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TELECOM ITALIA GROUP
Creating value by addressing adjacent markets: a path towards data monetization
2
Telecom Italia Group – different focuses on the ICT stake
OlivettiTelecomItalia
Telecom Italia Digital Solutions
TIGroup
TI Group
IT ConsultingSystem Integration
SaaS & PaaS
Infrastructure, IaaS& Mgmt Services
HWVertical Solutions
TLC Services
ICT
Sta
ke
TLC Solutions&ICT Infrastructural
Services as the technical platform
to support customer services
development
Specialized HW & Services for
vertical offerings
PaaS &SaaSServices Development Innovative Solutions
IT Cloud TrasformationConsulting & SI
to integrate & valuethe ICT elements
3
Market context - mobileCAGR 2009-2013 (%)
(revenue, ARPU)
Structurally declining revenues …and ARPUs …and margins
Hyper competition Saturated markets Price wars
Quest for consolidation
Source: analysis mason, 2014
-10.1% -11.7%
-7.0% -10.7%
-8.8% -9.8%
-3.0% -5.5%
-1.3% -3.4%
-4.8% -4.7%
4
Market context - ItalyItaly vs UE, penetration (%)
(fixed/broadband; mobile)
4 mobile operators, several MVNOs Hyper competition and saturation on
human Low and declining mobile ARPU TIM’s market share 60% of business,
40% of postpaidPotential ARPU upside on mobile
servicesFocus on VAS and innovative services:
m marketing and advertising, machine 2 machine, e/m payments
Source: analysis mason, 2014
5
Adjacent Markets - competitors and enablers
User Experience
Public Sector
Ecosystems
Devices
New networks
OTT players
Smart Spaces
E-Health
Robotics
Social
DigitalHome
Gaming
Payments
Multimedia
Mobile
M2M/IoT
Infomobility
IPNETWORKS
HSPA
3G
FiberxDSL
WiFi
LTELocation
Based
BigData
Regulators
Impacts: Very complex Go/No Go
process
«Infinite» time to market
Long time even for customer feedback, and difficulty to incorporate
that feedback
Good Money follows Bad Money: tough/impossible
to «reverse» a bad decision
Cost of adding a new feature vs. process phase
“Basically an RFQ will always bring you yesterday’s technology. After integrating this technology, at launch you will be working with the day-before-yesterday’s technology while others are working on tomorrow’s technology. Launching an innovative service via an RFQ process is as such impossible.
“It takes 3 months from idea to finalizing an RFQ document. 1,5 month to get a reply. 1,5 month to do procurement. Half a year in total. Not counting the deployment time which is likely to be another 6 months. Telcos take 12 months for any new system.”
Classic Telco Innovation Framework
The classic Telco innovation framework does not work
6
Several Ideas and Application… in a Darwinian environment
Incremental approach, low development cost barriers at the start, costs growing with penetration of the service
Agile Open Innovation Framework
Impacts: Easy Go/No Go
process
Alfa/Beta Time to market
Short time for customer feedback, easy to incorporate that feedback
Good Money follows only Good Money: easy to «reverse» a bad decision
A different approach is needed
7
Abstract and virtualize the control layer (std HW)
Connect network software with the Data Center/ Cloud software
APIs as a new way to create “over the Telco” services, both internally and with partners
Leverage on Big Data, both external and extracted from the network
Quickly develop incremental applications either directly or through partners (Open Innovation)
8
So What? Digital SolutionsBuild a new Cloud Based Innovation Framework
Screens
Computingcapacity
SoftwareEvolution
Memoriesbatteries
Wireless
Devices
UBB & IP
Networks
Convergence on IP networksUltra BB Access
TCP/IP
Web&Cloud
AppsAPI Cloud
SW Nwk
SDN
Innovation and Application
Development on Cloud and API
Innovation and Infrastructure Investment
EcosystemsThird Parties Open
Innovation
Implications
VDSL, FTTH,
LTE, WiFi
Growth in adjacent marketsa focused approach
Main Targets: Public Sector, Utilities, Corporations, Telcos, Vertical PlayersBusiness Models: B2B2b/c
Professional Services
Cloud & OTTServices
ICT Security Solutions
Digital Identity Management
M2M & Internet of Things
Digital CRM
Web
Applications
Social
Digital Cloud Provider and Broker
Reselling e OTT approach
NetworkSecurity
ICTSecurity
End 2 End Solution Provider
Echosystem Integrator
Digital Identity Certification
Managementof Secure
transactions
9
Digital Identity – Management
Qualified player for Conservazione
Sostitutiva
PEC Management(Posta Elettronica
Certificata)
Qualified Certificator of Firma Qualificata
10
Partnership networks
Value chain control
Integrated approach
Business footprint
Platforms
Internet of Things – E2E Solution Provider
11
Hor and Verticals mgmt
Cloud Market Place – Cloud Brokering
White label ServicesBranded Services
SaaS IaaS PaaS
International Markets
Domestic Market
DirectSales
PartnersISVResellers
1112 3
Digital Marketplace
12
Data Monetization - A Business Case for a Telco Playerrationals and issues
Advertising Online Market increasingly growing, driven by mobile e video advertising.
Display Advertising growth driven by video online e on mobile audience, with advanced metrics.
Paid-for-Search growth driven by the long tail effect and by searches in mobility.
Privacy and Customer behaviour
Analytics and dedicated platforms and tools
Do we really know our customers and know how to manage the information
Scope and focus
Fierce and increasing competition, driven by OTTs.
The big G effect, Apple, Facebook
Several TLC operators and specialized players, e.g. Millennial Media, InMobi, Smaato, Nexage, Madvertise e Amobee.
Industry in consolidation.
A Market opportunity to grow in an adjacent market worth more than 250 €mln/year, growing double digit.
No need for relevant upfront investments. Possible collaborations with specialized
players, with revenue sharing models.
13
Data Monetization - A Business Case for a Telco Playera possible path
Create/establish a dedicated organization devoted to address the opportunity, identify an initial set of specialized partners
Set an on field trial in order to test operational and commercial issues start
to deliver value added services based on analytics e CB profiling
Diversify (merchant) offering with more profiled and taylored services
Redirect parent organization in order to extract the value embedded in the customer knowledge and to redesign the existing and new services within the new framework
Verify and solve issues related to privacy, to consumer
behaviour and to market acceptance
Start commercial operations
Enrich the echosystem of web agencies and media partners
Leverage on Telco’s salesforce
Leverage Telco’s offerings in order to increase knowledge of customers and improve customer’s experience: security in transactions, digital identity mgmt, e/m payments,digital marketplace
Diversify customer offering with better segmented services and applications
Extract more information and obtain permission from more customers to reach them
14
www.tidigitalsolutions.com
15
TELECOM ITALIA GROUP
Creating value by addressing adjacent markets: a path towards data monetization