By Keith Willetts, founder and chairman of the TM Forum.
Children today are growing up in a very different world from their parents—a fully digital world that is impacting virtually everything we do in our social lives, our businesses, our government, our environment, and where and how we live.
The fusion of global and affordable communications, cloud computing and smart devices is unlocking a Pandora’s box of innovation and put simply, anything that can be digital will be.
This digital world offers almost limitless opportunities for fortunes to be made but also lost - major disruptions are rarely kind to existing players who don’t move fast enough.
These opportunities are not just enabling new services but they are also enabling entirely new business models.
As a result, companies will operate in very different ways, with many slow moving giants breaking up into focussed businesses that can move and innovate faster.
That applies to just as much to companies providing the capabilities that underpin the digital world.
For example, communications companies around the world are beginning to establish nimble, innovative business units to exploit opportunities such as eHealth, smart energy, and smart automobiles while at the same time cost reducing their infrastructure businesses through mergers or network sharing.
The Requirements for Success
Disaggregation is already happening in many businesses. As more and more services are supplied digitally, the future will become a digital economy based on an ever-increasing number of cloud-based services working together in a variety of ways.
These range from enabling services delivering underpinning the computing, storage and communications capabilities, to a wide range of consumer and enterprise application services, through to digital stores and aggregators that package and deliver these services to end customers.
At the same time there are numerous niches for various enabling services such as security, authentication, payment, service quality and so on.
Two key factors determine where companies can thrive in the digital world: market opportunity and possessing the core competencies needed for success.
For example, success in providing enabling infrastructure needs access to large amounts of capital and highly efficient, large-scale operations.
As a result, we are seeing an upswing in mergers and acquisitions and this is likely to increase with technology suppliers increasingly involved this market.
We will also see diversification into other infrastructure areas, especially providing cloud computing, storage and end-end managed M2M platforms.
Fast moving application services need quite different competencies such as innovation, agility and customer empathy.
So far, first generation digital services have mainly been ‘best-efforts’ consumer services, but where companies rely on services to run their business, they demand a very different level of reliability, security and quality of service.
This kind of operational competency will be critical to success in enterprise services whether aimed either horizontally (such as sales management and CRM) or at specific industries and markets.
Successful players will also benefit from a trusted brand and in-depth resources, provided they move quickly enough.
In between enabling infrastructure and application services is another opportunity - providing the common elements that most services require, such as security management, quality of service management, payments and settlements.
The third main sector is the digital storefront. The runaway success of iTunes has tempted many imitators but few have succeeded – in consumer applications the tie between the store and the device software provider is a strong one.
However, a window of opportunity may open for new players offering enterprise services, especially where they are aggregated into bundles aimed at specific market segments.
Aggregating a number of services into a cohesive package such as a complete set of business services for a small business requires much greater investment in software integration and customer support capabilities.
Vision, Innovation and Partnerships
The digital world is an eco-system that is moving very fast and thrives on new ideas so visionary leadership and innovative corporate culture are also critical for success.
Providing a great customer experience is also necessary because in the digital world, your competitor is only a click away. The ability to create and manage win-win partnerships is also vital.
Finally, it goes without saying that the digital world is primarily a software world - excellence at software development and operations is not a supporting role, it is the role.
Those companies who are busy downsizing or outsourcing their IT had better watch out because without excellent software development and operations, they surely won’t thrive and may not even survive.