Paul Wallbank – Brilliant Communications

Tag: services

  • Where next for the telco industry?

    Where next for the telco industry?

    The last thirty years have been good for the telecommunications industry; a wave of privatisations, regulatory reforms and technological change drove the sector and company profits.

    As populations around the world adopted mobile phones users started enthusiastically calling and texting, Telco profits exploded.

    Twenty years later the massive growth to the industry has peaked as customers have moved to using their cellphones for  less lucrative data services.

    So where do the telecommunications companies go next for growth and profit? Today and tomorrow I’m attending the Ovum 2020 Telecoms Summit where they’re looking at the future for the industry.

    Salvation from the internet of things

    The great white hope for the telco industry is the internet of things and the machine to machine (M2M) technologies; the hope being that putting SIM cards into every car, kettle and shipping container that this will be another lucrative revenue stream.

    Martin Creighan, Managing Director for Australia and New Zealand at AT&T, points out that by the end of the decade there will be seven times as many connected devices as live mobile phones. This is where the opportunity lies.

    The problem with the M2M vision is annual revenues per user (ARPU) for connected devices are a fraction of those from voice and messaging over the last twenty years and telcos will need more than that to maintain their revenues, let alone grow.

    Moving into the cloud

    One of the other revenue streams is adding cloud services, again this is a low margin business and involves competing with global giants like Amazon and Google along with the myriad of specialist companies.

    Another possibility is in providing professional services as Jennifer Douglas, Director of Fixed voice and platinum for Telstra, described in the company’s home support product.

    The problem with both the cloud and professional services model this requires a change in culture for the telcos, the traditional contempt telecommunications executives have for the end user doesn’t cut it in the professional services and cloud computing industries.

    For the telcos, this major change is something that’s been experienced by many other industries. That a comparatively protected industry like telecommunications companies are subject to these disruptions illustrates just how no sector is safe from being uprnded.

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  • So you think services are easy?

    So you think services are easy?

    ZDNet columnist Ed Bott is possibly one of Microsoft’s closest followers and among the few to defend Windows Vista, Ed though can’t be faulted for doing the hard yards including reading Microsoft’s stock market10-K  filings.

    In their most recent filing, Ed finds Microsoft has used the word “service” 73 times as opposed to 44 appearances last year.

    A key phrase in the filing is “a growing part of our strategy involves cloud-based services used with smart client devices.”

    This is consistent with the hands on previews of Windows 8 which Microsoft have been giving journalists over the last few months. Something that leaps out is the integration with online services; something that both Google and Apple have also been pushing.

    What should worry investors is that moving into services isn’t easy. Service businesses are far more labour intensive and, as a consequence, far less profitable.

    Despite having relatively low labour costs, cloud computing services are problematic as many sectors have been commoditised, which is the genius of Salesforce in establishing a profitable niche.

    The fat margins Microsoft are used to in their core software business can’t be replicated in the cloud based markets, which is one of the reasons why customers are switching to the cloud.

    Microsoft’s problem is shared by telecommunications companies who are finding their cloud offering don’t generate the same ARPUs — Annual Revenue Per User — that they’ve become accustomed to in the mobile phone market. Which means pain for executives whose KPIs are tied to historical performance.

    For Microsoft, the problem is compounded by their simultaneous move into hardware with the Surface tablets. Meaning the company’s has to deal with two significantly different business models to the ones they are used to.

    Again Microsoft aren’t alone in this, Google is having similar problems adjusting to the hardware market though its acquisition of Motorola Mobility.

    Integrating hardware with services and manufacturing isn’t impossible, we only have to look at Apple for how a company can succeed in that space although most managements struggle with the very different demands of each sector.

    During the 1980s we saw the rise of the “all business is soap” philosophy where MBAs and management consultants preached that the challenges of running a business were the same regardless of whether you sold cleaning products, soft drinks, computers or automobiles.

    Those folk were wrong. Most famously the Australian media company Fairfax hired as CEO a business school professor who preached this philosophy and managed to ignore the rise of the Internet, the echoes of the failed McKinsey ideas haunt Fairfax over a decade later.

    While its possible for a software company to succeed at services or hardware, the magnitude and complexity of the management challenge shouldn’t be understated. Both Google and Microsoft will be defined by how well their leaders succeed.

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  • Risks and opportunities in crowdsourcing

    Risks and opportunities in crowdsourcing

    Crowdsourcing and offshoring are changing bringing to small business the same changes we’ve seen in manufacturing and low level office jobs over the last forty years.

    Those trends are going to affect local businesses – particularly the home based service providers – in a serious way as the local web designer and bookkeeper find themselves undercut by freelancers in countries where an Australian day rate is a month’s pay.

    With those thoughts in mind I went along to a round table discussion with crowdsourcing advocate Ross Dawson, Freelancer CEO Matt Barrie and Design Crowd founder Alec Lynch to hear them discuss some of the issues around the concept ahead of their half day workshops in Sydney later this months.

    Having read Ross’ recent book, Getting Results From Crowds, many of the concepts and arguments are familiar but its worthwhile considering how the trend of a globalised workforce is changing.

    The benefits of crowdsourcing services

    Crowdsourcing services like Design Crowd and Freelancer have benefits traditional outsourcing services don’t have.

    Alec Lynch describes these as reduced expense, speed and risk. A broad range of cheap, accessible suppliers mean businesses aren’t locked into costly contracts with the attendant risks while they can bring projects to fruition in days.

    Until recently, globalisation only bought benefits for major corporations with manufacturers contracting work out to China, back office functions to India and software development to Eastern Europe.

    The rise of web based services where smaller, one off projects could be paid for by credit card has bought global outsourcing into the small and medium sized business markets.

    Now local businesses are affected by business practices that, until recently, were the concern of those working for large organisations.

    This is bad news for local service businesses; the suburban web designer or bookkeeper is now finding themselves competing with individuals who, as Matt Barrie points out, have a very good weeks’ income for the equivalent of a day’s pay in Australia.

    Basically the same forces that drove most low value manufacturing offshore are now driving services and white collar jobs the same way.

    Responding to the threat

    There are major downsides for clients using these project based outsourcing services; for instance designing a logo is only part of a much bigger branding exercise which in turn has to be considered against the orgainisation’s longer term objectives.

    Often, most of us don’t know what we don’t know and that’s the real reason why we hire an expert to explain why a logo should look a certain way, an expense should be allocated to one specific cost centre and not another or why we should one software package over another.

    When we outsource our services, particularly to a low cost provider, we lose that expert insight and end up with someone just carrying out a task; it is up to us to supervise something we probably don’t understand ourselves.

    Part of that supervisory role is project management, in the design field managing creatives can be like herding cats. This is why experienced project managers are worth their weight in gold.

    Like many essential skills, project management is one of those which most of us don’t have and is chronically undervalued but when a business is outsourcing to a freelancer in Estonia or Eritrea then this service is essential.

    Providing those skilled supervisor and management roles is where the opportunities lie in a crowdsourced market place.

    In many ways, we’re seeing the end result of the post-industrial society. Just as we offshored the manufacturing industries through the 1970s and 80s then the low skilled office work in the 1990s and 2000s, we’re now outsourcing local services to low cost countries.

    Whether ultimately this is a good thing or not is a big question but for local businesses, the trend is clear and much of the basic work is going offshore. Those who choose to whinge rather than adapt will be left behind.

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