How telecom service providers are embracing IT transformation
Savvy communication service provider CIOs and CTOs have abandoned the past - where they would align their new technology infrastructure investments with traditional IT and networking equipment vendors. In hindsight, the status-quo disruption was somewhat inevitable.
Today, 77 percent of all telecom service providers will now require some level of digital transformation over the next three years, to meet the changing market needs in their franchise area and to remain competitive, according to the latest worldwide market study by 451 Research.
Telecom transformation market development
Specifically, service providers are challenged by IT and networking automation, scalability and reliability issues. But they're not alone. Traditional technology hardware and software vendors will also have to compete with the public cloud providers, as service providers consider hyperscalers for their next compute and storage purchases, since many enterprises are moving workloads off-premises.
"Over the next two years, 60 percent of enterprises will run most of their IT in off-premises environments," said Al Sadowski, research vice president at 451 Research.
As such, the traditional vendor community must adapt their product roadmaps, marketing programs and sales strategies to address the growing role service providers will play. 451 research has launched new surveys to help quantify the drivers and priorities.
According to the 451 Research assessment, telecom service providers now choose vendors to work with based upon what services they must provide to customers and what differentiates them in the market.
In the 451 Research survey results, 39 percent of service providers identified reliability as the most important vendor selection criterion -- which mirrors the top end-customer pain point revealed to service providers.
They're also not afraid to forgo traditional hardware solutions in favor of simpler solutions to provision. For example, among respondents, 57 percent will deploy hyperconverged platforms in the next 12 months -- that's up from 38 percent deployed today.
Additionally, the most represented services are not the fastest-growing IT segments, but remain backup and disaster recovery. Creating a competency for new technology and attracting customers takes time for service providers, especially when 39 percent still prefer to work with a small group of strategic partners.
Outlook for service provider transformation opportunities
The vendors that can prove their IT and networking solutions to be reliable and of value to their customers are more likely to succeed. Other key findings from the survey include:
- Intel and AMD are no longer the only game in town for servers over the next 12 months – Arm’s cost and flexibility show promise. Plus, IBM Power is the HPC market leader
- There is strong interest in open networking projects, but limited adoption (so far)
- Twenty-one percent of service providers do not have a formal strategy for handling IoT
- The General Data Protection Regulation (GDPR) and Brexit are likely accelerants for service expansion within the EU over the next 12 months
In summary, market disruption has caught up with the legacy IT and networking vendors. That said, this is an exciting time for the most forward-looking technology vendors that have embraced agile marketing and design thinking methodologies. They're not afraid to explore new business models and open innovation strategies that enable progressive market development plans.
Interested in hearing industry leaders discuss subjects like this and sharing their use-cases? Attend the co-located IoT Tech Expo, Blockchain Expo, AI & Big Data Expo and Cyber Security & Cloud Expo World Series with upcoming events in Silicon Valley, London and Amsterdam and explore the future of enterprise technology.