Communications Service Providers (CSPs) are missing out on a huge amount of potential 5G revenue, as businesses look for more than simple communications solutions, and expect CSPS to be able to engage with partner ecosystems to solve enterprises’ business problems.
These are the key findings in a new report from BearingPoint//Beyond, in collaboration with Omdia (previously Ovum). And the report outlines how CSPs must change strategies in order to drive revenues from their 5G investments.
“Only one in five early enterprise 5G deals are CSP-led, proving that the way CSPs want to sell is at odds with the way in which businesses want to buy,” said Angus Ward, CEO, BearingPoint//Beyond. “What’s deeply concerning is that some of these early deals, such as the ones we see in automotive, cut out CSPs entirely – even connectivity is being provided by other suppliers. Businesses want to buy complete solutions that fit their needs and help them solve business problems, rather than individual technology assets. This is a multi-billion-dollar opportunity that CSPs need to address fast and requires CSPs to collaborate with enterprises and SMBs to better understand their reality.”
Change from ‘5G-first’ to ‘business-first’
The report shows that CSPs and enterprises are aligned on the importance of 5G, but it reveals huge shortcomings, and a ‘worrying trend’ for CSP 5G revenues based on their roles in early 5G enterprise projects. According to the report, 5G strategies focused only on selling communications solutions are failing, and only CSPs engaging partner ecosystems to solve enterprises’ business problems will be able to make up lost ground.
“CSPs will only realize value from 5G if they can identify, partner, codevelop, implement, and run a proposition with application-specific and industry-specific specialists,” said Evan Kirchheimer, Research Vice President, Service Provider & Communications, Omdia. “CSPs that can orchestrate such a complex web of relationships will be capable of capturing a greater share of the market and will not be relegated to being one of many connectivity providers competing solely on price.”
The report emphasizes the need for CSPs to change their posture from ‘5G-first’ to ‘business-first’, focusing on applications and vertical-specific solutions. It finds that enterprises are already making the connection between 5G and applications.
Earlier this year, BearingPoint//Beyond research showed that CSPs expect a 15% increase in current revenues from B2B 5G services. However, Omdia’s Enterprise 5G Innovation Tracker reveals that they’re already being cut out of strategic engagement and solution building with enterprise partners. In 40% of enterprise 5G deals signed CSPs were the secondary supplier. 32% were led by enterprises. Only 21% were led by CSPs.
Omdia’s Enterprise 5G Innovation Tracker reveals that manufacturing, transport, utilities and energy/mining sectors account for nearly 80% of early enterprise 5G deals. As an enabler of business solutions, 5G’s value will be realized through industry specific processes, supply chains, partnerships, and applications. The report points to examples of how Deutsche Telekom, Verizon and Telefónica are starting to form industry partnerships to access these verticals.
“The promise of enterprise 5G is there for the taking, but CSPs must realize they will need to master ecosystem orchestration, including joint go-to-market with vendors and cocreation with customers,” says Dario Talmesio, Principal Analyst & Practice Leader, CSPs Europe, Omdia.
To download a free copy of ‘Industries and enterprises are ready to reap the benefits of 5G’, please visit: https://www.bearingpointbeyond.com/en/industries/5g/5g-enterprise/