With nine in every 10 African IT leaders listing cloud as critical to business success, governments and companies across the continent are already identifying innovative ways to leverage the technology.
By SPECIAL CORRESPONDENT | The East African
The telecoms industry in the Middle East and Africa (MEA) is expanding at an unprecedented pace, driven increasingly by the availability of mass market smartphones and tablets costing as low as $100.
Mobile data traffic and network capacity in MEA is expected to grow the fastest in the world in the next five years. Hence, data services will play an increasingly important role among operators’ revenues. According to Informa, a leading knowledge provider firm, data should account for 22 per cent of all mobile service revenues in Africa in 2016.
Leading telcos on the continent are already getting ready to transform their businesses from voice-centric to data-centric. They understand that to protect operating margins and increase data profitability, they have to expand across the value chain from volume-based to value-based data offerings.
In this context, investing in cloud services and technologies becomes imperative. This is an unexplored area for many telcos.
Experiences from mature markets, however, show that in the “data era,” competition comes not just from other telcos, but primarily from over-the-top content (OTT) and other Internet-based players such as Google, Facebook, Amazon, Skype, WhatsApp or DropBox. They are experts in customer experience, web transactions and supply chain, and are early adopters of cloud-based services.
Moreover, the latest acquisitions of Viber and WhatsApp are proof that Internet players have a growing appetite for core telcos’ voice and messaging revenues.
To protect their market position and future revenues, telcos in Africa must boost their knowledge about the cloud business and develop targeted market offerings and services based on a deep analysis of their customers’ needs, expectations and usage patterns.
From commodities to cloud ecosystems
Mobile and fixed broadband networks as well as data centres in which Middle Eastern and African telco’s have strong capabilities will play a major role in the shift to the cloud. The brand value and customer ownership puts telcos in a strong position to shift their revenue models into the digital services territory.
Initiatives such as Etisalat Digital — which includes cloud services, digital advertising and entertainment, as well as video service — are paving the way for this revolution. Etisalat is a leading telecommunications operator in the Middle East.
The cloud is the most efficient and effective way for telcos to deliver digital services.
Know your customer intimately: It’s all at your fingertips
Voice is a well understood, profitable and low-risk business. Usage patterns are predictable and market segmentation is straightforward. For years, telcos did well by offering just a few voice plans and a handful of value added services.
The data business is different. Users of broadband-enabled mobile devices gain widespread access to a huge number of online services and mobile apps. Every smart device is highly personalised to meet the needs and requirements of its owner. In the “data era,” replicating voice market strategies does not work any more.
To provide differentiating user experience through personalised cloud offerings and to create new data revenues, telcos have to first of all better understand their customers than in the “voice era.”
The wealth of customer and service usage data that telcos possess is one of their greatest assets. By applying Big Data and analytics to this data, they can gain better insight into their customers’ needs and usage patterns. This would enable the creation of cloud services that resonate with specific customer groups and micro segments.
This would require telcos to quickly understand how cloud as a new delivery and business model can be applied to address the needs of individuals, small businesses, enterprises and the public sector.
Bringing a range of innovative cloud services to the market involves partnering with the application developers and third-party service providers. Many see telcos creating cloud and digital platforms with which industries and communities can build their own solutions. Diverse markets in which players share basic commonalities such as Nigeria’s fast-growing mobile entertainment industry are particularly apt for this approach.
Partnering with cloud technology vendors and cloud service providers gives telcos access to not just high levels of technical knowledge, but more importantly, expertise in creating, marketing, and supporting cloud services.
IBM’s work with Surfline Communications, for example, involves provisioning cloud infrastructure that’s tailored to a specific business goal: Expanding mobile data services to retail and corporate customers in Ghana’s high-potential e-commerce sector.
Breaking down borders: Internal and geographic
The complexity and scale of Africa’s myriad markets requires telcos to approach the cloud as far more than just an IT play. To create and monetise the mobile data services enabled by the cloud, telcos must bring together all departments of the business, from finance to marketing to customer service.
Replicating and adapting processes from global IT service providers, and learning from successes and failures in overseas markets will help them ensure their cloud offerings are first and foremost viable business products — ones that can shift and scale up with customer needs at every turn.
Unifying the telco around the cloud will result in business plans that avoid many of the early pitfalls in African and Middle Eastern deployments, including a lack of clear key performance indicators (KPIs) and revenue targets for cloud adoption.
It will also help telcos assess impediments to cloud services, like data sovereignty, and their actual impact on proposed offerings more objectively. For example, the issues surrounding cross-border data transfers are sometimes codified in legislature.
Advanced cyber-security measures can be applied to data centres, networks, and even end users mitigating these fears of non-compliance. When coupled with robust policies and breach monitoring, data sovereignty need not limit the potential of cloud services to reach untapped and geographically diverse markets.
And if a telco can identify data sovereignty as a perception risk rather than a legislative one, it can seek to devise more apt responses such as ramping up customer education and awareness marketing.
Building foundation for future digital economy
The region’s leaders and decision-makers should look towards the cloud as a platform of the future, using infrastructure as a foundation for creating a digital economy rather than a core offering in itself. These new cloud-based services must be informed by a deep understanding of customer behaviours and needs enabled by analytics technology.
Partnering with cloud technology leaders and cloud service providers such as IBM and adopting their best-practices will put African telcos in good stead to move their revenue models from products to services, and to create attractive cloud-based digital service offerings that will allow them to compete effectively with global Internet players.
Doing so is essential for maintaining profit margins, creating new revenues and adding a powerful competitive edge in an increasingly saturated telecommunications market in Africa.