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CSPs need to shift their 5G strategy if they want to keep up

Communications Service Providers (CSPs) are required to change their strategy if they hope to see a return on 5G investments, according to a new report released by Bearing Point/Beyond in collaboration with Omdia.

According to the study, how CSPs approach the market and their ability to engage with 5G enterprise projects will be the difference between success and failure.

CSPs must work with partners to focus not only on selling communications solutions but how to solve enterprise business problems.

The report highlights that 72.8% of CSPs believe the majority of 5G revenue will come from B2B, B2B2X or Government/smart city projects.

In fact, prior research by Bearing Point/Beyond showed that CSPs expect a 15% increase in current revenues from B2B 5G services.

However, CSPs are already being cut out of strategic engagement and solution building with enterprise partners. In 40% of enterprise 5G deals signed CSPs were the secondary supplier, 32% were led by enterprises, and only 21% were led by CSPs.

The research shows that only one in five early enterprise 5G deals are CSP-led, highlighting that the way CSPs want to sell doesn’t match the way that businesses want to buy.

Furthermore, in certain industries such as automotive, connectivity is being provided by other suppliers and CSPs aren’t being considered.

The report states that buying behaviour trends are driven by the fact that businesses are wanting to buy complete solutions that help to solve business problems, as opposed to buying individual technology solutions.

CSPs will find success if they are able to turn their focus to delivering technology-first solutions to business solutions that are vertical-specific, realising 5Gs value through industry specific processes, supply chains, partnerships, and applications.

When it comes to industries, the research shows that manufacturing, transport, utilities and energy/mining sectors account for nearly 80% of early enterprise 5G deals.

Omdia research vice president of Service Provider & Communications Evan Kirchheimer says, “CSPs will only realise value from 5G if they can identify, partner, codevelop, implement, and run a proposition with application-specific and industry-specific specialists.

“CSPs that can orchestrate such a complex web of relationships will be capable of capturing a greater share of the market and will not be relegated to being one of many connectivity providers competing solely on price.”

Bearing Point/Beyond CEO Angus Ward says, “This is a multi-billion-dollar opportunity that CSPs need to address fast and requires CSPs to collaborate with enterprises and SMBs to better understand their reality.”

Omdia’s principal analyst and practice leader of CSPs Europe, Dario Talmesio, echoes this sentiment saying, “The promise of enterprise 5G is there for the taking, but CSPs must realise they will need to master ecosystem orchestration, including joint go-to-market with vendors and cocreation with customers.”

The research also revealed the impact of COVID-19 on the 5G market, finding that if anything this will encourage enterprises to develop and invest in their 5G strategy.

For instance, the report finds that 5G investment in China is already recovering because the country recognises the importance of accelerating the digitalisation of industries to guard against future risk.

Omdia expects this trend to unfold globally as COVID-19 makes digitising the physical, enabling a work-anywhere economy and mitigating risk in supply chains through an ecosystem play more relevant than ever.

The report concludes that in order for CSPs to truly capitalise on 5G opportunities they must ‘be brave’, embracing platform-based business models and orchestrating partner ecosystems to meet specific enterprise demands.

Ward says, “CSPs have to embrace platform-based business models and orchestrate partner ecosystems to meet specific enterprise demands.

"This requires a change in mindset, experimenting with business models, accelerating testing and monetising speed to test and monetise new offerings that are co-created with ecosystem of partners and underpinned by the right IT platform to support these new ways of working.”

He says, “Fundamentally, CSPs must become 5G ecosystem orchestrators. That's the only way they can hope to meet enterprise business needs and re-integrate themselves into enterprise 5G value-chain as the world emerges from the COVID-19 pandemic.”