Consumers everywhere are waiting for the communications, high-tech, and media and entertainment industries to make good on three promises: a seamless experience, a common platform and superior service.
By Andy Zimmerman and Mattias Lewrén
Outlook Journal, January 2009
Accenture
For companies competing for this business, customer-centric strategies, offerings and services are now essential to achieving high performance in a truly networked world.
The networked, digital world created by the Internet and advanced mobile communications is reshaping industries, global economies and the way people work and live. Indeed, technology change occurs so rapidly today and in such transformative ways that the average person might be forgiven a bit of bewilderment.
That being said, new Accenture research strongly suggests that a significant percentage of consumers in both the developed and developing worlds are anything but bewildered. Instead, they are embracing the devices and networking technologies available today and are actually asking companies to take it all to the next level: Make everything work together—simply and powerfully—so that the vision of a fully networked world becomes a reality.
At the heart of this networked world, however, is a fundamental paradox. On the one hand, it’s an environment where devices and gadgets are proliferating at an unprecedented pace—faster, in fact, than the global birthrate. Each second around the world, four people are born . . . and 36 mobile devices are sold.
On the other hand—the other side of the paradox—from a business standpoint, it’s not really the devices that matter. “In terms of our device business, we realize that the phone itself is no longer the main value proposition to the consumer,” acknowledges one senior executive for a major mobile handset manufacturer. “There has to be some other value—some larger picture of which the device itself is just a part.”
How to get this new value proposition right, and then execute the best strategy to deliver that value, is the all-consuming question today for the various industry players vying for dominance in a communications, high-tech and media world that has come to be described by the word “convergence.” Traditional boundaries between industry sectors are blurring. Internet search and software companies are creating wireless protocols and mobile phones. Wireless providers are going into the media and entertainment business. Entertainment companies look increasingly like service providers.
Our consumer-based research shows that the biggest technology users among consumers around the globe—early adopters that we term “tech-forwards”—are beginning to understand the rich possibilities of a networked world And they have a pretty good idea of what they want companies to provide in terms of service, usability, capabilities and support. But our research also suggests that it’s still very much a horse race when it comes to who will ultimately prevail in this business.
However, based on both our research and client experience, we have identified some of the distinctive capabilities of the companies in the communications, high-tech, and media and entertainment industries that will achieve and sustain high performance in a networked digital world. The winners will:
Provide a common platform enabling interoperability, centralized controls and a simplified user experience. Simply put, the mantra of the digital world must be, “Make everything work together.”
Design compelling services for consumers based not on the technologies, communications networks, or functions and features of a device but on a customer-centric viewpoint geared to people’s real needs and goals.
Deliver superior customer support that cuts across vendors and devices, helping people maximize the value they get from the networked world.
Trivergence
Arguably, the most important current communications and technology development today is the growing capability of networking technologies to connect people not only with one another and with the universe of information but also increasingly with things—devices, appliances, cars and homes. Accenture calls this “trivergence”: the coordination of three components—devices, data and controls—across a ubiquitous network.
This opens up the intriguing possibility of enabling people to manage and optimize more aspects of their lives, unfettered by time and location. But with that capability comes the challenge of managing the flow of information and the interconnectivity of all these networked devices—potentially a trillion of them in the next 15 to 20 years, according to David Clark, an MIT senior research scientist and one of the original architects of the Internet.
Recent comprehensive research conducted by Accenture’s communications, media and entertainment, and high tech industry groups has focused on this development from multiple perspectives.
In an initial phase of research, we spoke with executives of leading carriers, software providers and media/content companies. In the most recent phase, we wanted to see how the trivergent world looks from the vantage point of tech-forward consumers, early adopters who are already heavy users of digital devices, wireless communications and Internet services.
This research finds that tech-forward consumers have quickly grasped the importance of major technology trends, adopted new devices and services into their daily lives, and are waiting, not always patiently, for communications and technology companies to refine their offerings, resolve the network and platform issues and get the customer experience part of the equation right.
Savvy consumers
The biggest message emerging from our research into trivergence, customer-centricity and networked devices is this: Tech-forward consumers get it, and they are a preview of things to come. Only 3 percent of those we spoke with didn’t understand the concept and capabilities of this networked, trivergent world. And 87 percent either agree or strongly agree with the prediction that most digital devices for a home, car or individual will ultimately feature a network connection.
Tech-forward consumers also understand the value of this networked world. Almost 90 percent agree that trivergent capabilities will save them time. More than 80 percent affirm that trivergence will create more business opportunities for them. High percentages also believe that, in the new networked world, their lives will be fuller and more enjoyable, and that they will be closer to their friends and family. Seventy-eight percent feel that trivergence can help them advance their careers.
The consumers in our study are also prepared to dream big about how a networked, digital world might change the way they work and live. For example, 93 percent can see trivergence enabling better home management, including more energy-efficient controls for things like lighting, heating and cooling. About 80 percent can envision network connectivity for their cars, as well as their refrigerators, ovens, dishwashers and even small appliances such as toasters and coffeemakers.
This is a world where, for example, your mobile device will be alerted if your home is broken into. Or where you can access your music or video library from a hotel room and push the content to a device of your choosing. Or where your car will have its own website, helping you monitor its location, gas gauge and service records.
An important finding for all companies planning or currently offering services in the developing world is that consumers in emerging economies appear to understand at a deeper, and perhaps more personal, level how the networked world can positively influence their lives. Significantly higher percentages of consumers in Brazil, India and China believe that the trend toward networked devices will help them save time, create new business opportunities and advance their careers.
These consumers are also more forward thinking than those in developed nations about networked-device innovations. They are more likely, for example, to express strong interest in networked solutions for digital home management, health care, entertainment and communications.
What does this all mean? In a multi-polar world, economic power is spread much more widely, while economic value flows in multiple directions. New consumers who embrace technology innovations are emerging everywhere, and they are willing to spend to acquire those innovations. These tech-forwards constitute a vanguard of consumers for companies interested in expanding their business into the developing world. They are forerunners of a broader market.
A common platformConsumers are already juggling multiple devices—phones, computers, digital cameras, music players and so forth. Most people expect the number of networked devices in the world to grow dramatically. Given the explosion in the number of these devices, interoperability and simplicity are keys to business success in these industries.
From the consumer perspective, one way to help simplify the use of rapidly multiplying devices and services is to give consumers the controls for personalizing their user experiences. Apple iTunes is an example of this technology and design strategy. The iTunes software manages a set of user devices and Web-resident data through controls that we call a “soft panel.”
The soft panel is what consumers see on their side of the network. On the industry side is the platform, which is what allows devices to attach to the network and interact with one another. It is also the means for managing traffic and content, and orchestrating user experiences.
