How can the telecommunications industry innovate across verticals? By focusing on cost, convenience, compatibility, consistence and customer focus. Only then can it be a win-win for all the parties.
Going the extra mile for vertical co-innovation with 5G
The author of this article, Vinay Devadatta, Practice Head of Innovation & Industry Relations at Wipro, will be spoke at TM Forums Digital Transformation World Series. He' was part of a virtual panel panel discussing the topic of becoming an ecosystem partner. As the communication industry makes strides towards deploying 5G technologies, other verticals are simultaneously experiencing transformational changes in their operations, business models, and core technologies. While some have been evolutionary, other have been revolutionary – disrupting the existing order of things. Many of these disruptions are based on external technologies and concepts versus technological advancements specific to a vertical. A classic example of this is how the leveraging of platform business models is disrupting a plethora of traditional businesses such as retail, hospitality and transportation. The rapid uptake of platform business models has been built on the platform of massive connectivity and the extensive use of smart devices – all made possible by the communications industry. In many cases, we see that innovations and changing business models in one vertical can catalyze transformation in another. Taking a critical look at leveraging external innovation, we can see that there is a much larger scope for integration, and a lot depends on the transformation cycles happening in an industry. Typically, transformation involves cost and risk, and any vertical will proactively leverage external innovation if it believes that it will provide definite advantages and at minimal risk. Today, many verticals are embracing the transformation popularly known as Industry 4.0, which is focused on massive and consistent automation spanning entire operations, the consolidation of automation silos, and extensively leveraging IoTs. It also involves the expansion of the scope of vertical focus from production units to entire supply chains as well as end-consumer consumption patterns and preferences. As markets become saturated, verticals like personalized medicine are considering massive cost-effective customization. Customization to specific needs can be key drivers for next generation market expansion across industries. The areas within the communications industry, especially differentiated 5G services, can play a vital role in supporting this direction towards customized solutions. While this sounds optimistic and, from a technical point of view – feasible, we need to cross the business decision barrier that the verticals have to take. Some of the key considerations that will make adopting 5G services attractive to these verticals include:
Every transformation has financial implications, and these need to be addressed before decisions can be made. Following the pandemic, many industries have been struggling with their finances and cash flow. Even for verticals that are cash rich, decision makers are favoring clear, definitive financial plans with minimal risk when embarking on a transformation journey. Because of this, communications service providers (CSPs) must understand each vertical’s financial system, and a proactive proposal must not only be aligned to it but also empower verticals to mitigate issues when possible. Finally, a definite strategic financial benefit must be called out.
As the scopes of various industries overlap and the cross-leveraging of concepts, technologies, products and services become more common, verticals will find it difficult to manage them. This presents a major problem because some verticals may not have the necessary expertise to understand external technologies. In these cases, a vertical would need to deploy non-core components transparently into their system. A vertical will find this scenario even more attractive if the external party can pre-integrate solutions that provide relevant innovation across domains. For example, CSP solutions – which are not limited to communication services and can also bring together IoT and robotics – can make it very convenient for verticals to incorporate these technologies within their core business processes.
With the inclusion of a plethora of technologies from different domains along with rapid changes in technologies happening across all fields, ensuring compatibility between technologies and maintaining them can become difficult. In fact, this challenge alone can become a major roadblock for incorporating innovative solutions from multiple domains. Because of this, solutions that internally manage compatibility across related domains will make it much easier and simpler to leverage new technologies. An ecosystem approach where all players ensure mutual compatibility can significantly reduce this burden.
One of the major factors that increases costs while possibly creating security and accounting issues is the consistency between different processes and operations within an organization. These inconsistencies can occur for many reasons, and they can be corrected during a transformation. However, inconsistencies may occur due to the inherent difference of needs from various operations within an organization. To accommodate this, 5G differentiated services vendors must cater to these different requirements while ensuring the interface for the vertical’s business is consistent. A vertical should be able procure and manage a communication service in the same way, regardless of the differences in the services they offer.
A growing number of verticals are shifting their focus from efficiency in operations and production to a customer-driven approach. New technologies in verticals like manufacturing are making it possible to create highly customized solutions aligned with a wide variety of customer bases. This requires verticals to maintain connectivity with end consumers while ensuring privacy and security regulations are met. These concerns are new for verticals and CSP services that offer seamless connectivity that also addresses issues related to privacy and security because the flow of consumption pattern information is highly desirable. While 5G-differentiated services are the way forward for the communications industry in order to expand its market, they must also consider the perspective of their target vertical industries. These verticals must be able to perceive definitive advantages that help them to simplify their operations, reduce the overall cost of operations, grow their business, and enable them to focus on their core strengths. Accomplishing this may require additional effort from CSPs in understanding and creating vertical use case-aligned services and may involve building an ecosystem. In the end, though, it’s a win-win situation for all the parties concerned.