Addressing the Growth Imperative: Pressure Building on EMEA Telcos
Telcos in Europe, The Middle East, and Africa (EMEA) are coming under increasing investor pressure to deliver stronger growth. The average year-on-year (YoY) revenue growth rate among the “big 5” European telcos — BT, Deutsche Telekom, Orange, Telefonica, and Vodafone — in 2023 and the first half of 2024 was 0% and 1%, respectively.
The group of four leading Middle East and Africa telcos, namely Etisalat, MTN, Mobily and STC, are doing better, with a collective year-on-year revenue growth rate of 5% in H1 2024, but investors are noting that this is slower than their collective 9% year-on-year revenue growth in 2023.
What is going on here? First, the core telco business of providing network connectivity and communications services to consumers and business — which accounts for over four fifths of the revenues of most telcos — is challenged by a new breed of competitors. Users increasingly rely on the more convenient MS Teams and Zoom apps for their business calls, and WhatsApp or Viber apps for their personal calls and messages, which is hurting telco revenues.
And a whole host of disruptive players are challenging telcos’ broadband and enterprise networking business, from new entrant fibercos offering full fiber at attractive prices to consumers and small businesses to systems integrators pitching SD WAN and private 5G solutions to large enterprises.
Second — and more important — is the fact that EMEA telcos’ efforts to expand into “beyond connectivity” solutions have not had a major impact on the growth needle so far. Telcos have a bewildering range of market positioning, customer, and technology choices to make in this area, as we show in this diagram:
From a customer perspective, telcos need to not only find ways to serve existing consumer and business customers better, but they also need to consider targeting new customer segments in the broader ICT ecosystem. But the real maze of choices is in the top part of this growth diagram, where telcos need to decide if and how they play effectively in technology areas such as security, CPaaS, cloud/datacenter, and sustainability.
The complexity is compounded by the myriad of sub-segment (i.e., IoT software and services versus IoT connectivity), vertical (manufacturing versus healthcare), and geographic considerations.
As it stands, telcos need to address dozens of “where to play,” “how to win,” and “how to execute” jobs to be done — and do these extremely well — as they seek to address the growth imperative, illustrated on the left-hand side of the diagram below:
And yet, there are three big jobs that telcos need to do particularly well:
- Prioritize Growth Opportunities: No telco will have the capacity to address every segment in every solution box outlined in the growth matrix above, so either/or choices will have to be made.
- Identify and Incorporate Global Best Practices: Telcos do not need to reinvent the wheel in each of the adjacent growth opportunities, innovative solutions by both telcos and non-telcos across the world offer valuable lessons for those willing to look.
- Define Winning Value Propositions: Telcos often have good value propositions in a range of “beyond connectivity” areas, but crucial ingredients that would make them great and irresistible to clients are often lacking.
IDC can help telcos address these critical growth jobs to be done with three well-established custom solutions:
- IDC’s Opportunity Thermometer helps CSPs identify, select and prioritize the best and most attractive growth opportunities within or outside current product and geographic markets — that are within client’s capabilities to exploit.
- IDC’s Innovation Radar helps CSPs identify and integrate inventive best practices and/or value propositions — and leverage the insights from these to accelerate revenue growth and boost customer loyalty.
- IDC’s Value Prop Accelerator solution helps CSPs build or validate winning value propositions in target growth areas that often sit outside the connectivity and communication perimeter (e.g., cloud, security, APIs).
Should you wish to learn more about these and other IDC Custom Solutions, please get in touch.
For more info on addressing growth in the telco space, please register for the following webcast: Addressing the telco growth imperative in EMEA
Monetizing 5G: Flexibility, OpenAPIs, and the End of the Killer App Paradigm
The deployment of 5G networks has reached a crucial point: We now have spectrum assigned, rollouts are nearly complete, devices are 5G compatible, and 5G Standalone (SA) is gaining ground.
Uncertainty remains, however, regarding monetization. The telecommunications sector is still searching for innovative use cases that can justify the massive investment. Finding that definitive “killer” use case has not been easy.
We need to understand, however, that 5G isn’t about a single blockbuster application. Instead, it’s about enabling multiple opportunities in a dynamic ecosystem where technologies like OpenAPIs will play a key role in success.
Show Me the Use Case — Where’s the Killer App?
