Global Telecom Industry Overview - 2023
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The document provides an overview of the global telecom industry in 2023, including: - Challenges like geopolitical tensions, inflation, and economic uncertainty. - The industry is recovering from stagnation through vertical plays like data centers and horizontal plays like utilities. Organic growth strategies include 5G, IoT, and edge computing. - In Australia, the industry follows a four pillar model of Telstra, Optus, TPG, and NBN. Key players are decentralizing assets and spending is shifting to cloud, software, and digital transformation to enable new services and revenue streams in areas like IT.
Global Telecom Industry Overview - 2023
- 1. 1 GLOBAL SATE OF TELECOM INDUSTRY- 2023
- 2. 2 Agenda Disclaimer: This presentation acknowledges and gives credit to the work of others. Necessary validation have been taken to avoid copyright infringement. Any instances that violate terms can be removed when notified. All discussed thoughts & opinions are my own & not that of my employer or other parties. § Global Challenges - 2023 § GFC to GIC 2023 § Why Inflation is Rising § Telecom Industry - 2023 § Performance, Growth Strategy – Organic vs Inorganic § Todays State and Building Blocks, Future Network § Telecom Industry - Australia § Adopting the Four Pillar Model § Inorganic Growth - Decentralise § Australia – Future Spend Profile, IT Services Opportunity § Summary § Appendix § IT Trends -2023 § 5G, SD WAN – Growth Area, AI Use Cases, Salesforce Stack for BSS, Amdocs OSS Capability View § Why Cloud is on Fire, Post COVID Growth Drivers and Revenue Generation
- 3. 3 Attribution Licensed Under This work is Licensed Under No Derivative 4.0 International
- 4. 4 Global Challenges - 2023 Macro Economic & Geopolitics • Geopolitical View • Credit Suisse strategist Zoltan Pozsar, who challenges investors to think tensions between the US (and West) and China, Russia as part of an economic war destabilising the low-inflation world. • His view is that low inflation has simplistically been built on three things: • Immigration keeping wages low in the US (and in the West); • Cheap goods from China helping to raise living standards despite stagnant wages; • Cheap Russian gas powering Europe & Germany Macro View • Russia / Ukraine War • Recalibrating Economic Growth and Activity • Inflation, Interest Rates, and Exchange Rates • Consumer Purchase Power Erosion • Energy, Commodities and Stock Market • Quantitative Tapering and Recession Fears • The Shrinking Labor Force, Skill Scarcity and Hiring • Manufacturing and Supply Chains strained • Ongoing Pandemic Concerns • Elections, Government Policy, Regulation • Digital Sovereignty and Falling Globalisation Source: AFR, Mckinsey, Gartner, Forrester
- 5. 5 GFC to GIC Economic Crisis Spectrum 2008 2019 GIC 2011 unable to meet the Demand and are driving The Price Rise Bailed out by Govt. GFC - 2 2022 Bailed out by Govt. Govt. Rescued COVID driven and addressed the GFC - 1 PIIGS GFC: Global Financial Crisis, GIC: Global Inflation Crisis
- 6. 6 GIC - 2023 Why Inflation is Rising GFC: Global Financial Crisis, GIC: Global Inflation Crisis • Geopolitical View • Credit Suisse strategist Zoltan Pozsar, who challenges investors to think tensions between the US (and West) and China, Russia as part of an economic war destabilising the low-inflation world. • His view is that low inflation has simplistically been built on three things: • Immigration keeping wages low in the US (and in the West); • Cheap goods from China helping to raise living standards despite stagnant wages; • Cheap Russian gas powering Europe & Germany Macro View • Economic Downturn • Conflict in Europe • Energy Scarcity • Cyber Attacks • Material Shortage Source: AFR, Mckinsey, Gartner Forrester Risk is Stagflation and Prolonged Recession
