Finding the right channel

Hadi Raad and Jad Hajj from Booz and Company discuss how telecom operators can exploit the rise in mobile devices across the region.

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Finding the right channel
By  Hadi Raad , Jad Hajj Published  October 21, 2010

Hadi Raad and Jad Hajj from Booz and Company discuss how telecom operators can exploit the rise in mobile devices across the region.

Businesses and governments in the Middle East, like those around the world, increasingly rely on information and communications technology (ICT) to improve experiences for their customers and constituents, enhance productivity, and reduce costs. With these requirements come greater demands: Middle East enterprises today want voice and data solutions, both fixed and mobile, that fit their needs—and they expect telecom operators to deliver them. To do so, operators will need to truly understand the varying needs and demands of their different existing customers.

All over the world, business and government enterprises are becoming increasingly sophisticated in their purchasing behavior. They often choose a single source for their telecom needs; they are more cost conscious, and they demand more control and improved customer care. Enterprises have realised that the traditional approach of having separate data and telecom networks and running them in parallel is inefficient and costly. According to a 2008 Ovum survey, two-thirds of the CIOs who responded said they recognise the value of end-to-end solution providers in helping to drive down total cost of ownership and network downtime.

Global telecom operators must respond, too, to the fact that mobile use has gone mainstream, with 70% of businesses worldwide using some type of mobile applications. Broadband is also critical to enterprise users, as they recognise the importance of high-speed connectivity to reduce the cost of doing business (with services such as voice-over IP phone service and online payment) and to develop new markets and channels to attract new customers (for instance, by increasing their market reach via the Internet).

Telecom and network operators in the Middle East are feeling the force of these trends even more strongly than their global counterparts, as businesses in the region strive for growth and government agencies seek to become more connected and efficient.

Organisations’ potential use of mobile service, in particular, is still relatively untapped in the region when compared to international benchmarks: On average, only 0.4% of mobile subscribers in the region are enterprise users, compared to 4.7% on average in Western Europe. Similarly, there is still considerable room for growth in enterprise broadband. On average, 13.8% of broadband subscribers in the Middle East are enterprise users, compared to 18.3% on average in Western Europe, according to Ovum.

Some factors unique to the region are also driving demand. Government spending on megaprojects generating the need for customised ICT solutions. The region’s real estate boom is also contributing: developers typically ask for customised services to differentiate themselves through the services   they deliver to tenants; they also seek quality of service for their tenants such as service-level agreements, dedicated ICT teams, network operation centers, and 24/7 technical support teams.

Telecom and network operators are exploring a number of options to meet this growing demand. They are offering integrated bundles that include fixed and mobile voice services and data services in one discounted offer; they are also extending their offerings beyond the typical voice and data connectivity and offering managed services, in which the operator is fully responsible for the delivery and operation of end-to-end service.

They are enabling enterprises through mobile solutions: Although e-mail and SMS/ MMS still dominate mobile data use, the adoption of machine-to-machine solutions, such as remote monitoring, and mobile applications are on the rise. The field sales automation application, for example, is expected to grow substantially in the upcoming years. Operators are also increasing their investments in state-of-the-art datacentres. These facilities, in addition to their pre-existing relationships with enterprise customers, high-speed connectivity, and specialised applications, will position operators to capture a share of the US$15 billion opportunity in cloud computing and software as a service.

Finally, operators are offering ICT solutions to meet the needs of specific sectors, such as the “Connected Hospital,” which provides a full solution of connectivity services and tailored applications to hospitals and healthcare providers. Similar ICT solutions are continuously being designed and developed to address the needs of other key economic sectors, including government, education, defense, and logistics.

Offering these services is a step in the right direction, but operators will need to continue their efforts in order to fully capture the opportunity offered by enterprise ICT. First, they need to thoroughly understand their customers’ needs and segment their customers accordingly: For instance, small and medium-sized enterprises are likely to prefer bundled services, whereas large enterprises (including key local players in various economic sectors as well as multinational corporations operating in the region), are more likely to opt for integrated, customised ICT solutions. Second, operators need to develop their products and services based on this deep understanding, taking into account different enterprise segments’ needs in terms of connectivity, mobile use, and sales approaches.

Third, operators must create after-sales service and support to meet enterprises’ increased expectations through higher service availability, 24/7 help desks with knowledgeable technical support, proactive maintenance, short resolution times, and service-level agreements for increased commitment. Doing so will not only lead to operators’ own success but support the critical growth of the region’s businesses.

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