Historically, each new generation of networks has been driven by a killer app that fueled its adoption. 2G was driven by voice, while 3G and 4G saw data and mobile browsing become the catalysts.
But with 5G, the industry is learning there won’t be a single, all-encompassing app to justify the investment. Such a mindset no longer applies.
With 5G, we aren’t looking for an application that will endure for decades. Instead, we need a network that enables a flexible range of services that can evolve over time.
The Real 5G Use Case: Flexibility and OpenAPIs
The true value of 5G lies in its flexibility. What’s pivotal isn’t a killer app but an infrastructure that can capitalize on a continuous flow of opportunities.
This is where innovation driven by network OpenAPIs comes into play. These open interfaces allow operators to provide a technological foundation on which third parties can build and monetize their services, creating a far more dynamic and diversified ecosystem.
Recently, Ericsson, in collaboration with 12 leading global operators, launched a joint initiative to enable the commercialization of network OpenAPIs, further solidifying their role in shaping a dynamic 5G ecosystem. This collaboration aims to redefine the industry by creating open interfaces that allow third parties to develop, deploy, and monetize their services on 5G infrastructure.
By fostering interoperability and innovation, this initiative positions OpenAPIs as a critical enabler for unlocking the full potential of 5G, allowing businesses across industries to tailor solutions that maximize their 5G investments.
Network OpenAPIs enable businesses to develop specialized, customizable solutions tailored to specific needs across industries such as manufacturing, healthcare, smart ports, and logistics. The key is that this ecosystem of services can be monetized collectively, allowing 5G networks to capture value from multiple sources simultaneously.
5G: A Technology for the Enterprise World
5G is primarily designed for the enterprise world, in which each company has unique requirements and seeks differentiation in the market. This creates the scenario in which a single use case may not justify the investment.
Companies must therefore leverage 5G and OpenAPIs to deploy tailored solutions that meet their specific needs. A hospital, for example, will have entirely different latency and reliability requirements than a factory or a smart port.
It’s 5G’s ability to meet these demands that brings real value. The possibility of real innovation lies in the ability of 5G networks to adapt to the specific challenges of each business sector and to do so in a scalable, flexible manner.
This agility is central to monetization, as it allows for the creation of custom solutions in an ecosystem that’s constantly evolving.
Enabling Technology: The Challenge and the Opportunity
We need to keep in mind that 5G is an enabling technology. This sets it apart from previous network generations. Instead of being the direct star, its success depends on services and solutions that can take advantage of its capabilities.
Here, OpenAPIs play a fundamental role: They allow businesses to integrate with the network and create their own applications using the operator’s infrastructure as a platform. The success of enabling technologies will be directly proportional to how easy they are to implement and how well they connect with customer needs.
5G monetization will not rely on finding a killer app but rather on enabling an ecosystem in which multiple services can thrive simultaneously. Collaboration between operators and developers is critical to unlocking the value of 5G.
OpenAPIs enable precisely this. They open access to the infrastructure, allowing each industry to design and deploy its own solutions.
The Key to Monetization: A Shift in Mindset
Successfully monetizing 5G requires a shift in mindset on how networks are operated and monetized. It’s no longer about searching for a central application to justify the investment, but about creating a flexible architecture, supported by OpenAPIs, that enables companies to innovate and fully leverage 5G’s capabilities.
This change is already happening. Complementary technologies such as GenAI and edge computing are accelerating the transformation.
As organizations adapt to this mindset, they will identify and capitalize on real-time opportunities. At that point, the flexibility and service ecosystem enabled by OpenAPIs will unlock the true monetization potential of 5G.
For more info on addressing growth in the telco space, please register for the following webcast: Addressing the telco growth imperative in EMEA
Regulations and the Future of B2B Digital Transactions: Embracing e-Invoicing
Regulations Are Reshaping the Way Companies Transact with Each Other
In the first blog of our e-invoicing series, we explored the pivotal role of e-invoicing in pioneering the transformation of business-to-business (B2B) transactions. This foundational piece highlighted how e-invoicing is reshaping the landscape of business interactions by streamlining processes, enhancing accuracy, and driving efficiency. In the current post, we delve deeper into the regulatory frameworks influencing these digital transformations, examining the opportunities and challenges that arise as businesses adapt to evolving compliance requirements.