The technical details of how such a common platform works are too complex for even the most knowledgeable consumers to understand. The tech-forwards in our study nevertheless have some preliminary opinions about how this platform should work. Almost half indicated a preference for an integrated, single website or soft panel to control all their devices and services.
The need to provide that kind of seamless delivery across platforms was also identified in an earlier phase of this Accenture study, which was based on in-depth, hour-long telephone interviews with executives representing carriers, software providers and media/content companies.
That research found that the communications and high-tech industries in general need interfacing technologies to work as transparently as possible from the standpoint of consumers and business customers.¹ The future world depicted by several of the executives we spoke with is one where consumers will expect to maintain an uninterrupted connection as they pick up the phone from their desk, walk out of their building and get into their car. Similarly, consumers will want access to information or portals wherever they are, free of the constraints of any one of the potentially trillion desktop computers, televisions, phones and other networked devices.
Too few companies have developed a set of well-considered responses to the implications inherent in helping consumers manage a world of a trillion networked devices. Concerns seem to be more tactically focused at this stage: Will more bandwidth be required? Will more databases be needed?
There is some recognition that greater network intelligence will be required for routing, billing and utilization of bandwidth. Carriers are already working to meet this challenge—as are content delivery networks, Internet service providers and device makers.
Strategic shift
Accenture’s discussions with industry executives underscore the critical importance of moving the communications and high-tech industries away from a device-centric or technology-centric approach to products and services and adopting, instead, a customer-centric development strategy.
As Peter Bithos of Virgin Mobile Australia puts it, “Removing frustration from the user, especially at the application front end, is essential for achieving success in the delivery of converged services. Currently everything is too complicated to actually put into practice.” A senior executive with a major US consumer electronics company is even blunter: “Most companies are now forcing customers to be small-scale systems integrators, and most consumers are either turned off or overwhelmed by this.”
This executive’s concern is well founded. Consumers who are indeed overwhelmed by complex products or devices that don’t clearly meet their existing needs or awaken a new one are returning the hardware and canceling services.
The problem of usability is even more acute in the enterprise systems realm. For knowledgeable, tech-forward consumers, most of whom are young, user-friendliness is a given. “Young consumers are used to the drag-and-drop simplicity of online applications like Facebook,” cautions James Bailey of BT Wholesale. “Compare that with a clunky expenses system in a corporate environment. At some point the Facebook generation grows up and becomes the strategic buyers, the future leaders of enterprise. So companies have to be creating products and services that meet or exceed the expectations of the Web 2.0 generation.”
The challenge of customer-centricity, however, is about much more than usability. It’s about the customer’s entire experience with a company and its products and services. Our research reveals the challenge of delivering seamlessly across at least six stages of the end-to-end customer experience—starting with acquisition and then proceeding through purchase, operations, inquiries, service and communications.
A company can excel in one or two of these dimensions—in marketing, for example, or the purchase experience—but then run aground in others—usability, for example, or support and service. Companies need to strategize across the entire spectrum of the customer experience and then spend wisely.
A superior experienceThe fact that no clear winners have emerged in the race to become the dominant platform provider of trivergent devices and services was confirmed by our consumer study. When we asked survey participants what types of companies they would trust to ensure that everything in the trivergent ecosystem will work together smoothly (multiple answers were permitted), 58 percent cited Internet or software companies, while 48 percent named telecommunications, cable, satellite or media companies. Consumer electronics companies were cited by 46 percent of those surveyed. Retailers trailed the pack at 19 percent.
Even if companies capable of dominating the networked world have yet to emerge, the capabilities needed to achieve that success are clearer: providing a superior user experience and excellent customer support.
When respondents were asked what they are looking for in selecting a company that “makes everything work together,” customer support was the top answer, at 85 percent. High security and privacy standards was named by 80 percent of consumers. Other capabilities that ranked high were support for commercial standards, a trusted brand and a strong technology reputation.
Different kinds of companies need to step up in different ways to enable the trivergent devices that will increasingly dominate consumer technology. Usability enhancements are important, and plug-and-play features that would make networked devices easier to set up and manage need to improve. Companies must also be willing to offer the in-home set-up and maintenance services that would give customers the confidence they need to create their own home networks and connect their trivergent devices.
What are the key implications and imperatives gleaned from these Accenture research studies?
1. Collaborate to win
Successful players in the networked world will be those that can offer a seamless customer experience that integrates six essential business roles: service integrator, content provider, data banker, control enabler, device maker and network provider.
At this point in the evolution of the industry, it is unrealistic to expect a single company to play all these roles. Accordingly, we believe that collaborative partnerships will be essential. As one high-tech company executive told us, “We don’t want to have the customer set up an account with us so that we collect the money and then pay part of it back to the carrier. That is a lot more arduous than using the billing relationship that the carrier already has established. Anytime a company already has a good relationship with its customers, we try to leverage that.”
One challenge that companies face, however—especially many traditional industry leaders—is that they are poorly prepared for a competitive environment where the ability to seamlessly collaborate with other companies, even competitors, is a strategic priority. Whether in terms of organization, processes, policies or systems, companies are not set up to quickly form and dissolve the relationships needed to get new services to market quickly. “Collaboration agility” will become increasingly critical in the industry over the coming years.
Collaboration will also be essential to creating the capabilities needed to succeed in a convergent world. The marketplace has recently witnessed a flurry of global mergers and acquisitions focused on acquiring the capabilities companies need to fulfill new roles. Many of these transactions, however, have been far from successful. Our research indicates that in many cases, these companies probably would have been better off collaborating to create these capabilities rather than acquiring them through traditional approaches.
2. Develop a common platform for an integrated central control or soft panel.
For some time, companies have pursued customer portals—either online or mobile—as a means to grab and hold customers. With the proliferation of networked offerings, the company that provides a service enabling a consumer to control multiple devices and services across vendors from a single, simple, comprehensive soft panel will have attained the high ground in the never-ending battle for the consumer wallet.
Beyond the soft panel, companies must understand and map the customer experience they want to control or enable. As noted earlier, companies must plot their customer strategy across the entire spectrum of the customer experience—from purchase to use to inquiries to repairs. Customers expect each of those touchpoints to be a simple, consistent and flexible experience. Connecting a series of positive interactions defines the seamless, end-to-end customer experience.
3. Dramatically improve speed to market.
Our research suggests that trivergence and the increased focus on customer-centricity will compel companies to offer more services targeted to more narrowly defined customer segments. Therefore, improving speed to market, while simultaneously driving down product development costs, will be critical. Companies may need to create 100 new services or more each month, and the executives we spoke with admitted they simply do not have that capability right now.
4. Provide superior customer service and support.
The ability to deliver effective customer service and support is absolutely essential to establishing a winning position as the controls provider in the networked world. And according to our research, the playing field is wide open when it comes to achieving dominance in this area, at least from a consumer perspective. When we asked the consumers in our study to rate specific companies that they felt could serve as trusted providers, they listed a variety of well-known global brands—ISPs, software companies and device makers—as well as carriers in the countries studied, which have national but rarely global brands.
