The initial tranche of analysis covers 8 CSPs…• AT&T, Axiata, Etisalat, Ooredoo, SingTel, Telefonica, Verizon, Vodafone
• …across 5 core business model domains• Marketplace, Service Offerings, Value Network (internal organisation and external partnerships, Technology and
Finance
• Comparative analysis is undertaken across all 8 CSPs with objective scores used to determine relative performance of each CSP by domain
• Raw data and analysis/charts are made available in Excel and detailed evaluations made in Powerpoint
• Clients can purchase:
1. The comparative Benchmarking report (and Excel data pack) which includes a detailed deep-dive analysis of 1 CSP
2. Additional CSP deep-dives analysis reports (and Excel data packs)
3. The Benchmarking report and all 8 deep-dive analysis reports (including all Excel data packs)
- 3 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
The Telco 2.0 Transformation Index (T2TI): Compares the performance of Communications Service Providers (CSPs) in moving to Telco 2.0
1. Explore the Telco 2.0 implementation performance of individual CSPs in detail:
• See where they are strong and weak• Understand what is driving strengths
and weaknesses• Learn and apply lessons to your
organisation
2. Benchmark the Telco 2.0 implementation performance of CSPs against each other:
• Determine best-in-class players in different areas
• Understand relative strengths and weaknesses
• Identify how to improve performance – learn from other CSPs
Enables users to:
- 4 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology Finance
Initiating coverage on 8 leading CSPs
1.Telefonica Europe/South America
2.Vodafone Europe/Asia
3.Etisalat Middle East
4.Ooredoo Middle East
5.Axiata Asia
6.SingTel Asia
7.Verizon US
8.AT&T US
Deep-dive analysis of each CSP
plus
Benchmarking of CSPs against each other and, where appropriate, key new competitors (Google, Apple, Facebook, etc.)
- 5 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology Finance
The T2TI is based on STL Partners standard Business Model Analysis Framework1.
• Five core domains are analysed covering both a CSP’s external environment and relationships and its internal structures and performance
• A CSP performance is evaluated against the key requirements for transforming from Telco 1.0 to Telco 2.02.
• Analysis highlights areas of absolute strength and weakness for each CSP and benchmarks performance against peers
• Analysis balances depth and manageability:
• Aims to be insightful but not overwhelmingly detailed
• Objective assessment:• STL Partners is independent
• Uses hard public data and information where possible
• Additional information gathered via interviews and surveys conducted by STL Partners
1. Used in our research and consulting. Strategy reports using this model include The Roadmap to new Telco 2.0 Business Models, A Practical Guide to Implementing Telco 2.0, Cloud 2.0: Telco strategies in the Cloud.
2. Outlined in detail in A Practical Guide to Implementing Telco 2.0 and other reports and implicitly communicated throughout this analysis.
2. Service Offering
5. Finance
3. Value Network4. Technology
1. The marketplace
Services Offering is what the CSP delivers to customers in particular market segment. It is defined by the CSPs corporate and services strategy.
Technology is the technical architecture and functionality that a CSP uses to deliver service offerings.
Finance describes the way the CSP generates a return from its investments and service offerings. It also measures the CSP’s success in generating returns.
Value Network is the way the CSP organises itself to deliver service offerings and includes both the internal structure and processes and external partnerships.
The Marketplace is the context in which the CSP operates. It consists of the economic and regulatory environment and the alternate service offerings offered by competitors.
