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APIs and Business Model Transformation KPN Consulting 6 February 2013

Application enablement stephan massalt (kpn netco)

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Page 1: Application enablement   stephan massalt (kpn netco)

APIs and Business Model Transformation

KPN Consulting

6 February 2013

Page 2: Application enablement   stephan massalt (kpn netco)

The agenda

2 06-02-2013 KPN Strategic Innovation

Key Challenges for Telco 2.0 Innovation

What is Application Enablement

How does it contribute to the business

What have we done and where are we going

Lessons learned and next steps

Page 3: Application enablement   stephan massalt (kpn netco)

The game for Telecom providers is rapidly changing This causes the break-up of the value chain and service fragmentation

TELCO services

Devices / Clients Connectivity Services

• Smartphones

• Tablets

• Apps

• Laptops

• M2M

TELCO

Network

OTT services

TELCO services

Break-up of the value chain

FR

AG

ME

NT

ED

SE

RV

ICE

S

FROM

OLD

GAME..

..TO NEW

GAME

FR

AG

ME

NT

ED

US

ER

EX

PE

RIE

NC

E

TELCO network

06-02-2013 KPN Strategic Innovation 3

KPN needs to develop an appealing strategy to cope with this

Page 4: Application enablement   stephan massalt (kpn netco)

We see the innovation game is shifting towards flexible,

agile and low risk development of new services Telco’s are typically focussed on large scale controlled innovation

Reduce Time to Market by

using the open innovation

power of 3rd parties

Lower costs in developing

and deploying new

services

Key opportunities

New applications that

substitute the traditional

Telco value add services

Growing number of OTT

services that only need a

bit pipe

Key threats

?

Size of the innovation

project, and level of

KPN control

Required % of

innovation successes

>9

0%

<2

0%

High

Low

?

? ?

06-02-2013 KPN Strategic Innovation 4

Page 5: Application enablement   stephan massalt (kpn netco)

Telco's can add a set of different assets to its value chain Create and approach of ‘Building Blocks’

5 06-02-2013 KPN Strategic Innovation

Messaging

Mobile Fixed

Billing CRM Subscriber

info

Cloud

App Store

Voice/

Telefony Location iTV

Networks

- Control

- Status information

- Data streaming

Services

- Device

independency

- Content

Customer Data*)

- Identity

- Billing relation

Distribution power

- Consumers

- Business KPN.com

Account

Mgt.

KPN

Store XL

BS

S

OS

S

*) All under strict privacy compliancy rules

Page 6: Application enablement   stephan massalt (kpn netco)

So changing the way we interact with the innovation

power outside is needed Meet Nigel, our first step into connecting with innovators outside

6 06-02-2013 KPN Strategic Innovation

Page 7: Application enablement   stephan massalt (kpn netco)

The agenda

7 06-02-2013 KPN Strategic Innovation

Key Challenges for Telco 2.0 Innovation

What is Application Enablement

How does it contribute to the business

What have we done and where are we going

Lessons learned and next steps

Page 8: Application enablement   stephan massalt (kpn netco)

The IT landscape changes rapidly with dedicated apps APIs are widely and publicly available on the Internet

The IT landscape is dominated more and more by small specialized Apps.

Around the globe the number of available external interfaces (APIs) is growing explosive.

These combined trends lead to a growth of applications that combine these into new functions and applications

This way of innovation offers Telco's an opportunity to open up towards developers.

8 06-02-2013 KPN Strategic Innovation

Page 9: Application enablement   stephan massalt (kpn netco)

We see three main areas of value in using APIs Various strategies to engage with the different developer segments

Type of developers Examples

Head Google, Spotify, Corporates

Mid tail Gaming, Media, Specialists

Long tail Garage developers and start-ups

06-02-2013 KPN Strategic Innovation 9

Revenue

potential

Head Mid

tail

Long

tail

150 700 10,000+

Developer segments

developers

B2B B2C

External Internal

Cost

Savings

New

business

opportunities

New

business

models

Process & IT

Optimization

Co Creation

Open Data

Co

mm

un

ity

ma

na

ge

me

nt

Pa

rtne

r

ma

na

ge

me

nt

IT

ma

na

ge

me

nt

Page 10: Application enablement   stephan massalt (kpn netco)

API Exposure Engine

Services Adaption Layer

Application Enablement platform: secure environment to expose APIs KPN internal systems and 3rd party system can be connected and exposed

10

Application Enablement Platform Service Orchestration

SMS-C

MMS-C M2M IMS

3rd party

platforms BI

Voicemail LBS

Developer

Portal

Application Application Application Application

Policies

Security

Compliancy & privacy

Accounting

Support

Testing

Projects

Financials

Outs

ide A

pps

KP

N S

yste

ms

iTV Network

data

External secure

interface

Internal trusted

interface

06-02-2013 KPN Strategic Innovation

Page 11: Application enablement   stephan massalt (kpn netco)

The agenda

11 06-02-2013 KPN Strategic Innovation

Key Challenges for Telco 2.0 Innovation

What is Application Enablement

How does it contribute to the business

What have we done and where are we going

Lessons learned and next steps

Page 12: Application enablement   stephan massalt (kpn netco)

Developers KPN Assets

Applications/Services

Application

Enablement platform

(Standard APIs)

3rd party services

supermarket

(3PSSM, SDP)

Strong KPN value

propositions

Acceleration

(partnerships,

equity)

12

BUILDING THE 2SBM ECOSYSTEM

Application Enablement is one step into the two-sided business

model And supporting the KPN ambition as integrated access provider

06-02-2013 KPN Strategic Innovation

Page 13: Application enablement   stephan massalt (kpn netco)