One lesson was clear: Carriers especially need to act swiftly, since they generally appeared from the middle to the bottom of the lists of companies mentioned.
Each type of company has both strengths and weaknesses. Technology companies such as Microsoft, Google and Nokia have strong global brands, but customer support has not been, to date, one of their core capabilities. Outsourcing such a capability is certainly one strategy these companies should consider. Telephone companies have support resources, but lack global presence. Retailers such as Best Buy and Circuit City, which have done the most work to date in the area of premium customer service and support, do not come readily to consumers’ minds as providers of unified network services. These companies could stand to become more aggressive in positioning themselves as major players in the networked world.
Accenture believes that today’s clear trend toward networked devices is a revolutionary development—even in a technology environment regularly marked by significant advancements. If it is true that the future will bring with it a ubiquitous network connecting a trillion devices, then it becomes all the more important for companies to focus their efforts on ensuring that devices and services are interoperable and can be managed effectively.
A growing number of consumers in both developed and developing countries already know they’re living in a networked, digital world and, as a result, they have very high expectations of the companies in these allied industries. If these companies want to sustain high performance in the long term, they must move quickly to meet those expectations.
2/11/2009
A VIEWPOINT ON: TIME - PRIORITIES - MULTI TASKING
TIME vs. PRIORITIES
"I didn't have enough time".
A feeble rationale.
We all have the same time - 168 hours each 7 day week.
The personal variable is our set of priorities.
'I didn't have enough time' is code for "It was not an important priority for me."
Our execution effectiveness is a reflection of our ability, willingness and discipline to act upon our values and reality based priorities. It is not a reflection of time.
MULTI - TASKING
"I am a multi - tasker" is the proud comment we hear.
There is no such thing.
What is true is that some individuals are superb prioritizers and are exceptional at rapidly sequencing a number of tasks within a given time period. The sequence is rapid but remains a sequence - one task at a time.
2/01/2009
UNDERSTANDING EXECUTION
To understand execution three things must be kept in mind:
- Execution is a discipline and integral to strategy.
- Execution is the major job of the business leader.
- Execution must be a core element of an organization's culture.
Execution is a systematic process of rigorous;y discussing hows and whats, questioning, tenaciously followsing through and ensuring accountability. It includes making assumptions about the business environment, assessing the organization's capabilities, linking strategy to operations and the people who are going to implement the strategy, synchronizing those people and their various disciplines and linking rewards to outcomes. It also includes mechanisms for changing assumptions as the environment changes and upgrading the company's capabilities to meet the challenges of an ambitious strategy.
In its most fundamental sense execution is a systematic way of exposing reality and acting on it. Most companies don't face reality very well.
1/31/2009
EXECUTION: A DISCIPLINE AND A SYSTEM
"People think of execution as the tactical side of business, something leaders delegate while they focus on the perceived "bigger" issues. This idea is completely wrong. Execution is not just tactics - it is a discipline and a system. It has to be built into a company's strategy, its goals and its culture. And the leader of the organization must be deeply engaged in it. He cannot delegate its substance. Many business leaders spend vast amounts of time learning and promulgating the latest management techniques. But their failure to understand and practice execution negates the value of almost all they learn and preach. Such leaders are building houses without foundations."
Dr. Ram Charan: Corporate Advisor
Dr. Ram Charan: Corporate Advisor
EXECUTION: A DEFINITION
Robust results originate from "the consistent practice of the discipline of execution: understanding how to link together people, strategy and operations, the three core processs of every business."
Larry Bossidy CEO AlliedSignal
Larry Bossidy CEO AlliedSignal
1/23/2009
THE 200,000,000 GLOBAL EXPATS CASE FOR THE BANKS
Around the globe, 200 million people now live and work outside their homeland. From maids to middle managers to multi-millionaire investorimmigrants, they all need financial services that cater to their footing in two worlds. It's a new era of global personal finance - with Canada, a nation of immigrants, front and centre.
First-time expats an executive with a big consumer goods company, say - can suddenly find they have
more disposable income than they're used to. That makes them good customers. The banks help out with cash and wealth-management services, and get their hands on more deposits and healthy fees
ON A SUNDAY MORNING in late August, the shade of the towering headquarters of the Hong Kong and Shanghai Banking Corp. Ltd. shelters dozens of women from the Philippines, Indonesia and China's poor Western provinces from the sweltering heat that hangs in Hong Kong through the summer.
A clatter of voices fills the sticky air with Tagalog, Malay and Putonghua. This city is still the hub for commerce across Asia a decade after China regained sovereignty from the British, and Sunday is a day off for tens of thousands of foreign maids and nannies that service Hong Kong's wealthy expatriate bankers and Cantonese merchants. On patches of roadside grass and shaded underpasses all over the city the women gather, gossiping, dancing and picnicking on food that tastes of home.
Air-conditioned malls also become clogged with the almost exclusively female foreign workers. In Worldwide Plaza - one of central Hong Kong's few downscale malls - the women crowd narrow corridors and jostle in line at the Western Union to send money to their families, before strolling for a few minutes to the 47-storey home of HSBC - a prized spot because it pumps out cold air to a large open plaza on Queens Road Central.
It's fitting that so many choose to rest here given the central role of banks like HSBC and financial services providers like Western Union in oiling the wheels of globalization, and particularly the ever-rising tide of workers - from domestic help to middle management employees to entrepreneurs to highpowered executives - that whiz around the world for work. Today, there are about 200 million people working and living outside their home country, a figure that's rising steadily. They comprise 3 % of the world's population. Together, in one place, they would be the world's fifth most populous country. And the sums of money they earn, control and routinely transfer is staggering. Remittances
- money sent home by family members via Western Union and myriad formal and informal operations - was estimated at more than $300 billion in 2007 alone.
Banking industry experts divide the migrating multitudes into three general categories: (1) temporary labourers; (2) immigrants, split into two subgroups - a wealthy elite and a moderately affluent majority; and (3) middle- and upper-income executives on foreign postings. In human terms: cleaners in Hong Kong that wire cash home to waiting families; the super-rich who roam the streets here in high-end European sports cars, citizens of the World who have private bankers that charge high fees to take care of their every whim; and bankers fleeing the tumult of Wall Street and the City of London in search of better times abroad.
Though their needs are vastly different, all 200 million migrants have key things in common: mobility, a home in another country, and a need to move their money. In less-tech-obsessed days, people commonly carried cash-stuffed envelopes in their pockets anytime they went home. Today, technology and the banking industry's recognition of this massive market means that each and every migrant is a potential customer of banks and other service providers. As a country of immigrants, Canada is a prime location. And our banks are stepping up for a share. At the same time, hard data remains scarce. Fortunately, there are plenty of people to tell us the story.
