Becoming an ecosystem player: Are you ready?
Communications service providers (CSPs) keep being told that, to capture new revenues in the 5G era, they need to turn their networks into “digital ecosystems”: open platforms for collaborative value creation. But opening up requires letting go of some control over the end-to-end customer offering — and living with a bit of uncertainty about commercial outcomes.
While it’s no surprise some CSPs have difficulty effectively engaging in ecosystems, the fact is, it’s worth it. Digital ecosystems bring new business and help companies continue to improve and innovate.1 McKinsey estimates they could add up to $60 trillion to the global economy by 2025.
A multi-party mashup
One of the first stumbling blocks for CSPs can be the abstractness of the ecosystem idea itself, which is hard to wrap your head around when you’re used to rigid, inside-out service development using networks designed for specific service offerings and service-level agreements (SLAs).
We can look outside the CSP sphere for a clear model. Uber’s platform is hosted in the Amazon Web Services (AWS) cloud but uses mapping from Google. Its application is used by drivers and riders on all kinds of devices (Android and Apple) connected to mobile networks operated by a wide range of telecom companies. This mashup of services, functions, data, software and hardware comes together to form the “Uber ecosystem”.
Contrast that with the self-contained, siloed way a typical CSP operates today: you define a service or set of services, acquire and deploy assets to build a network to support them, sign up subscribers, give them SIM cards, connect them to your network. The radical openness of the ecosystem concept is clear by comparison.
It takes a mind-shift
The next hurdle for many CSPs is accepting that, to participate in an ecosystem, they first have to consider what “levers of innovation” they can offer — and then give ecosystem member companies simple access to those levers. The trade-off for less CSP control of the offering is generating revenue from third-party integration of the value of the network without the CSP’s direct involvement.
If you’re used to building ironclad business cases with more-or-less guaranteed ROI, opening up the network and “seeing what happens” may be a slightly uncomfortable prospect. It demands thinking like a start-up: agile, flexible, responsive. It’s impossible to fully imagine what opportunities may emerge from the cross-pollination of multiple partners working off each other. The key is to let that creativity flourish and then make sure you have a piece of the value that’s created.
It takes technology transformation
Opening up the network requires a secure mechanism for outside parties to access network functions. Allowing third parties to easily select, access and activate services demands a catalog of service elements and APIs for solution-building. To ensure frictionless consumption, catalog services must be able to be turned up instantly, which requires automation in operations and a tight coupling between catalog service offerings, the cloud and the network capacity available to deliver them.
The good news is you can gain these kinds of capabilities by digitalizing your infrastructure, operations and services. In this way, the ecosystem approach complements the overall 5G evolution, since 5G as a technology domain is basically meant for digital interaction.
Get into it gradually
In ecosystems, companies can either be producers or directors. In the Uber example, Uber is the director, and AWS, Google and all the various device makers are producers, even if only by association. But AWS and Google are directors in other ecosystems. CSPs can ease themselves into the ecosystem way of working by opening up their networks and being producers before trying to direct a whole ecosystem.
AT&T and Microsoft provide a real-world example. They partnered to integrate Azure cloud compute services into the edge of the AT&T network. This was announced as a component of a multi-year strategic partnership. When looked at from the Azure Cloud IT ecosystem point of view, AT&T is a producer in that ecosystem. AT&T and Microsoft are opening up AT&T’s network edge for the Azure Cloud ecosystem members to access it for their own products, services and systems.
One size doesn’t fit all
Ecosystems encourage experimentation with new combinations of functions and expand the pool of creative talent seeking the next killer app or solution. While producing for or directing an ecosystem is no guarantee of success, it must be considered in every CSP’s growth strategy. What that looks like can take many forms: there’s no single formula for how or where to participate, no “one size fits all” approach. There are several ecosystem models you can explore, and some or all of them may serve in a given situation. The important point is to commit to an ecosystem strategy and get started.
Being a part of an ecosystem can dramatically expand the uses of your offerings, exposing your brand to a broader customer base and enabling you to offer more within your own service lines. As an ecosystem player, you can be part of a digital future you’ll help build.
1 De Man, A.P. (2020). Governing ecosystems. Strategic Alliance Quarterly, Q3, 38–41.