Source: Faber et al; Designing business models for mobile ICT services, 2001; adapted and developed by STL Partners
- 6 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Data and information sourced for each market and CSP – quantitative and qualitative analysis conducted
• Company accounts
• Regulator
• International Monetary Fund
• World Bank
• Internetworldstats.com
• Academic studies
• Interviews
• Surveys
• Web sites
• Presentations
Financials:Market, Competitor, Target CSP P&L,
Balance sheet, cash flow
Operational KPIs: Target CSP & competitor market
share, service volumes (voice, data, SMS), ARPU…
Market economics: GDP, growth
Market digital maturity:Internet penetration, Facebook
penetration, bank account penetration, regulation
Service offerings:Core services, Vertical industry
solutions, Infrastructure services , Embedded communications, 3rd-party
business enablers, OTT
Organisation & Partnerships:
Structure, process, key players
Technology: Key technologies, challenges, change process
- 7 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology Finance
For each CSP, the data and associated analysis is organised around the 5 domains at different levels of abstraction
• One overall Telco 2.0 transformation score for each CSP based on 5 domain scores
• Over 100 underlying pieces of analysis conducted for each CSP to produce 34 level 1 or 2 scores
• Domain scores built up from Level 1 and Level 2 scores
• Benchmarking of scores and underlying pieces of analysis carried out between CSPs
Financials:Market, Competitor, Target CSP P&L, Balance sheet,
cash flow
Operational KPIs: Target CSP & competitor market share,
service volumes (voice, data, SMS), ARPU…
Market economics: GDP, growth
Market digital maturity:Internet penetration, Facebook penetration, bank
account penetration
Service offerings:Core services, Vertical industry solutions,
Infrastructure services , Embedded communications, 3rd-party business enablers,
OTT
Organisation & Partnerships:Structure, process, key players
Technology: Key technologies, challenges, change process
MarketplaceFinance
TechnologyValue Network
Serv
ice
Offe
ring
Internal organisation
External
partnerships
Man
agem
ent,
visi
on, g
oals
&
cultu
re
Org
anis
atio
n st
ruct
ure
Third-parties
Other CSPs
Core
service
s
Verti
cal
indu
stry
so
lutio
nsIn
fras-
truct
ure
serv
ices
Embe
dded
C
omm
s
3rd-party
business
enablersO
TT
Comm
unications
ConnectivityContent
Enterprise mobility
Unified comms
Other ICT
Traditional telecoms
Cloud services
Embedded connectivity
Embedded voice/messaging
NFC
M2M
CEBP
ID & authentication
Advertising & marketingPayments and collectionDeveloper support
Regulation
Competition
&
positioning
CustomersFi
nanc
ial
perfo
rman
ce
Finance
-
strate
gy
alignmen
t
Revenue
model
Cost
model
Flex
ibili
ty
EfficiencyCustom
er
data
Change process
Summary
Domain
Level 1
Level 2
Economic environment & maturity
- 8 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Marketplace domain evaluation – analysis areas
• This section evaluates the attractiveness of a CSP’s marketplace by region
• Four parameters comprise the marketplace evaluation:1. Economic environment & digital maturity:
• The overall health of economy (or economises) in which the target CSP operates as reflected by GDP size and growth.
• The digital maturity of the target CSP's market(s) as reflected by consumer and enterprise adoption and usage of telecommunications and internet services.
2. Regulation:• The regulatory framework that the CSP operates in. Includes legislation and attitudes to pricing,
net neutrality, CSP technical and commercial collaboration for new Telco 2.0 solutions, etc.
3. Competition and positioning:• The nature of competition - how players compete, their goals, the strategies they deploy, the
products they develop• How Telefonica is competing in the marketplace and its strengths and weaknesses
4. Customers:• What customers want and, more importantly, are trying to achieve (physically, intellectually,
socially) and how this is reflected in their (digital) behaviour including how they use products, react to companies and brands, share information about themselves etc.
• Specifically, the regard with which customers hold CSPs
Marketplace
Regulation
Competition &
positioning
Customers
Economic environment
& digital maturity
Contents Summary Marketplace Service offering Value network Technology Finance
- 9 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology Finance
Service offering domain evaluation - analysis areas
1. Core services:• Core “Telco 1.0” retail offerings such as subscriptions, communications, broadband
connectivity and basic content services. These will remain at the core of telco revenues, enhanced by the smart and targeted delivery of improved offers.
2. Vertical industry solutions:• Comprise telephony services (voice and data) being integrated with IT with the operator
acting in a systems integrator role to provide a complete solution. These solutions are tailored and packaged for specific vertical industries.
Serv
ice
Offe
ring
Core
servi
ces
Verti
cal
indu
stry
so
lutio
nsEm
bedd
ed
Com
mun
icat
ions
3rd-party
business
enablersO
TT
Comm
unications
ConnectivityContent
Enterprise mobility
Unified comms
Other ICT
Traditional telecoms
Cloud services
Embedded connectivity
NFC
M2M
CEBP
ID & authentication
Advertising & marketingPayments and collection
Infra
s-tru
ctur
e se
rvic
es
Embedded voice/messaging
Contents Summary Marketplace Service offering Value network Technology Finance
3. Infrastructure services:• Includes telecom capacity “bulk” wholesale, as well as more granular “distribution” two-sided business
models and aspects of hosting/cloud services. Some have been around for a while – bitstream ADSL, unbundled local loop sales etc. Others (data MVNOs, wholesale wireless networks, IAAS) are relatively new.
4. Embedded Communications:• The delivery to consumers and enterprises of basic telecom services, primarily voice telephony, SMS and
broadband data access, through new routes such as application-embedded functions or devices which “come with data” pre-provisioned. Telecoms as an integral part of another service rather than standalone.