IN BAGUIO CITY, a seven-hour drive into the mountains from Manila in the Philippines, the phone rings at Marcelo and Patricia Gumolda's partially completed cemen~ house. Their 31-year-old daughter, Irene, is calling from Niagara-on-the-Lake, Onto
Marcelo and Patricia receive regular remittances from their three daughters in Canada: Irene earns her money working as a nanny; Nelda, age 36, works at a printing press in St. Catharines;
Grace, 27, is in Niagara Falls where she is a nanny like Irene. The money the three send - approximately $500 a month - pays most of the expenses for their parents, their two sisters and one nephew living in the house on a steep hillside in a poor neighbourhood. "We depend on the money," says Marcelo. "I have a small pension, but it's only enough for food. We use the money from our daughters for our household, and to payfor school for the children.
Their story is a familiar one to almost every family in the Philippines. By some estimates there are 11 million Filipinos living overseas - about 11 % of the population. They sent home US$13 billion in 2006, a figure that represents 13.5% of the national gross domestic product.
In Baguio, Marcelo's money is wired to the Western Union on busy Session Road. It is one of 320,000 Western Union locations that's more than the total number of outlets owned by McDonald's, Burger King, Starbucks and Wal-Mart combined, the company boasts. Irene's money, about 3,000 pesos or $68, arrives within 15 minutes of her sending it from Canada.
India, China and Mexico all receive more remittances than the Philippines. Indeed, the World Bank says remittances can be as high as a third of GDP in some countries. In 22 countries, remittances were equal to more than 10% of Gross Domestic Product (GDP) in 2006 and in six countries they were equal to more than a fifth of GDP, according to figures from the Washington, D.C.-based
Migration Policy Institute.
Globally, this industry translates into hefty revenue for the wire transfer companies that charge an average fee of about 12.5% of the cash being remitted. Around the world, remittances to developing countries hit US$2 5 0 billion in 2007, according to the World Bank. That means global annual revenue (for all carriers) of more than $30 billion from cash sent home to some of the world's poorest nations. Little wonder that Scotiabank set up links in the past year with Western Union and HDFC Bank of India. "This partnership provides Scotiabank customers across Canada with the ability to send money to friends and family in 220 countries," says Rania Llewellyn, vice-president of multicultural banking at Scotiabank. "For many people, this service represents an important connection with immediate and extended family."
IF REMITTANCES lie at one pole of the global banking trend, then the opposite extreme is the world of the private bankers.
Jessica Shi wears a stylish Bay Street suit, as she talks about her career over tea in a lofty meeting room in First Canadian Place in Toronto. Shi is a chartered financial analyst and a private banker to some of Canada's wealthiest immigrants. Originally from Shanghai. hai, Shi grew up in Guilin and went to the People's University of Beijing, then on to her first job, in risk management for Industrial and Commercial Bank of China, the country's biggest commercial lender. After moving to Canada in 2001 and completing her MBA, Shi got married and started working for BMO in Toronto, where she was recruited into the private banking group - an exclusive banking niche that involves a highly personal concierge-type service for the rich and super-rich, clients that often have US$2 million or more in liquid assets.
While the world leaders in this market have traditionally been UBS AG of Switzerland, Citigroup and Merrill Lynch - each with an estimated US$l trillion in assets under management for private clients - the whole industry has seen an increase
in demand for this type of service that often appeals to internationally mobile clients like successful entrepreneurs, c-suite executives, celebrities and even sports stars. Verifiable statistics on this group are scant, but according to a recent report by Merrill Lynch and the Capgemini con-
sulting outfit, in the world last year there were 10.1 million "high-net-worth" individuals - people with at least US$l million in financial assets excluding collectibles, consum-
abies and primary residences. That's up substantially from 8.8 million in 2005.
"They're very needy for sure," says Shi of the 40% or so of her clients that are new Chinese immigrants, typically factory owners or real estate developers or mining company executives and their families. "They call me day and night, asking where to live and eat, how to get a doctor, a driving license, a lawyer or an accountant. I've had to learn where all the good public and private schools are. I've had to learn to be a real estate agent, and learn about tax laws and how my clients' businesses might be taxed in China," says Shi. Some clients even want to be put in touch with a Feng Shui consultant or fortune teller.
These new immigrants often want different banking products than other customers, and are more likely to ask for a safety deposit box or for advice on buying vacation property overseas, or for low-cost, safe methods of shuffling cash around the world. It is lucrative, high-margin work for the banks, that also find tapping this market can lead to relationships that bring in more work for their investment banking and capital markets businesses, too.
THE SUPER-RICH are not typical among immigrants. Not surprisingly, then, bankers around the world nowhere more so than in Canada - spend even more time targeting the much bigger pool of immigrants of modest means. Royal Bank of Canada has calculated Canada's new-immigrant banking market is worth about $3 billion a year. And it's growing fast: By some estimates, there are 300,000 new arrivals each year in Canada.
It's no wonder banks covet them. While it's notoriously difficult to convince established retail customers to change their bank - because of the perception it's a hassle to re-new direct deposits, cheques and so on - a new immigrant is, almost by definition, in the market by necessity.
The banks respond with targeted marketing - ads in multiple languages or on ethnically focused cable television networks touting new products, services and international treaties with overseas banks, such as Scotiabank's links with Western Union and HDFC Bank ofIndia. The bank also sponsors pre-immigration workshops in China, and permits immigrants to open Canadian bank accounts before moving, says Scotiabank's Llewellyn, herself a Kuwaitiborn, Egyptian immigrant to Canada.
Other Canadian banks have similar global hook-ups and preimmigration programs, too. After moving, new Canadians will find ATMs in a multitude of languages as well as polyglot tellers. This summer, Royal Bank of Canada announced its customers can call a helpline manned by agents that can translate their queries into 150 different languages, including Spanish, Russian, Vietnamese and Korean. Meanwhile, the banks deliberately target this migrating workforce with a slew of sponsoring and marketing efforts aimed at different national and ethnic groups. Big banks are now the main sponsors in Canada for cricket and soccer, as well as a host of internationally themed festivals and outdoor events.
BACK IN HONG KONG, high above the nannies and maids, HSBC, the world's most successful global retail bank, plans to grow its share of yet another piece of the shifting global workforce.
The Hong Kong international banking centre (lBe) is one of 40 the bank has around the planet. Bankers from India, China, Hong Kong, the United Kingdom, Australia and elsewhere sit in an open plan room with lowwalled cubicles. There are all colours of national flags on many desks. There are dozens of languages spoken in these IBC's where staff answer questions on local banking regulations from colleagues all over the world who have customers moving from one country to another.