The Emergence of a New Transaction Ecosystem
After decades of paper-based dominance, business-to-business transactions are digitalizing and digitally transforming. e-Invoices and digital networks are streamlining accounts payable and receivable processes, enhancing efficiency and accuracy. Transactions are also becoming enriched with data, especially to display sustainability-related information.
Prompted by new regulation, digital-first thinking, and good corporate governance, businesses are changing how they collaborate and transact. This presents an opportunity for vendors to develop innovative solutions that meet the needs of today’s B2B landscape.
Regulators face the constant challenge of implementing measures that ensure market integrity, consumer protection, and alignment with public interests, while simultaneously fostering innovation and economic growth.
Regulations and the Burden of Responsibility
Reducing costs and improving efficiency are constant concerns for businesses. Companies explore every avenue to achieve these goals, from leveraging technology to optimizing workflows.
However, businesses must also contend with numerous external factors that can influence their operational effectiveness. Regulations are one of these external factors. Enterprises and their leadership are entrusted with the responsibility of ensuring compliance, which requires investments in personnel, technology, and training — oftentimes, all three.
Personnel
To stay compliant with evolving laws and regulations, companies must proactively recruit, train, and retain specialized personnel. These experts ensure adherence to current legal frameworks and monitor upcoming changes, like the introduction of new regulations or amendments to existing ones.
For example, the General Data Protection Regulation (GDPR) mandates that companies handling large volumes of personal data appoint a Data Protection Officer (DPO). Highly regulated industries like banking and healthcare often require multiple layers of compliance personnel throughout their organizations, in addition to industry-specific regulations and overarching ones.
As digital businesses increasingly rely on complex technologies, leadership must ensure their workforce possesses the necessary skills to navigate both current and future regulatory landscapes. This involves establishing management structures that can anticipate staffing needs and strategically invest in technology and training to maintain compliance. Public and private companies have distinct compliance needs and requirements. While technology can assist in meeting these needs, it cannot replace dedicated teams responsible for ensuring operational compliance. That is why technology and training is so important.
Technology
Technology and regulations are intertwined, existing in a state of interdependency with stronger linkages than often recognized. Regulators face the constant challenge of fostering innovation and economic growth, simultaneously safeguarding consumers and the public interest. This requires ongoing assessment of the benefits and drawbacks that new technologies bring to society.
In the European Union (EU), policymakers understand the importance of this dynamic and actively foster dialogue and collaboration between regulators, industry leaders, enterprises, technology experts, and vendors. To facilitate change management within organizations when it comes to regulation and technology, the EU provides support and self-service tools.
This collaborative approach is crucial, because while regulatory changes drive transformations in business-to-business transactions, technology provides the tools and solutions for effective compliance.
By understanding and proactively adapting to this interplay, businesses can leverage technological advancements to navigate the evolving landscape of B2B transactions and gain a competitive advantage. Vendors will play their part by supporting their clients in ensuring that they bring the right systems online at the right time.
Training
Sustainable compliance requires more than just training; it demands a culture of open communication and employee empowerment. Management must proactively inform employees about evolving regulations and the rationale behind them, providing the necessary resources and support to adapt without disrupting workflows.
Ensuring that the training covers both the law and technologies that are either being regulated or used to ensure regulation is key. This transparent approach fosters trust, reduces resistance to change, and enables employees to confidently contribute to a compliant organization.
Regulators must ensure a level playing field for businesses of all sizes, as multinational corporations have greater resources to invest in compliance compared to smaller enterprises. While not always perfect, European regulators have been leaders in promoting inclusive dialogue and collaboration among stakeholders to address these challenges.
Regulation as an Innovation Driver in B2B
At first glance, new invoice-related regulatory changes may easily be perceived as an added burden, however, within these changes there exists a significant area of opportunity if organizations successfully broaden the scope to include finance process improvements.
e-Invoicing could serve organizations as a catalyst for organizations to spearhead the introduction of more efficient practices for finance departments, facilitated through process automation.
Additional protocols in B2B document exchanges, particularly invoices, increase data accuracy while reducing manual intervention, which then enhances operational efficiency.