The agenda

13 06-02-2013 KPN Strategic Innovation

Key Challenges for Telco 2.0 Innovation

What is Application Enablement

How does it contribute to the business

What have we done and where are we going

Lessons learned and next steps

Page 14: Application enablement   stephan massalt (kpn netco)

We had a pilot platform up and running and working applications

build on top Participation in various events to test our ideas and spread the word

14

• 11 pilot contracts signed

• 2 Letters of Intent in the funnel

• 2 Applications operational

(BrightBird & Calendar42)

• 1 Press release (BrightBird)

Technology

Voice

iTV

Identity

Handset Info

Customer Profiles

QoS

SMS/MMS

LBS

Operator Billing

• Implemented a

pilot platform

• Exposed 3 APIs

based on the

OneAPI standard

• InApp Operator

Billing ready end

of June

• Potential of new

APIs to be

explored

APIs

Business

AmIHome: concept that uses

API location based service

to switch on/off lights and

thermostats if you are not

in the area of your home.

• TNW Hack Battle (event)

• ‘Stekkers van KPN’ (event)

48 people of 21 different companies

attended the first ‘Meet up’ at KPN

06-02-2013 KPN Strategic Innovation

Page 15: Application enablement   stephan massalt (kpn netco)

The pilot environment cannot scale, to set next step there is a need

for a production environment But also a discussion started on our business focus…

15

Pilot functions Production requirements

Technology

• Reuse existing CallFactory

infrastructure for small scale pilot

• Selected number of developers and

limited number of APIs (3).

• Create an industry grade API

exposure platform to connect a

large number of developers and

multiple API services

Legal &

Compliance

• Pilot contracts with T&C and manual

on boarding of partners.

• Specific Opt-in process only usable

for Location Based Services.

• Online T&C for online on

boarding of developers.

• Generic Opt-In process for

multiple services

Business

• Support of various models like:

o transaction,

o revenue share

o freemium

o multiple price plans

• No mechanism in place to bill

developers for their usage.

06-02-2013 KPN Strategic Innovation

Page 16: Application enablement   stephan massalt (kpn netco)

The main challenge is addressing all the different

segments Current insight is that a Telco is not suited to address all segments

16

Large Mid Small

Reve

nu

e p

ote

ntial /

cu

sto

me

r

Developer segments

Account

Management

Business Development &

Partner Management

Online Portal

Events & International Partners

Different type of APIs

• Common standardized

service (OneAPI)

• Specific, more advanced

API’s (IPTV)

Relevance of Telco customer

to developer

• Able to address Telco

customers via multiple

channels (Google, Apple,

etc.)

Ownership of relation with

developer

• Who is in charge?

• Segmentation

06-02-2013 KPN Strategic Innovation

Page 17: Application enablement   stephan massalt (kpn netco)

SOCIAL ENERGY!

Case Study

06-02-2013 KPN Strategic Innovation 17

Page 18: Application enablement   stephan massalt (kpn netco)

Social Energy! is an example of Open Data Co-Creation And top-10 finalist of the TEDx Amsterdam Award 2012

Social Energy! was born at the Hack Battle of The Next Web (2012). In 24 hours

Developers created an application where ‘Rules’ could be set based on open data.

• The thermostat lowers the temperature in the home when the mobile phone leaves

the 6 km. perimeter of the house serving people who forget to do this manually.

• The thermostat raises the temperature when the mobile phone is within the 6km

perimeter.

Result: Social Energy! saves energy costs for the consumer in an effortless way

Two ingredients (API’s):

- eThermostaat by Essent

- Location data (LBS) by KPN

The advantage to the end user:

The thermostat lowers automatically

when no one is home

06-02-2013 KPN Strategic Innovation 18

Page 19: Application enablement   stephan massalt (kpn netco)

The Open Data Collective is about: Initiators:

• Open data and monetizing the value

• Co-Creation sessions to define new useful data combinations

• Explore new business models and revenue streams

Goal of The Open Data Collective :

- Learn, inspire and use the possibilities of open data

Together we will work on:

- Business models based on open data / open platforms

- Data combinations resulting in market ready propositions based on combined data

Joining the collective will lead to:

- (unexpected) New propositions, new partnerships and a new customer base

Timeline:

Dec 2013 Sep 2012

Inspire to open up data

Oct 2012

Create proof and execute

Jan 2013

First presentation

of propositions and

Business models

Start Open

data

collective

Invite

Companies to

Open Data

Collective

First testing of the

propositions and

Business models

Go to market

plan ready

First Co-Creation

session

Dec 2012 Apr 2013

19

Page 20: Application enablement   stephan massalt (kpn netco)

The agenda

20 06-02-2013 KPN Strategic Innovation

Key Challenges for Telco 2.0 Innovation

What is Application Enablement

How does it contribute to the business

What have we done and where are we going

Lessons learned and next steps

Page 21: Application enablement   stephan massalt (kpn netco)

Next steps defined by our lessons learned so far Including the key challenge: time

21 06-02-2013 KPN Strategic Innovation

Transform KPN

architecture based on:

• Atomic Services

• Detach services from

network layers

Align a distribution

strategy together with

the business segments

• Leverage on a central

portal

• Innovation

outsourcing

Focus on B2B

approach

• Develop PoCs with

enterprise customers

• Participate in Open

Data Collective

• Find partners for a

Long Tail strategy

Inte

rna

l E

xte

rnal

Technology Business

Provide more valuable

functions via APIs:

• Cloud networking

• Software Defined

Networking

• Big Data Insigths &

Analytics

Page 22: Application enablement   stephan massalt (kpn netco)

For large companies it is a feasible strategy to let the outside world do

their innovation

Future innovations can only be done in collaboration between the larger

companies

22 06-02-2013 KPN Strategic Innovation