This office is part of HSBC's efforts to grab an ever-bigger slice of the global "mass affluent" market - the lawyers, accountants, sales staff and other middlemanagement types that travel the world for work, often in the employ of multinational companies, and have an annual family income of up to US$lOO,OOO to deposit.
HSBC, the self-styled "world's local bank," has grown a global retail business by following the international growth of its commercial clients, says Nick INinsor, head of personal finance for HSBC in the Asia-Pacific region. "Because we were banking the companies, we tended to bank the individuals who worked for those companies to."
A slim, amiable middle-aged Brit, INinsor has been with the bank for 25 years in the United Arab Emirates, Qatar, Japan, Hong Kong, Brunei, India, Singapore and New York as well as the United Kingdom. He has bank accounts in five countries.
\Vhile there are several banks with global retail banking franchises - Citibank and Standard Chartered, for instance, or Scotiabank in Latin America and the Caribbean - HSBC is without a doubt the market leader and is working hard to cement that position. \Vhen HSBC talks about global retail banking services, it's worth listening.
INinsor explains that first-time expatriates - a marketing executive for a big consumer goods company that has just been transferred from Atlanta to Shanghai, for instance - can suddenly find they have more disposable income, and that makes them good customers. They may have a house to rent, which will generate more income, or they may find tax savings that free up extra cash. The bank can help out with cash and wealth-management services, and get its hands on more deposits as well as some healthy fees.
Around the world, there are an estimated 200 million people in the "mass affluent" category, according to Datamonitor - a figure that's increased 34% since 2005. Not every one of them is on the move, but a sizeable portion are. Last year, HSBC's chief executive Mike Geoghan set an ambitious target - to triple the number of HSBC's global premier accounts clients by 2012. Considering that the bank had about two million such clients in 2007, that translates into a goal of a 3 % share of the global mass-affluent market.
Three percent might not sound like a lot. But, as INinsor says, banks in Canada and elsewhere would be thrilled with another six million wealthy clients - wherever they happen to live.
Source: FP October 2008
First-time expats an executive with a big consumer goods company, say - can suddenly find they have
more disposable income than they're used to. That makes them good customers. The banks help out with cash and wealth-management services, and get their hands on more deposits and healthy fees
ON A SUNDAY MORNING in late August, the shade of the towering headquarters of the Hong Kong and Shanghai Banking Corp. Ltd. shelters dozens of women from the Philippines, Indonesia and China's poor Western provinces from the sweltering heat that hangs in Hong Kong through the summer.
A clatter of voices fills the sticky air with Tagalog, Malay and Putonghua. This city is still the hub for commerce across Asia a decade after China regained sovereignty from the British, and Sunday is a day off for tens of thousands of foreign maids and nannies that service Hong Kong's wealthy expatriate bankers and Cantonese merchants. On patches of roadside grass and shaded underpasses all over the city the women gather, gossiping, dancing and picnicking on food that tastes of home.
Air-conditioned malls also become clogged with the almost exclusively female foreign workers. In Worldwide Plaza - one of central Hong Kong's few downscale malls - the women crowd narrow corridors and jostle in line at the Western Union to send money to their families, before strolling for a few minutes to the 47-storey home of HSBC - a prized spot because it pumps out cold air to a large open plaza on Queens Road Central.
It's fitting that so many choose to rest here given the central role of banks like HSBC and financial services providers like Western Union in oiling the wheels of globalization, and particularly the ever-rising tide of workers - from domestic help to middle management employees to entrepreneurs to highpowered executives - that whiz around the world for work. Today, there are about 200 million people working and living outside their home country, a figure that's rising steadily. They comprise 3 % of the world's population. Together, in one place, they would be the world's fifth most populous country. And the sums of money they earn, control and routinely transfer is staggering. Remittances
- money sent home by family members via Western Union and myriad formal and informal operations - was estimated at more than $300 billion in 2007 alone.
Banking industry experts divide the migrating multitudes into three general categories: (1) temporary labourers; (2) immigrants, split into two subgroups - a wealthy elite and a moderately affluent majority; and (3) middle- and upper-income executives on foreign postings. In human terms: cleaners in Hong Kong that wire cash home to waiting families; the super-rich who roam the streets here in high-end European sports cars, citizens of the World who have private bankers that charge high fees to take care of their every whim; and bankers fleeing the tumult of Wall Street and the City of London in search of better times abroad.
Though their needs are vastly different, all 200 million migrants have key things in common: mobility, a home in another country, and a need to move their money. In less-tech-obsessed days, people commonly carried cash-stuffed envelopes in their pockets anytime they went home. Today, technology and the banking industry's recognition of this massive market means that each and every migrant is a potential customer of banks and other service providers. As a country of immigrants, Canada is a prime location. And our banks are stepping up for a share. At the same time, hard data remains scarce. Fortunately, there are plenty of people to tell us the story.
IN BAGUIO CITY, a seven-hour drive into the mountains from Manila in the Philippines, the phone rings at Marcelo and Patricia Gumolda's partially completed cemen~ house. Their 31-year-old daughter, Irene, is calling from Niagara-on-the-Lake, Onto
Marcelo and Patricia receive regular remittances from their three daughters in Canada: Irene earns her money working as a nanny; Nelda, age 36, works at a printing press in St. Catharines;
Grace, 27, is in Niagara Falls where she is a nanny like Irene. The money the three send - approximately $500 a month - pays most of the expenses for their parents, their two sisters and one nephew living in the house on a steep hillside in a poor neighbourhood. "We depend on the money," says Marcelo. "I have a small pension, but it's only enough for food. We use the money from our daughters for our household, and to payfor school for the children.
Their story is a familiar one to almost every family in the Philippines. By some estimates there are 11 million Filipinos living overseas - about 11 % of the population. They sent home US$13 billion in 2006, a figure that represents 13.5% of the national gross domestic product.
In Baguio, Marcelo's money is wired to the Western Union on busy Session Road. It is one of 320,000 Western Union locations that's more than the total number of outlets owned by McDonald's, Burger King, Starbucks and Wal-Mart combined, the company boasts. Irene's money, about 3,000 pesos or $68, arrives within 15 minutes of her sending it from Canada.
India, China and Mexico all receive more remittances than the Philippines. Indeed, the World Bank says remittances can be as high as a third of GDP in some countries. In 22 countries, remittances were equal to more than 10% of Gross Domestic Product (GDP) in 2006 and in six countries they were equal to more than a fifth of GDP, according to figures from the Washington, D.C.-based
Migration Policy Institute.