- 7. 7 • Telecom Industry is Capital Intensive, with high Fixed Costs. As a result, Barriers to entry are high for new entrants. Its Business Model is Volume centric and with minimal margins, hence relies on Economies of scale and operational efficiency dividends. • In the last decade Price to Earnings (P/E) ratio on average has been less than 15 across the globe (no growth), but since the COVID demand profile has changed and the telecom industry is recovering from being stagnant or declining. • Traditionally Telecoms have sold fixed line, voice, mobile and data as their key offerings. Today, these offerings are digitised and have become a commodity (demand is elastic). Hence Telecoms as an industry segment is finding it hard to survive. • To compete with traditional and new OTT agile players, it is opting for Vertical and Horizontal Play to generate new revenue streams. • Vertical play is driven by moving into Datacenter, Cloud, Network Managed Services, Mobility, M2M (IoT), Communication Services (incl Embedded), Security, OTT (App Store Economy) and Enabling B2B Services (Customer Care, Payments, Identity). Besides they are offering industry specific solutions to other industries like health, energy, education, transport, government, postal and entertainment. • Horizontal Play is by selling utilities like gas and electricity as the E2E value chain activities are very similar. • Next generation of growth is anticipated from Connectivity (5x data, from 13 to 40 devices at home), 5G & Private 5G, IoT, Network Edge, SD-WAN, SDN, Hybrid Cloud. Telecom Industry State - Today Key Message • Industry is struggling in generating ROI • Avg P/E < 15 (no growth) • Digitisation of cores services has commoditised it • Both Horizontal and Vertical Play are employed Source: AT&T, IBM’s 2015 Scenario for Telco Industry - 2011 Horizontal Declining Addressable Market Expanding Clash of Giants Generative Market Market Shakeout Survivor Vertical Industry Structure
- 8. 8 Recovering Firms -100.0 0.0 100.0 200.0 300.0 -50.0 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 Verizon AT&T Deutsche Telekom Vodafone Telefonica China Telecom Telstra BT Singtel NTT Teleocm Italia Amdocs Cisco Market Cap (Bn.) IBL- Cash (Bn.) Brand Value in (Bn.) Rev (Bn.) Source: Google Finance Telecom Operators and Services - Enterprise Value vs Brand Value • Key Message - Telecom Services Market • Market Size: $2.9 Tn • Growth (CAGR): (6%), Recovering since COVID • Technology Change: High • Life Cycle: Matured • Regulation: Heavy • Avg P/E < 13 (no growth), Industry is struggling in generating ROI • Organic Growth: Both Horizontal and Vertical Play are employed • Inorganic Growth: Adapt, Amalgamate, Acquire • Business Environment: Challenging, hence all of them have debt undertakings on their B/S with Verizon and AT&T having the maximum debt on their books • NZD and Australian Telcos are the best performing telcos across the globe. • AT&Ts brand equity is in –ve, Telstra and Verizon are holding and leading the pack. Dividend Challenging Stock (P/E) Op Condition (P/B) Adequate Falling Stars Dogs Rising Stars Deutsche Tel China Tel BT Verizon Vodafone Telefonica Dividend Growth Undervalued Telstra AT&T Singtel NTT Tel Italia Amdocs CISCO TPG Chorus NZD ABB Super Loop Telecom Industry Performance - 2023
- 9. 9 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% NBN AT&T Teleocm Italia Verizon BT Cisco Vodafone Deutsche Telekom ABB Telstra Singtel Amdocs China Telecom Telefonica NTT Ericsson EBITDA Margin Key Message - Telecom Services Market • Market Size: $2.9 Tn • Growth (CAGR): (6%), Recovering since COVID • Technology Change: High • Life Cycle: Matured • Regulation: Heavy • Avg P/E < 13 (no growth), Industry is struggling in generating ROI • Organic Growth: Both Horizontal and Vertical Play are employed • Inorganic Growth: Adapt, Amalgamate, Acquire EBITDA Margin • NBN has the highest EBITDA Margin whereas NTT has the least. Volatility and Safe Heaven Stocks. • Verizon and Telstra are the safe heaven stocks whereas NTT and CISCO are showing challenging market conditions with high volatility. Telecom Industry Performance - 2023 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0 1.1 Ericsson Verizon Telstra China Telecom Singtel Vodafone Deutsche Telekom BT Amdocs AT&T Telefonica NTT Cisco Beta
