In a headline De Volkskrant presents KPN’s annual report over 2015: “Business market hurts KPN”. There are good things to say on KPN’s positive results, but the journal pinpoints a serious problem.
Over 2015 KPN revenue in this market dropped by € 400 million, with some 10%. For the company it appears to be a trend, since the operator copes with this decline for some years. The reduction refers to the inclining demand in private switches and fixed lines. But it does not reflect the opportunities in a growing number of markets that only function in an online environment.
Telecommunication changed the way companies produce, distribute, cooperate, interact with their customers, etc. This boosts a market for managed communication services. The reason is simple. More and more organizations rely on their IT infrastructure but have no budget to staff technicians. It makes perfect sense for KPN to jump on the bandwagon of 'managed services' and develop these services as a logic extension of its core business. KPN has a customer base. There are digital product lines. And the company has invested in IT-expertise to manage its digital products. Of course this new source of revenue is on its radar. Looking at empirical statistics, the development of managed services particularly includes the use of laptops netbooks, tablets and smartphones on the hardware side, and OTT-services and cloud storage on the software side.
Communication, or more precise connectivity, has become a utility. It is no less critical to modern living than water or electricity. Yet for the most part people who have access to connectivity take it completely for granted. Therefor the most obvious disruption that has appeared in the telecom market is that of vertical integration.
The acquisition of Getronics – in 2007 – KPN created the ability to transform into an end-to-end ICT service provider in the business market. There is a blurring line between telecommunications and IT. The pervasiveness of Internet makes managed services more than managing basic connections and devices. It may also strengthen the revenue stream of KPN. But the dynamics in the development of IT have changed.
Not so long ago it was only when you joined a company you learned how to use software and computers. But now the situation is reversed. The new workers today in most cases have more access to technology at home then in the office.
We are facing the first time ever consumer-led IT revolution in history. Consumer trends are forcing us all to change and this change is inevitable. It is not a strategy or something to be “adopted.” Consumerization can be embraced and it must be dealt with, but it cannot be stopped. It effects every organization.
But there is more. Every employee and customer today is like a teenager – they want everything instant at all times, on any device and have it easy to use with no training required. Everybody expects to move seamless from one device to the next – from a PC to smartphone or tablet. And that puts a stress on the development and the delivery of services and on customer satisfaction.
In the TV market KPN understood this well. It was successful in differentiating services in TV. It presented “Live TV-pausing” and “Start-over” in early 2014, and “TV Everywhere” and the integration of OTT-services with Netflix in 2015. These brought continued high IPTV net adds and a growing market share in the TV-market.
The thing is that a smartphone or a tablet is not just a phone or a small laptop, but a whole lot more that adds to productivity or ease of work. “Mobile is eating the World” is Benedict Evans’ powerful statement.
In an extensive research IDG says some 83% of organizations are planning to invest in mobile technology in the next 12 months. Tablets and employee training (49% each) leading the priority list. Buying smartphones (43%), network consulting and integration services (34%) and application development and improved user experience (33%) being the top four investment priorities.
IDG notes 82% of organizations are making changes to their policies and IT infrastructure to support the proliferation of personal devices. These changes include creating policies on how corporate data can be shared, investing in mobile device management solutions, and purchasing secure file sharing services.
Organizations have a long priority list for selecting mobile technology solutions. Security and reliability of the software or network are the top requirements, closely followed by ease of use and integration into existing infrastructure.
Mobile computing management
That opens the line of differentiating through innovative services. This means monitoring and managing the whole environment of mobile computing management. This may include Office 365, the internet, the router, the firewall, switches and OTT-services. KPN is able to track and manage every single point of contact right up to the mobile device that the end user is holding to access their email, the cloud, the Internet and various applications. It’s all about seamless mobile computing with zero distinction between these devices.
It took a while before IT-departments embraced the benefits of the consumerization. But for traditionalists in IT it’s an uphill fight. IDG reported 67% of the participating companies gaining positive Return on Investment (ROI) from their investments in Bring Your Own Device technologies and solutions. The greatest contributors to positive ROI include increased user productivity (50%), increased employee morale (39%), external customer satisfaction (18%), and revenue growth (16%).
High margin value added managed network services – like Virtual Private Networks, Wide Area Networks – shift to Internet with cloud-based – and OTT-like services. And with a market share of 70% in fixed telephony counter-balancing this trend is a challenge.
I think “mobile computing management” is imperative to change gears in the business market. This market accounts for over a third of the revenue of KPN. The challenge for KPN is to organize the agility in its organization, leave legacy behind and to capitalize on an a key aspect of the blurring line between work and private life: the consumerization of IT.
Author: Pieter van Hoogstraten