Globally, this industry translates into hefty revenue for the wire transfer companies that charge an average fee of about 12.5% of the cash being remitted. Around the world, remittances to developing countries hit US$2 5 0 billion in 2007, according to the World Bank. That means global annual revenue (for all carriers) of more than $30 billion from cash sent home to some of the world's poorest nations. Little wonder that Scotiabank set up links in the past year with Western Union and HDFC Bank of India. "This partnership provides Scotiabank customers across Canada with the ability to send money to friends and family in 220 countries," says Rania Llewellyn, vice-president of multicultural banking at Scotiabank. "For many people, this service represents an important connection with immediate and extended family."
IF REMITTANCES lie at one pole of the global banking trend, then the opposite extreme is the world of the private bankers.
Jessica Shi wears a stylish Bay Street suit, as she talks about her career over tea in a lofty meeting room in First Canadian Place in Toronto. Shi is a chartered financial analyst and a private banker to some of Canada's wealthiest immigrants. Originally from Shanghai. hai, Shi grew up in Guilin and went to the People's University of Beijing, then on to her first job, in risk management for Industrial and Commercial Bank of China, the country's biggest commercial lender. After moving to Canada in 2001 and completing her MBA, Shi got married and started working for BMO in Toronto, where she was recruited into the private banking group - an exclusive banking niche that involves a highly personal concierge-type service for the rich and super-rich, clients that often have US$2 million or more in liquid assets.
While the world leaders in this market have traditionally been UBS AG of Switzerland, Citigroup and Merrill Lynch - each with an estimated US$l trillion in assets under management for private clients - the whole industry has seen an increase
in demand for this type of service that often appeals to internationally mobile clients like successful entrepreneurs, c-suite executives, celebrities and even sports stars. Verifiable statistics on this group are scant, but according to a recent report by Merrill Lynch and the Capgemini con-
sulting outfit, in the world last year there were 10.1 million "high-net-worth" individuals - people with at least US$l million in financial assets excluding collectibles, consum-
abies and primary residences. That's up substantially from 8.8 million in 2005.
"They're very needy for sure," says Shi of the 40% or so of her clients that are new Chinese immigrants, typically factory owners or real estate developers or mining company executives and their families. "They call me day and night, asking where to live and eat, how to get a doctor, a driving license, a lawyer or an accountant. I've had to learn where all the good public and private schools are. I've had to learn to be a real estate agent, and learn about tax laws and how my clients' businesses might be taxed in China," says Shi. Some clients even want to be put in touch with a Feng Shui consultant or fortune teller.
These new immigrants often want different banking products than other customers, and are more likely to ask for a safety deposit box or for advice on buying vacation property overseas, or for low-cost, safe methods of shuffling cash around the world. It is lucrative, high-margin work for the banks, that also find tapping this market can lead to relationships that bring in more work for their investment banking and capital markets businesses, too.
THE SUPER-RICH are not typical among immigrants. Not surprisingly, then, bankers around the world nowhere more so than in Canada - spend even more time targeting the much bigger pool of immigrants of modest means. Royal Bank of Canada has calculated Canada's new-immigrant banking market is worth about $3 billion a year. And it's growing fast: By some estimates, there are 300,000 new arrivals each year in Canada.
It's no wonder banks covet them. While it's notoriously difficult to convince established retail customers to change their bank - because of the perception it's a hassle to re-new direct deposits, cheques and so on - a new immigrant is, almost by definition, in the market by necessity.
The banks respond with targeted marketing - ads in multiple languages or on ethnically focused cable television networks touting new products, services and international treaties with overseas banks, such as Scotiabank's links with Western Union and HDFC Bank ofIndia. The bank also sponsors pre-immigration workshops in China, and permits immigrants to open Canadian bank accounts before moving, says Scotiabank's Llewellyn, herself a Kuwaitiborn, Egyptian immigrant to Canada.
Other Canadian banks have similar global hook-ups and preimmigration programs, too. After moving, new Canadians will find ATMs in a multitude of languages as well as polyglot tellers. This summer, Royal Bank of Canada announced its customers can call a helpline manned by agents that can translate their queries into 150 different languages, including Spanish, Russian, Vietnamese and Korean. Meanwhile, the banks deliberately target this migrating workforce with a slew of sponsoring and marketing efforts aimed at different national and ethnic groups. Big banks are now the main sponsors in Canada for cricket and soccer, as well as a host of internationally themed festivals and outdoor events.
BACK IN HONG KONG, high above the nannies and maids, HSBC, the world's most successful global retail bank, plans to grow its share of yet another piece of the shifting global workforce.
The Hong Kong international banking centre (lBe) is one of 40 the bank has around the planet. Bankers from India, China, Hong Kong, the United Kingdom, Australia and elsewhere sit in an open plan room with lowwalled cubicles. There are all colours of national flags on many desks. There are dozens of languages spoken in these IBC's where staff answer questions on local banking regulations from colleagues all over the world who have customers moving from one country to another.
This office is part of HSBC's efforts to grab an ever-bigger slice of the global "mass affluent" market - the lawyers, accountants, sales staff and other middlemanagement types that travel the world for work, often in the employ of multinational companies, and have an annual family income of up to US$lOO,OOO to deposit.
HSBC, the self-styled "world's local bank," has grown a global retail business by following the international growth of its commercial clients, says Nick INinsor, head of personal finance for HSBC in the Asia-Pacific region. "Because we were banking the companies, we tended to bank the individuals who worked for those companies to."
A slim, amiable middle-aged Brit, INinsor has been with the bank for 25 years in the United Arab Emirates, Qatar, Japan, Hong Kong, Brunei, India, Singapore and New York as well as the United Kingdom. He has bank accounts in five countries.
\Vhile there are several banks with global retail banking franchises - Citibank and Standard Chartered, for instance, or Scotiabank in Latin America and the Caribbean - HSBC is without a doubt the market leader and is working hard to cement that position. \Vhen HSBC talks about global retail banking services, it's worth listening.
INinsor explains that first-time expatriates - a marketing executive for a big consumer goods company that has just been transferred from Atlanta to Shanghai, for instance - can suddenly find they have more disposable income, and that makes them good customers. They may have a house to rent, which will generate more income, or they may find tax savings that free up extra cash. The bank can help out with cash and wealth-management services, and get its hands on more deposits as well as some healthy fees.
Around the world, there are an estimated 200 million people in the "mass affluent" category, according to Datamonitor - a figure that's increased 34% since 2005. Not every one of them is on the move, but a sizeable portion are. Last year, HSBC's chief executive Mike Geoghan set an ambitious target - to triple the number of HSBC's global premier accounts clients by 2012. Considering that the bank had about two million such clients in 2007, that translates into a goal of a 3 % share of the global mass-affluent market.
Three percent might not sound like a lot. But, as INinsor says, banks in Canada and elsewhere would be thrilled with another six million wealthy clients - wherever they happen to live.
Source: FP October 2008
1/20/2009
THE BOOMER CASE FOR COMMUNITY WEB 2.0 BASED ACCESS TO FINANCIAL SERVICES PROFESSIONAL PRACTITIONERS
Consumers are ready for the networked world.