- 10. 10 Telecoms Growth Inorganic Strategy Spectrum Primarily selling assets with no Growth or Noncomplementary to business or to reduce Information Asymmetry, to free up more cash or create passive cash flow. Ex Selling Towers Combine with another company's complementary assets to scale and expand services and enhance ROCE over WACC Ex Selling 5G using other companies Tower and Spectrum and in return giving access to their Services Telecoms Inorganic Growth Strategy Spectrum Technology & Customer Behaviour Change is Accelerating the Evolution of Telecom Industry Acquire Adapt Amalgamate Acquire a company competing in growth areas to Strengthen Scale & Competitiveness Ex Buy a Cloud or DC Operator
- 11. 11 Telecoms Growth Organic Play Vertical Service Market Play Product Renaissance Carnage Horizontal Growth Revenue Play Margin Play Key Message Horizontal Play • Regulation and commodification of the retail arm of telecom operators are forcing them to move away from vertical integration to horizontal play. • With the digitisation of voice, video and telecom services (less capital intensive, low barriers to entry) industries with similar Ops value chain can penetrate the telecom sector with ease. In order to defend and find new revenue streams, telecoms are leveraging economies of scope and scale, and are venturing into Horizontal segments like Utilities to grow. • Besides telecom operators are creating a low-cost player (like a white labelled MVNO) as a way of protecting existing revenue from commodity players and defending the premium segment. Vertical Play • Vertical play is driven by moving into Datacenter, Cloud, Network Managed Services, Mobility, M2M (IoT), Communication Services (incl Embedded), Security, OTT (App Store Economy) and Enabling B2B Services (Customer Care, Payments, Identity). Besides they are offering industry specific solutions to other industries like health, energy, education, transport, government, postal and entertainment. • Telecom Industry is Capital Intensive, with high Fixed Costs. As a result, Barriers to entry are high for new entrants. Its Business Model is Volume centric and with minimal margins, hence relies on Economies of scale and operational efficiency dividends. • To compete with traditional and new agile OTT players, it is opting for Vertical and Horizontal Play to generate new revenue streams.
- 12. 12 Telecom Industry Todays Setup - Building Blocks Source: Vodafone Key Message • Vodafone’s E2E technology landscape encapsulates the building blocks for todays Telecom set up.
- 13. 13 Telecom Industry Programmable Network Key Message • Future of the telecom network is programmable (intelligent and smart), enabled by SD-WAN (NFV) and Cloud. Source: Gartner, TMForum, Forrester
- 14. 14 Telecom Industry Australia - Four Pillar Model Key Message • In a country like Australia most industry verticals follow 3 or 4 pillar model like Banking (CBA, NAB, ANZ, Westpac), Retail (Coles, Woolies, Aldi) or Mining (BHP, RioTinto, Fortescue). • Telecom Industry is also aligning towards a 4 pillar model. • Market Size: $35 Bn • Growth: (0.6%), Recovering since COVID • Technology Change: High • Life Cycle: Matured • Regulation: Heavy Telstra Optus TPG NBN
- 15. 15 Telecom Industry To Grow - Decentralise • In a country like Australia most industry verticals follow 3 or 4 pillar model like Banking (CBA, NAB, ANZ, Westpac), Retail (Coles, Woolies, Aldi), or Mining (BHP, RioTinto, Fortescue). • Telecom Industry is also aligning towards a 4 pillar model. • Besides, key players are opting for decentralisation to grow and find new revenue streams. • Market Size: $35 Bn • Growth: (0.6%), Recovering since COVID • Technology Change: High • Life Cycle: Matured • Regulation: Heavy Monolithic Telecom Structure Towers Co Net Co Services Co Digital Co Fintech Co Decentralised Telecom Structure Reduce Information Asymmetry Monetise and increase the utilisation of Passive Assets Free up cash for growth in Digital and enable Horizontal Play Telstra Optus TPG NBN Australian Telcos Four Pillar Model Source: IBIS, NBN Co, AFR, Gov.au, TMForum