5. 3rd-party business enablers:• The provision of extra capabilities derived from the operator's ’platform’ rather than just network transport.
This includes functions such as billing-on-behalf, location, authentication and call-control, provided as basic building blocks to developers and businesses, or abstracted to more complex and full-featured enablers (for example, a location-enabled appointment reminder service).
6. OTT:• CSPs offering content, communications and connectivity services outside the perimeter of their own access
subscriber base and independent of their network. CSPs acting like a OTT player and launching internet services.
• This section evaluates the attractiveness of a CSP’s service offering• STL Partners has identified 6 service offering opportunity areas for Telco 2.0:
- 10 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Value Network evaluation domain - analysis areas
• This section evaluates how well each CSP is organised internally and externally (within its ecosystem) to deliver Telco 2.0
• The Value Network evaluation consists of internal organisation and external partnerships:• Internal organisation – how the CSP is configured to deliver Telco 2.0
value:1. Management, vision, goals and culture:
• The quality of the senior management team and the quality and clarity of the associated vision, company goals, company culture
2. Organisation structure:• How well the CSP organisation structure is aligned with the company vision and
goals and how effectively this supports the culture
• External partnerships – how the CSP works with other players to deliver its Telco 2.0 strategy and specific Telco 2.0 service offerings:1. Third-parties:
• The ability of the CSP to develop valuable and sustainable commercial relationships with other players to build mutual value that is greater than could be achieved by either party alone
2. Other CSPs:• The ability of the CSP to identify and exploit areas where collaboration between
CSPs is mutually beneficial (e.g. because opportunities to differentiate are low and/or the need for scale is high)
Internal organisation
External
partnerships
Man
agem
ent,
visi
on, g
oals
&
cultu
re
Org
anis
atio
n st
ruct
ure
Third-parties
Other CSPs
Value Network
- 11 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Technology domain evaluation - analysis areas
• Four parameters comprise the Technology evaluation:
1. Flexibility• The ability of the CSP's network, OSS and BSS to support more business models
(customers, partners, revenue and cost models) and more services than ever before.• This includes the ability to manage information and transact on a real-time basis with
services that involve multiple customers and partners.
2. Efficiency:• The CSP's ability to drive network, OSS and BSS costs down by managing technology
efficiently and driving complexity out.• Covers both capital expenditures (and related depreciation charges) and operating costs.
3. Customer data:• The CSP's ability to exploit its customer data to generate value for consumers and
businesses. This covers• Ability to understand the value and risks of using customer data (including privacy issues).• Ability to move beyond theory and develop services that derive value from customer data.
Includes both Core (retail) services (relatively easy to implement) and third-party services via a B2B2X platform (more challenging).
4. Change process:• The effectiveness of the CSP's process to transform its network, OSS and BSS to meet the
demands for Telco 2.0 (flexibility and efficiency, use of customer data, etc.). This covers:• Fit between commercial and technology strategy. • The balance of benefits and risks of the CSPs specific transformation approach.• Evidence of success or failure in technology transformation.
Contents Summary Marketplace Service offering Value network Technology Finance
Technology
Flex
ibili
ty
Efficiency
Customer
data
Change process
- 12 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Finance domain evaluation - analysis areas
• This section evaluates each CSP’s financial position, finance-strategy alignment and revenue and cost models
• Four parameters comprise the Finance evaluation:1. Financial performance
• The overall health of the company as reflected by profitability, debt levels and returns on invested capital
2. Finance-strategy alignment:• The degree of congruence between the finance model - revenue, opex, capex – and the Telco
2.0 vision and strategy (Telco 2.0 Happy Piper or Telco 2.0 Service Provider) including the degree to which this is reflected in financial metrics.
3. Revenue model:• How effectively can new revenues be generated as existing (Telco 1.0) revenues come under
pressure?
4. Cost model:• How effectively overall the overall cost base be reduced (as the existing business model comes
under pressure) while new Telco 2.0 activities be adequately funded?