Are you?
The boundaries of the telecommunications industry
continue to blur as technology, business and consumer
trends redefine the digital services marketplace.
Long talked about, "convergence" is now an
accurate description of the current business model
of the communications services industry. Carriers,
software companies, high-tech firms, media enterprises,
entertainment conglomerates—all may find
themselves collaborating and partnering one day …
and competing against each other the next.
But what exactly do these different players need
to do to gain a competitive edge? A wide-ranging
research initiative from Accenture—surveying
industry executives as well as consumers in both
the developed and developing worlds—creates
some urgency around that question, especially
when it comes to service providers.
Our global consumer survey of early adopters of
technology devices and services—a group we term
"tech forwards"—found that these users are quickly
embracing the possibilities of a networked world.
They are waiting—sometimes impatiently—for
companies to take this vision to the next level by
delivering a seamless experience, a common
platform and a superior service.
At the same time, our interviews of executives
representing carriers, software providers and
media/content companies reveal a troubling sense
of complacency among the companies that should
be moving faster to meet the needs of these techforward
consumers. Many carriers appear to be
overly content with selling legacy services,
attempting to recoup sunk costs for their
existing communications infrastructure.
Accenture believes, however, that holding onto
the past for too long creates inertia among carriers
and impedes the transformation process needed to
serve the communications and entertainment
needs of today's consumers.
Companies that expect
to achieve high performance need to move quickly
to meet consumer expectations
.
Consumers are ready
Our research study examined the perceptions and
usage of tech-forward consumers in the United
States, Europe, Japan, Brazil, China and India.
Participants were screened to ensure that they
were part of a demographic that embraces
leading consumer technologies.
The survey findings reveal a high degree of understanding
among these consumers of today's key
trends in the networked world. Accenture refers
to one of the most important of these trends as
"trivergence": the coordination of three components—
devices, data and controls—over a ubiquitous
network. The Apple iPod is perhaps the best
way to understand trivergence. Unlike, say, a CD
player, which contains within a single device both
the data and the controls, a trivergent device like
an iPod operates quite differently. The data or content
resides in the device, as well as in a library,
usually on a person's computer. The controls reside
not only on the physical device but also on what
we call a "soft panel"—in this case, the menus and
screens made possible by iTunes software.
The most important message about trivergence and
the networked world is this: Consumers get it. Only
3 percent of those with whom we spoke didn't
understand the concept and capabilities of this
networked, trivergent world. And 87 percent
either agree or strongly agree with
the prediction that most digital devices
for a home, car or individual will ultimately
feature a network connection.
Consumers also understand the value of
trivergence. Almost 90 percent agree that
trivergent capabilities will save them
time. More than 80 percent affirm that
trivergence can create more business
opportunities for them. High percentages
also believe that the new networked
world will make their lives richer and
more enjoyable, and bring them closer
to their friends and family. Seventy-eight
percent feel that trivergence can help
them advance their careers.
The consumers in our study are also
prepared to dream big about how a networked
world might change the way they
work and live. Ninety-three percent can
see trivergence creating more energyefficient
controls for things like lighting,
heating and cooling. About 80 percent
can envision network connectivity for
their cars, as well as their refrigerators,
ovens, dishwashers and even small appliances
such as toasters and coffeemakers.
(Put the clothes in the washing machine
but forgot to turn it on?
No problem:
Log in at work to your appliances soft panel
and turn it on remotely.)
Service providers may not
be ready
If consumers are ready for the extraordinary
world enabled by trivergence,
industry executives are uncertain that
companies are feeling a sufficient level
of urgency.
While many respondents to our survey
agreed that the trivergence trend will
continue on a steep trajectory, too few
companies have developed a set of wellformed
implications about the growing
plethora of networked devices. Concerns
seem to be more tactically focused at this
stage: Will more bandwidth be required?
Will more databases will be needed?
The carriers with whom we spoke were
confident about their ability to operate in
the trivergent world; they believe themselves
well-positioned to overcome the
technical challenges in migrating to IP.
They do not believe they are fated to
become “dumb pipe” providers. In
describing their future roles, carriers tend
to view themselves as exerting more control
over content and services than the
technology/content partners will.
In the face of this overall confidence,
however, are some concerns about carriers
expressed by technology and content
partners—specifically, that carriers are not
thinking about the future in a sufficiently
transformative way. As one tech company
executive bluntly put it, "I don’t think the
carriers are on top of IP transformation."
Another possible concern is that the
forces of technological change are too
great for existing carrier strategies.
Another high-tech executive compared
today's situation to the fate of middleware
in the evolving Internet era. “There
was a huge role for middleware in the
early days of the Internet because companies
were trying to figure out how to
interface older enterprise systems with
the Web. Now those companies are taking
out the middleware and going direct. The
same thing will happen in networking.
There will be a need for 'glue' in the early
days, but at the end of the day, every
point will be a node on the network and
the nodes will be able to communicate
with each other without going up to a
super node and coming back down.”
The potential stifling effect of legacy
business models and cultures is another
obstacle to be addressed by the carriers.
One high-tech executive noted, "I’m still
seeing an enormous cultural hold over
from the old days of a monolithic monopoly.
Carriers are making some progress,
but they don’t show enough agility and
flexibility in keeping up with the changes
and what customers are demanding.”
So what is to be done? An executive from
a device manufacturer pointed to a likely
path forward: “To survive, carriers need
some type of value proposition that deals
with content itself so that it becomes
more of a brand play—delivering the content
that consumers value across different
platforms.”
The importance of collaboration
Accenture believes that delivering a
seamless customer experience over a
common platform will require a distinctive
collaborative mindset. Very few businesses
have a trivergence strategy for the
growing plethora of networked devices
and services, never mind the resources to
execute such a strategy.
Based on our interviews with executives,
the various industry players all see the
value of such collaboration. For example,
one high-tech company executive said,
“We don’t want to have the customer set
up an account with us so that we collect
the money and then pay part of it back
to the carrier. That is a lot more arduous
than using the billing relationship that
the carrier already has established. Any
time a company already has a good
relationship with its customers, we try
to leverage that.”
And, of course, the value of such
partnerships between carriers and technology/
content providers goes both directions.
As another high-tech executive
noted, “I think the financial opportunities
for the carriers lie in unique partnerships
where they can get content, special products,
offerings or rewards—something
that delivers unique and exclusive value
rather than a 'me-too' proposition."
Building mutually beneficial partnerships
with strategically aligned industry players
will be a key to emerging as a provider
capable of making all of these complex
offerings work together. Carriers, software
companies, Internet businesses,
media enterprises and entertainment
conglomerates will be both partners and
competitors from day to day in the networked
world. Choosing the right partner
has never been more important.