- 16. 16 Telecom - Australia Future Spend Profile - 2023 Dividend Low P/E P/B High Dogs TPG Rising Stars Telstra Falling Stars Growth Recovering Firms Optus Chorus NZD NBN (pvt) ? Telecom Opportunity – Key Trends • Telecom industry across the globe is recovering from being in decline or stagnant in the last 5-10 years. This recovery is driven by the change in demand profile because of COVID. • Since early 2020 demand for digital enabled services like self serve, self care, mobile first, remote work and collaboration has grown by 3-5 times. This has resulted in a spurt in demand for data (x3), high speed internet and mobility. • Industry's focus has shifted from Revenue Generation to Revenue Protection and Generation. The Customer engagement has shifted to non negotiable CX (intuitive and simplicity), Resiliency and Stickiness. • Fulfillment of this demand is enabled by accelerating digital transformation (simplify offerings and services) across the business. • Industry is rapidly adopting technology enablers like Cloud, AI/ML, 5G, IoT, Security, Platform (API) and SD-WAN to fulfil the growing and elastic demand. In Australia • Optus & TPG are going through Transformation (rise in CAPEX & OPEX), Telstra is at the tail end of Transformation and is heading for Growth (CAPEX & optimised OPEX), NBN Co being a private entity has information asymmetry, currently it is going through a nation building transformation by upgrading the network (CAPEX centric, rise in OPEX). Network Spend • Spending is shifting from Core & RAN into the Cloud. • From H/W centric & E2E services from NEPS to fragmented spending on S/W, Integration and Orchestration • Passive Network - Selling Towers & then leasing them back (Airlines Model) • Network Realisation – bring together all in one new core network People Spend - is Declining • no insourcing, hiring is for IT only, rise in Automation & Integration. IT Spend • SAAS instead of a license, Public Cloud for IT and Private Cloud for Networks. Cloud Migration for Agility & Savings 10-20%. • With Open API Architecture less spending on people, more on Integration. Other Spending Growth Areas • Network as a Servicing (slicing), Edge • Recovering Firms have growth potential but their operation needs transformation to spur that growth. Often these firms are undervalued. • Firms in the Dogs domain have minimal growth potential and their current state of operation needs an uplift. • Rising Star Firms have growth potential and operations are performing quite well. Source: Tmforum, Gartner, Mckinsey, BCG, Forrester NBN Co, AFR, ABB Super Loop
- 17. 17 Telecom - Australia IT Opportunity - 2023 Opportunity for IT Services • COVID has created the pent up demand for vertical & bespoke solutions because of a change in working culture. • Data growth and the need for boundary less information means back end assets need to be transformed for information manageability & flexibility. • Rollout of 5G for next gen services will increase the software spend by around 38% by 2026 (AI and Cloud are focus areas for new deployment & use cases). • BSS like Payroll, HR & BI are driving the digital transformation as the solutions from Workday, Twilio, Salesforce (Slack) and others are hosted in Cloud, providing agility and scale on demand. These systems are an easy sell (shorter sales cycle) because they have minimal dependency on core IT systems. • OSS’s are primarily on premise COTS or hosted in a private cloud. These systems are not an easy sell (longer sales cycle) as they have a lot of linkages and dependencies, including legacy integration in some cases. Ex Amdocs core operational support systems (leader) are still lagging in Cloud 3.0 (composable) adoption. Their 1st billing system in a cloud (private) was recently rolled out in North America. IT Spend Profile • Customer Centric BSS – Increase by 5-7% • Omnichannel sales & ordering (salesforce), CRM - (salesforce) • Revenue Management (billing, rating, charging) • OSS Service Fulfilment – Increase by 5-6% • OM (Amdocs), Service Orchestration, • Prod/Service Asset Catalog, Planning and