Finance
Fina
ncia
l pe
rform
ance
Finance
-
strate
gy
alignmen
t
Revenue
model
Cost model
Contents Summary Marketplace Service offering Value network Technology Finance
- 13 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Analysis output data within each domain is collected for all CSPs and used to benchmark Telco 2.0 transformation performance
Dimension Description Value
Market GDP 2012, Aggregate of all markets, $ Trillions 12.9$ Market GDP growth 2010-17, Compound Annual Growth Rate (CAGR) for weighted average across all markets* 4.3%Market GDP per capita 2012 in US$, weighted average across all markets* 22,729$ Market GDP per capita growth 2012-17, CAGR, weighted average across all markets* 2.8%Market Internet penetration 2012, %, weighted average across all markets* 63%Market Mobile penetration 2012, %, weighted average across all markets* 119%Market Bank account penetration 2011, %, weighted average across all markets* 56%Market Mobile broadband penetration 2011, %, weighted average across all markets* 22%Market Telecom Regulatory Governance Index Based on 2011 academic paper, weighted average across all markets* 0.55 Market Herfindahl score Q4 2012, weighted average across all markets* 0.31 Market Mobile revenue growth 2010-2012, CAGR, weighted average across all markets* 4.6%CSP Total subscribers Q4 2012, Millions 239CSP Monthly ARPU Q4 2012, $ 20$ CSP market share Q4 2012, weighted average across all markets* 32%CSP market share gain/loss 2010-12, weighted average across all markets* -1.2%Market Facebook penetration 2012, %, weighted average across all markets* 40%Market Proportion of post-paid customers Q4 2012, weighted average across all markets* 30%CSP Proportion of post-paid customers Q4 2012, weighted average across all markets* 31%Market Average monthly churn Q4 2012, weighted average across all markets* 3.0%CSP Average monthly churn Q4 2012, weighted average across all markets* 2.8%CSP Brand value/revenue 2012, %, total of all CSP brands 33%CSP Facebook likes Spring/Summer 2013, Millions, total of all CSP brands 9.8CSP Facebook likes per $1M Spring/Summer 2013 Facebook likes/2012 revenue, total of all CSP brands 121
Marketplace
Example: 23 quantitative variables collected for Marketplace domain (Telefonica data)
- 14 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Each domain has its own set of output data used for benchmarking Telco 2.0 transformation performance: e.g. shown Marketplace
Notes: 1) Work-in-progress, additional dimensions may be added. 2) There are additional datasets for each domain.
Dimension Quantitative Qualitative Scored?
Market GDP
Market GDP growth
Market GDP per capita
Market GDP per capita growth
Market Internet penetration
Market Mobile penetration
Market Bank account penetration
Market Mobile broadband penetration
Market Telecom Regulatory Governance Index Regulation
Market Herfindahl score
Market Mobile revenue growth
CSP Total subscribers
CSP Monthly ARPU
CSP market share
CSP market share gain/loss
Market Facebook penetration
Market Proportion of post-paid customers
CSP Proportion of post-paid customers
Market Average monthly churn
CSP Average monthly churn
CSP Brand value/revenue
CSP Facebook likes
CSP Facebook likes per $1M
Marketplace
Mar
ketp
lace
Dom
ainEc
onom
ic e
nviro
nmen
t &
digi
tal m
atur
ity
Com
petit
ion
and
posi
tioni
ng
Cus
tom
ers
and
cust
omer
eng
agm
ent
- 15 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Analysis output data is then used to compare CSPs against each other and against new competitors
Qtel (now Ooredoo)
China Mobile
AT&T Verizon Axiata Group
Deutsche Telekom
Orange Telefonica MTN Etisalat Singtel Vodafone Apple Google Facebook0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
9%
20% 22% 24% 24% 27%33% 33% 35% 35% 39%
44% 45%
95%
173%
Example: Brand value/Revenue, 2012
- 16 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Each individual piece of analysis is used to build domain scores and overall score for each CSP
Example: Marketplace domain
Churn analysis
Brand analysisDigital
engagement analysis
Customer mix analysis
OTT strength analysis
Market share analysisARPU analysis
Subscriber volume analysis
Market Growth analysis
Market structure (Herfindahl)
analysis
Market regulation analysis
Market GDP size analysis
Market GDP growth analysis
Market GDP per capita analysis
Market GDP per capita growth
analysis
Market internet penetration
analysis
Market mobile penetration
analysis
Market bank account
penetration analysis
Market mobile broadband
analysis
Economic environment & digital maturity score
Regulation score Competition & positioning score
Customers and customer engagement
Marketplace domain score
- 17 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
For qualitative analysis, STL Partners uses a standard scoring guide for each CSP to produce a comprable score
• Qualitative analysis – such as exploration of Service Offerings – is undertaken by STL Partners:• Example shows 3 slides
analysingTelefonica’s Core Services (Voice and messaging, Connectivity and Content)
• The results for each CSP are then converted to scores using a scoring guide with clear, standardised definitions used to produce scores
Example: Telefonica performance on Core Services (Service Offering Domain)
- 18 -© STL Limited • Proprietary and Confidential
Contents Summary Marketplace Service offering Value network Technology FinanceContents Summary Marketplace Service offering Value network Technology Finance
Each CSP analysis report is supported by a data pack containing the sourced data and STL Partners analysis