Fraud prevention
e-Invoicing unlocks new potential for tax authorities to combat value added tax (VAT)- related fraud, addressing the blind spots for VAT evasion and avoidance. The starting point for EU tax authorities begins with invoking greater controls in monitoring the integrity of VAT data being reported by organizations. For this tax enforcement modernization effort to serve its true purpose, several European tax authorities are establishing their own document exchange screening and approval processes, commonly referred to as continuous transaction control (CTC).
This is an important step in the future of the transaction that veers towards creating transparency and mitigating fraud at the point of the transaction. This involves new technical elements requiring organizations to submit invoices to designated regulatory platforms for approval prior to delivery to the end recipients.
Audit readiness
An advantage for both organizations and tax administrations that arises through e-invoicing is advanced audit readiness. European governments are tasked with, among other things, implementing two of the common transaction control models: the post-audit and clearance models.
Each having their own benefits, tax authorities will have more control in performing audits at will. Previously performed solely after the event, tax authorities that have adopted clearance models are able to carry out audits in real-time and/or upon request for each transaction. This removes the need to request and wait for information from taxpayers. Some European tax authorities are using this as an opportunity to explore new ways of incentivizing organizations.
For example, the Italian government initially introduced e-invoicing for B2G transactions in 2014; now it has gone on to introduce remote audit checks that will lower government interference with tax remittances for B2B exchanges.
Organizations looking to deploy e-invoicing will need to overcome significant hurdles such as breaking down data silos, improving data quality and consistency, and, in some instances managing high volumes of complex data, to avoid non-compliance penalties
Conclusion
As the landscape of B2B transactions evolves under the influence of new regulations, businesses must embrace the opportunities presented by e-invoicing and digital transformation.
This transition not only meets compliance needs, but also drives efficiency and innovation within organizations. Businesses must actively leverage the interconnectedness of technology, personnel training, and regulations to shape the future of transactions and drive growth.
Ready to elevate your solutions and empower your teams? Contact us for a deeper dive on how IDC can help.
Why Managed Detection and Response Services Are Key to Reducing Business Risk
Building strong detection and response capabilities is vital for organizations seeking to improve their cybersecurity posture and business resilience.
Many organizations do not have the in-house skills or resources to make the required improvements in detection and response. For example, just 15% of large organizations in Europe have sufficient security operations center (SOC) analyst skills in house, and churn and burnout among these analysts are often high. These challenges can have a strong negative impact on a company’s cybersecurity posture.
Consequently, many organizations are turning to service providers to fill specific gaps in their detection and response capabilities or are outsourcing their requirements in full.
The high level of interest in managed detection and response (MDR) has led to many service providers entering the market, which has now become highly competitive, providing customers with a greater range of services. This is not always the case for IT services markets, some of which are dominated by a handful of players.
The choices for detection and response include telecom and network players, IT services companies, systems integrators, cybersecurity specialists, professional services companies, and vendors with services offerings. Each has something different to offer enterprises.
Many of the service providers in this market have a global presence, others have a more regional focus. Service providers have different types and levels of skills and knowledge, and so there are differences in the ways they can support the unique needs of European organizations.
Europe is a complex patchwork of numerous factors, including cultural, language, economic, and regulatory factors (among others)meaning that in-region (and sometimes in-country) capabilities are vital to meet customers’ objectives.
The IDC MarketScape: European Managed Detection and Response Services 2024 Vendor Assessment examines the strengths and weaknesses of leading providers of European MDR services. We have identified eight leaders and nine major players in this market, providing a detailed analysis of the services offered by each; this is aimed at providing European organizations with clear guidance to assist them in their purchasing decisions.
There are marked differences between providers in terms of target customers, technical capabilities, and detailed expertise in addressing the needs of European organizations. Organizations should evaluate all these aspects carefully to ensure they choose a service provider that delivers on their business and technology objectives. This will include making optimal decisions that relate to technical capabilities, services and skillsets, target markets, and strategic roadmaps.
One critical area to consider is onboarding and time-to-value. Customers should ensure they are clear on delivery capabilities and the desired operating model. They should be fully informed by their provider in advance how they will be onboarded and the timing of key steps.
As the threat landscape is becoming ever more complex, with a growing ecosystem of actors, the need for proactive detection and response capabilities is becoming essential for all organizations across the region. According to IDC’s EMEA Security Services Survey, MDR is now a priority for 65% of organizations, with the market in Europe forecast to record a compound annual growth rate of 29.2% from 2022 to 2027.