Optimisation, • Activation and Management • OSS Service Assurance - Increase by 5-6% • Assurance Data Analytics • Performance Management, Fault and Alarm Monitoring Key Focus Areas in IT • API and Orchestration (for Composability and Agility) • Microservice Architecture (containers for Portability) • ML and AI enabled S/W and H/W • Agile - Devops, CI/CD (Agility, MVP) • Data Analytics focused closed loops (Intelligence) • Cloud Native Apps and Migration to Cloud (Agility and Savings) • Mapping of Tech Spend and Technology gives a good view of IT spend in 2022 New OPEX Spend CAPEX CX, AI Automation, B2B Platforms Regulatory & Compliance, Cyber Security BPM/O Existing Technology Collaboration Digitisation of CX New B2B & B2C Services Streamline IT Cloud Migration App Upgrades Agile Delivery, Devops, CI/CD SD WAN, NAAS, 5G, IoT, Edge, Cloud Native Source: Tmforum, Gartner, Mckinsey, BCG, Forrester NBN Co, AFR,
- 18. 18 Summary Telecom Industry - 2023 • Telecom industry with a market size of $2.9 Tn has grown (CAGR) by 6% across the globe. • Business environment is challenging with rising inflation and muted customer demand. • Telcos are exploring both organic and inorganic growth. • Key Ares for growth are Connectivity (5x data, from 13 to 40 devices at home), 5G & Private 5G, IoT, Network Edge, SD-WAN, SDN, and Hybrid Cloud.
- 19. 19 IT Trends -2023 Macro View & Spend Profile Inflation and USD • Inflation and a steep rise in IR have impacted the middle class across the globe with minimal cash to spend. Softening of economies is happening now and in within 1-2 quarters rates will move downwards • The rise in inflation and IR has helped the USD rise and impacted Software Products, Services including Cloud and Devices (mostly priced in USD) pricing and impacted the purchasing power of enterprises in other parts of the world. IT Spend (Run, Build, Design, Support) • IAAS is rising by > 35% with a rise in Cloud and Digitisation . • Cloud juggernaut is heading for more growth. • Design (incl. consulting) and Build are part of a healthy increase in IT spending. • Support Services spend is declining Verticals • Online Entertainment & Gaming, Healthcare Insurance, and Hospitals are attracting top dollars for IT and Digitisation. • Air, Agriculture, Rail and Telecom are on the lower end of the spending profile. Enterprise vs Consumer • When it comes to IT spending Enterprises are less impacted as compared to consumers because enterprise spending is moving away from ownership to leasing or usage-based Digital Transformation • IT is moving from a cost centre to revenue generation. • Digitisation is forcing enterprises' infrastructure to be resilient, driven by AI Augmented testing, Auto remediation, and Apps Security to mitigate Op risks and enhance CX. Key Deliverables are Security, Scalability, and Stability for Revenue Generation. Source: AFR, Mckinsey, Gartner, Forrester • Key Message - IT Services and Software Market • Market Size: $2.3 Tn • Growth: (8-10%) • CAGR Average Spend: 7% • Technology Change: High • Life Cycle: Matured • Regulation: Medium - Low • Business Environment: High Risk
- 20. 20 5G Rollout Challenges in Scaling up Key Message • Confidence in the technology is high, but less clear is whether and how soon it can fuel new products and services that customers are willing to pay for. Challenges: • Spectrum availability issues and national policies • ROI on 5G is not clear • Confusing range of technology variations and various deployment scenarios. • Coverage & rollout schedule varies by country and operators • Changing Regulation Devices & Things Connectivity Edge Computing 5G Core Content, Apps & Cloud service 5G Platform Orchestration and Automation Source: Gartner, TMForum, Forrester