Source: Accenture November 2008
The boundaries of the telecommunications industry
continue to blur as technology, business and consumer
trends redefine the digital services marketplace.
Long talked about, "convergence" is now an
accurate description of the current business model
of the communications services industry. Carriers,
software companies, high-tech firms, media enterprises,
entertainment conglomerates—all may find
themselves collaborating and partnering one day …
and competing against each other the next.
But what exactly do these different players need
to do to gain a competitive edge? A wide-ranging
research initiative from Accenture—surveying
industry executives as well as consumers in both
the developed and developing worlds—creates
some urgency around that question, especially
when it comes to service providers.
Our global consumer survey of early adopters of
technology devices and services—a group we term
"tech forwards"—found that these users are quickly
embracing the possibilities of a networked world.
They are waiting—sometimes impatiently—for
companies to take this vision to the next level by
delivering a seamless experience, a common
platform and a superior service.
At the same time, our interviews of executives
representing carriers, software providers and
media/content companies reveal a troubling sense
of complacency among the companies that should
be moving faster to meet the needs of these techforward
consumers. Many carriers appear to be
overly content with selling legacy services,
attempting to recoup sunk costs for their
existing communications infrastructure.
Accenture believes, however, that holding onto
the past for too long creates inertia among carriers
and impedes the transformation process needed to
serve the communications and entertainment
needs of today's consumers.
Companies that expect
to achieve high performance need to move quickly
to meet consumer expectations
.
Consumers are ready
Our research study examined the perceptions and
usage of tech-forward consumers in the United
States, Europe, Japan, Brazil, China and India.
Participants were screened to ensure that they
were part of a demographic that embraces
leading consumer technologies.
The survey findings reveal a high degree of understanding
among these consumers of today's key
trends in the networked world. Accenture refers
to one of the most important of these trends as
"trivergence": the coordination of three components—
devices, data and controls—over a ubiquitous
network. The Apple iPod is perhaps the best
way to understand trivergence. Unlike, say, a CD
player, which contains within a single device both
the data and the controls, a trivergent device like
an iPod operates quite differently. The data or content
resides in the device, as well as in a library,
usually on a person's computer. The controls reside
not only on the physical device but also on what
we call a "soft panel"—in this case, the menus and
screens made possible by iTunes software.
The most important message about trivergence and
the networked world is this: Consumers get it. Only
3 percent of those with whom we spoke didn't
understand the concept and capabilities of this
networked, trivergent world. And 87 percent
either agree or strongly agree with
the prediction that most digital devices
for a home, car or individual will ultimately
feature a network connection.
Consumers also understand the value of
trivergence. Almost 90 percent agree that
trivergent capabilities will save them
time. More than 80 percent affirm that
trivergence can create more business
opportunities for them. High percentages
also believe that the new networked
world will make their lives richer and
more enjoyable, and bring them closer
to their friends and family. Seventy-eight
percent feel that trivergence can help
them advance their careers.
The consumers in our study are also
prepared to dream big about how a networked
world might change the way they
work and live. Ninety-three percent can
see trivergence creating more energyefficient
controls for things like lighting,
heating and cooling. About 80 percent
can envision network connectivity for
their cars, as well as their refrigerators,
ovens, dishwashers and even small appliances
such as toasters and coffeemakers.
(Put the clothes in the washing machine
but forgot to turn it on?
No problem:
Log in at work to your appliances soft panel
and turn it on remotely.)
Service providers may not
be ready
If consumers are ready for the extraordinary
world enabled by trivergence,
industry executives are uncertain that
companies are feeling a sufficient level
of urgency.
While many respondents to our survey
agreed that the trivergence trend will
continue on a steep trajectory, too few
companies have developed a set of wellformed
implications about the growing
plethora of networked devices. Concerns
seem to be more tactically focused at this
stage: Will more bandwidth be required?
Will more databases will be needed?
The carriers with whom we spoke were
confident about their ability to operate in
the trivergent world; they believe themselves
well-positioned to overcome the
technical challenges in migrating to IP.
They do not believe they are fated to
become “dumb pipe” providers. In
describing their future roles, carriers tend
to view themselves as exerting more control
over content and services than the
technology/content partners will.
In the face of this overall confidence,
however, are some concerns about carriers
expressed by technology and content
partners—specifically, that carriers are not
thinking about the future in a sufficiently
transformative way. As one tech company
executive bluntly put it, "I don’t think the
carriers are on top of IP transformation."
Another possible concern is that the
forces of technological change are too
great for existing carrier strategies.
Another high-tech executive compared
today's situation to the fate of middleware
in the evolving Internet era. “There
was a huge role for middleware in the
early days of the Internet because companies
were trying to figure out how to
interface older enterprise systems with
the Web. Now those companies are taking
out the middleware and going direct. The
same thing will happen in networking.
There will be a need for 'glue' in the early
days, but at the end of the day, every
point will be a node on the network and
the nodes will be able to communicate
with each other without going up to a
super node and coming back down.”
The potential stifling effect of legacy
business models and cultures is another
obstacle to be addressed by the carriers.
One high-tech executive noted, "I’m still
seeing an enormous cultural hold over
from the old days of a monolithic monopoly.
Carriers are making some progress,
but they don’t show enough agility and
flexibility in keeping up with the changes
and what customers are demanding.”
So what is to be done? An executive from
a device manufacturer pointed to a likely
path forward: “To survive, carriers need
some type of value proposition that deals
with content itself so that it becomes
more of a brand play—delivering the content
that consumers value across different
platforms.”
The importance of collaboration
Accenture believes that delivering a
seamless customer experience over a
common platform will require a distinctive
collaborative mindset. Very few businesses
have a trivergence strategy for the
growing plethora of networked devices
and services, never mind the resources to
execute such a strategy.
Based on our interviews with executives,
the various industry players all see the
value of such collaboration. For example,
one high-tech company executive said,
“We don’t want to have the customer set
up an account with us so that we collect
the money and then pay part of it back
to the carrier. That is a lot more arduous
than using the billing relationship that
the carrier already has established. Any
time a company already has a good
relationship with its customers, we try
to leverage that.”
And, of course, the value of such
partnerships between carriers and technology/
content providers goes both directions.
As another high-tech executive
noted, “I think the financial opportunities
for the carriers lie in unique partnerships
where they can get content, special products,
offerings or rewards—something
that delivers unique and exclusive value
rather than a 'me-too' proposition."
Building mutually beneficial partnerships
with strategically aligned industry players
will be a key to emerging as a provider
capable of making all of these complex
offerings work together. Carriers, software
companies, Internet businesses,
media enterprises and entertainment
conglomerates will be both partners and
competitors from day to day in the networked
world. Choosing the right partner
has never been more important.
Source: Accenture November 2008
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