- 21. 21 Private – 5G Telcos – Engagement Model Key Message • Private 5G is about transforming business operations and driving new revenue opportunities via the application layer. • Telcos are adopting different engagement & deployment models for Private 5G. o Increase in the footprint across the engagement value chain leads to an increase in the complexity but reduces time to market o Jio in India is heading for end to end value chain control • Ecosystem is getting more complex as partners are also competitors. Source: Gartner, TMForum, Forrester, STL Key Challenges • Enterprise requirements are not articulated well – telcos primarily play in horizontal segment; vertical play is new for them. • Complex technology and ecosystem with minimal returns esp. in the connectivity is a big risk. Time to Market
- 22. 22 Telco Cloud Adoption Engagement Model Key Message • Private 5G is about transforming business operations and driving new revenue opportunities via the application layer. • Telcos are adopting different engagement & deployment models for Private 5G. o Increase in the footprint across the engagement value chain leads to an increase in the complexity but reduces time to market o Jio in India is heading for end to end value chain control • Ecosystem is getting more complex as partners are also competitors. Source: Gartner, TMForum, Forrester, STL Key Challenges • Enterprise requirements are not articulated well – telcos primarily play in horizontal segment; vertical play is new for them. • Complex technology and ecosystem with minimal returns esp. in the connectivity is a big risk. Time to Market
- 23. 23 Edge on Cloud Revenue Model Key Message • Edge Computing is a decentralised mechanism done at the edge of the network, close to the data source, as opposed to on the cloud or away in data servers. With the rise of the Internet of Things (IoT) devices more and more smart devices connect to the network, hence businesses are facing demanding and diverse data challenges. Key Strategies are • Retail – Sell directly to Enterprise • Retail – Sell via Partners like HPS • Wholesale - become Wholesale provider Source: Gartner, Forrester, TM Forum, STL, Transport Access Network Access Point Enterprise End Device Internet Exchange Core Network Value Chain Edge Continuum Type of Edge Computing Technology Assets and Locations Device Edge On Premise Edge Network Edge (Edge Apps, Core Network, RAN) Regional Edge Edge Computing Internet HPS Cloud Telecom Edge Computing Multi Access (Mobile/Fixed) Edge Computing Network Edge On Premise Edge Computing Sensor, Robot, Drone Street Lamp IoT Gateway, Server Retail Factory CPE, Set Top Box, Sim Gateway Micro/Macro Cell Central Office CDN, Central Office CDN, Internet Exchange City CDN, Data Centre Private LTE/5G Network Single Tenant Single /Multi Tenant Single Tenant Multi Tenant Tenancy Cloud Type Likely PAAS PAAS/ SAAS IAAS IAAS SAAS/IAAS Revenue Model Consumption Based - IAAS like AWS Wavelength Azure Edge, PAAS like Force.com, SAAS, HAAS (OPEX centric) like HPE GreenLake, CDN Other - License Based (not in demand), Managed Services (Availability, Security, Responsiveness), Co Location
- 24. 24 Managed Service Overlay Connectivity Access Telecom Wholesaler Telecom Operator Telecom RSPs OTT/IT Service Providers Tier 2 Network Operators Tier 3 RSP OTT MNS Providers Tier 1 Wholesale SD WAN Growth Area Key Message • Traditional Managed Services have more activity but declining spending whereas WAN Managed services are transitioning from traditional delivery to Software Defined (#SDWAN). • SD WAN is a growth area for telecom players as it is tipped to grow by 40% driven by demand for 5G, Distributed Cloud, IoT, Edge, AI/ML and others • Competition is aggressive because of the entry of Tier 3 and OTT players. At Access Level (Layer 1) battle is competitive between Enterprise Ethernet, G.fast driven FTTP and high speed FTTP. SD WAN provides stickiness to the provider. Source: ITnews, TMForum, AFR, Gartner, Forrester SD WAN Building Blocks • Orchestration • Application Awareness • Intelligent Routing • Flexible and Hybrid Network • NFV • Security SD WAN Bare Bone Working Telstra – FY 22 Results The Data & Connectivity outlook remains challenged with competitive pressures, especially nbn’s release of more fibre business zones. In addition, customers are using SDWAN and internet as an alternative to private dedicated connectivity, especially for smaller locations.
- 25. 25 Source: Tmforum.com Oracle Telecom AI Use Cases
- 26. 26 Source: SalesforceBen.com Salesforce (BSS) Product Under The Hood • BSS like Payroll, HR & BI are driving the digital transformation as the solutions from Workday, Twilio, Salesforce (Slack) and others are hosted in Cloud, providing agility and scale on demand. These systems are an easy sell (shorter sales cycle) because they have minimal dependency on core IT systems. • Their sales positioning is about Revenue Generation, Agility to market and CX. • The Salesforce Cloud offering has come a long way and with a Composable API- centric SaaS platform for sales and marketing, it's enabling the digital transformation
- 27. 27 Amdocs (OSS) Product Capability View • Amdocs offering in BSS with Digital Play is about Vertical Integration of its assets and positioning it as a telco in a box solution. • Their Cloud adoption needs to pick up the pace as they are still lagging in Cloud 3.0 (composable) adoption. Their 1st billing system in a cloud (private) was recently rolled out in North America. • OSS’s are primarily on premise COTS or hosted in a private cloud. These systems are not an easy sell (longer sales cycle) as they have a lot of linkages and dependencies, including legacy integration in some cases. Since they are OPEX centric, their sales positioning is about Price, Function and Risk Appetite. Source: AWS, Amdocs.com
- 28. 28 B2B Sales • Enable Remote and Virtual Sales • from 10% to > 35% virtual engagement on the rise • field sales sentiment dropped to 42% from 63% • Enable Sales Analytical Capabilities • focus on quality than volume of pipeline • historical analysis is of little help • Buyers need more help • because they are struggling with new engagement • need discovery and dialog from sellers • Buyers are revising the buyers map • catering for change in engagement model • Buyers risk appetite has jumped from 20% to 33% • trying new revenue generation channels • resilience and continuity of operations driving the rollout • ex digital workplace or securing remote working • Marketing team is in a state of flux on how to position • because engagement model has changed • Sellers need to prepare demand profile and validate it with buyers • because future is uncertain and no one knows what is ahead • collectively walkthrough short, mid and long term needs • get commitment to ongoing initiatives • Domain Skills in Demand • automation, cloud, agile delivery via Scrum and DevOps Source: HBR, Gartner, Sales Academy, Forrester, Mckinsey, Forbes, BCG Pre COVID During & Post COVID Virtual Sales Engagement 10% 35% Buyers Risk Appetite 20% 33% Post COVID Dynamic Demand Profile
- 29. 29 Existing New Existing Customers New Revenue Milking Pre COVID Revenue Expansion Post COVID Products Revenue Acceleration & Diversification Post COVID Revenue Protection During COVID § Ongoing pandemic has created challenges for B2B Technology Growth across industry verticals § By analysing customers vs products or service offerings, technology demand drivers can be identifies for – pre, post and during COVID scenarios Post COVID B2B Tech Growth Drivers • Primarily business driven • Chasing sales revenue and CX enhancements • Business owners controlled spending • Business centric or CX centric assets transformed with no major change in back end assets • Cloud delivered on promise, CX partial success, others RPA, ML, AI yet to deliver on ROI • Primarily resilience driven • Chasing mixture of sales & need driven revenue • CX is non negotiable • Fulfil pent up demand for vertical & bespoke solutions • Transform back end assets as need for information manageability & flexibility grows • New Tech Normal - Cloud becomes platform of choice and RPA, ML, AI are revived to cater for change in demand profile • Primarily tactical driven • Chasing need driven sales revenue and CX • Controlled Cost & Cash Conserved • Not sure to be innovative or pay the bills • Building pent up demand for vertical & bespoke solutions • Information harness is required • RPA, ML, AI on backburner for next half Source: Gartner, HBR, Sales Academy, Forrester, Mckinsey, Ansoff Matrix Pre COVID During COVID Post COVID
- 30. 30 Software Assets Infrastructure Assets Virtual Physical Demand Centric Fulfillment Centric Security Overlay IT Assets Setup Digital 1.0 Digital 1.0 Digital 2.0 Digital 2.0 Pre COVID Digital 1.0 Digital 2.0 Digital 2.0 • Primarily business driven, business owners controlled spending • Demand centric or CX centric assets transformed with no major change in Fulfilment assets • Cloud delivered on promise, CX with partial success, others like RPA, ML, AI yet to deliver on ROI • Overall IT spend is in decline by 5-7% FY20 & 1H FY21, however digital and cloud spend is on the rise, driven primarily by Resilience, ex. JIT supply chain is adapting to Resilience during pandemic • Standardised Demand Centric Assets consulting and rollout is growing underpinned by the rise in digital channels for revenue generation • Transformation for Fulfilment Assets are on the rise as the need for information harnessing, manageability & flexibility grows • New Tech Normal - Cloud becomes a platform of choice, Optimisation of business process and hybrid workloads on the rise via automation for OPEX relief, RPA, ML, AI are revived to fulfil the change in demand profile • Infrastructure and services outsourcing on the decline • Concern for Remote Working & IT Assets security driving the rise in ringfencing • Fulfil the tactical demand during pandemic and the pent up demand Post COVID for vertical & bespoke (expensive) solutions During & Post COVID Digital 2.0 Source: Gartner, BCG, HBR, Sales Academy, Forrester, Mckinsey Post COVID Digital and Cloud is on Fire • Digitisation and Personalisation is driving the Consumerisation of IT (app, services on demand), which is driving cloud adoption Post-COVID. • Since Cloud is an enabler of consumerisation, hence IT spending on the Cloud is in demand.
- 31. 31 Low High Low Digital Operations High Growth New Rev, Existing Model Digital Value Transformation New Rev, New Model Post COVID Key Drivers for Digital Acceleration • Efficiency • Staff Performance and Employee Engagement • Liquidity • Costs aligned to growth Key Digital Trends • Process Mining • Discovery, Conformance, Enhancement • RPA • From Efficiency Compliance, Productivity Cost Reduction • Moving to Hyper automation, OCR, ML • Artificial Intelligence • Analytics • Digital Acceleration is about transforming the business not just restructuring and opening some new channels for revenue growth and customer retention and acquisition • Example • Restructuring could be about account receivable in finance where late payments can be predicted using ML • Transformation could be about transforming sales activity by predicting which prospects will pay on time Source: Gartner, Sales Academy, Forrester, HBR, BCG § Ongoing pandemic has created a challenge for organisations to fast track their digital transformation journey as the demand profile has changed rapidly in last 12 months. § Digital transformation is about moving from demand fulfilment to demand generation of customers BAU Existing Rev, Existing Model Restructure Existing Rev, New Model Post COVID Digital Acceleration Trend
- 32. 32 Disclaimer: This presentation acknowledges and gives credit to the work of others. Necessary validation have been taken to avoid copyright infringement. Any instances that violate terms can be removed when notified. All discussed thoughts & opinions are my own & not that of my employer or other parties. For further information, please contact: Name: Vishal Address: Melbourne, VIC 3000 Australia Mobile: 0468 675 566 Blog: http://blog.sharmavishal.com/