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TELECOM ITALIA GROUP Creating value by addressing adjacent markets: a path towards data monetization.

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Presentation on theme: "TELECOM ITALIA GROUP Creating value by addressing adjacent markets: a path towards data monetization."— Presentation transcript:

1 TELECOM ITALIA GROUP Creating value by addressing adjacent markets: a path towards data monetization

2 2 Telecom Italia Group – different focuses on the ICT stake Olivetti Telecom Italia Telecom Italia Digital Solutions TI Group TI Group TI Group IT Consulting System Integration SaaS & PaaS IT Consulting System Integration SaaS & PaaS Infrastructure, IaaS & Mgmt Services HW Vertical Solutions HW Vertical Solutions TLC Services ICT Stake TLC Solutions &ICT Infrastructural Services as the technical platform to support customer services development Specialized HW & Services for vertical offerings PaaS &SaaS Services Development Innovative Solutions IT Cloud Trasformation Consulting & SI to integrate & value the ICT elements PaaS &SaaS Services Development Innovative Solutions IT Cloud Trasformation Consulting & SI to integrate & value the ICT elements

3 3 Market context - mobile CAGR (%) (revenue, ARPU) CAGR (%) (revenue, ARPU)  Structurally declining revenues  …and ARPUs  …and margins  Hyper competition  Saturated markets  Price wars  Quest for consolidation Source: analysis mason, %-11.7% -7.0%-10.7% -8.8% -9.8% -3.0% -5.5% -1.3% -3.4% -4.8% -4.7%

4 4 Market context - Italy Italy vs UE, penetration (%) (fixed/broadband; mobile ) Italy vs UE, penetration (%) (fixed/broadband; mobile )  4 mobile operators, several MVNOs  Hyper competition and saturation on human  Low and declining mobile ARPU  TIM’s market share 60% of business, 40% of postpaid  Potential ARPU upside on mobile services  Focus on VAS and innovative services: m marketing and advertising, machine 2 machine, e/m payments Source: analysis mason, 2014

5 5 Adjacent Markets - competitors and enablers User Experience Public Sector Ecosystems Devices New networks OTT players Smart Spaces E-Health Robotics Social Digital Home Gaming Payments Multi media Mobile M2M/IoT Info mobility IP NETWORKS HSPA 3G Fiber xDSL WiFi LTE Location Based Big Data Regulators

6 Impacts:  Very complex Go/No Go process  «Infinite» time to market  Long time even for customer feedback, and difficulty to incorporate that feedback  Good Money follows Bad Money: tough/impossible to «reverse» a bad decision Cost of adding a new feature vs. process phase  “Basically an RFQ will always bring you yesterday’s technology. After integrating this technology, at launch you will be working with the day- before-yesterday’s technology while others are working on tomorrow’s technology. Launching an innovative service via an RFQ process is as such impossible.  “It takes 3 months from idea to finalizing an RFQ document. 1,5 month to get a reply. 1,5 month to do procurement. Half a year in total. Not counting the deployment time which is likely to be another 6 months. Telcos take 12 months for any new system.” Classic Telco Innovation Framework The classic Telco innovation framework does not work 6

7 Several Ideas and Application… in a Darwinian environment Incremental approach, low development cost barriers at the start, costs growing with penetration of the service Agile Open Innovation Framework Impacts:  Easy Go/No Go process  Alfa/Beta Time to market  Short time for customer feedback, easy to incorporate that feedback  Good Money follows only Good Money: easy to «reverse» a bad decision A different approach is needed 7

8  Abstract and virtualize the control layer (std HW)  Connect network software with the Data Center/ Cloud software  APIs as a new way to create “over the Telco” services, both internally and with partners  Leverage on Big Data, both external and extracted from the network  Quickly develop incremental applications either directly or through partners (Open Innovation) 8 So What? Digital Solutions Build a new Cloud Based Innovation Framework Screens Computing capacity Software Evolution Memories batteries Wireless Devices UBB & IP Networks Convergence on IP networks Ultra BB Access TCP/IP Web&Cloud Apps API Cloud SW Nwk SDN Innovation and Application Development on Cloud and API Innovation and Infrastructure Investment Ecosystems Third Parties Open Innovation Implications VDSL, FTTH, LTE, WiFi

9 Growth in adjacent markets a focused approach Main Targets: Public Sector, Utilities, Corporations, Telcos, Vertical Players Business Models: B2B2b/c Main Targets: Public Sector, Utilities, Corporations, Telcos, Vertical Players Business Models: B2B2b/c Professional Services Cloud & OTT Services Cloud & OTT Services ICT Security Solutions Digital Identity Management M2M & Internet of Things Digital CRM Web Applications Social Digital CRM Web Applications Social Digital Cloud Provider and Broker Reselling e OTT approach Digital Cloud Provider and Broker Reselling e OTT approach Network Security ICT Security Network Security ICT Security End 2 End Solution Provider Echosystem Integrator End 2 End Solution Provider Echosystem Integrator Digital Identity Certification Management of Secure transactions Digital Identity Certification Management of Secure transactions 9

10 Digital Identity – Management Qualified player for Conservazione Sostitutiva PEC Management (Posta Elettronica Certificata) Qualified Certificator of Firma Qualificata 10

11 Partnership networks Value chain control Integrated approach Business footprint Platforms Internet of Things – E2E Solution Provider 11 Hor and Verticals mgmt

12 Cloud Market Place – Cloud Brokering White label Services Branded Services SaaSIaaSPaaS International Markets Domestic Market Direct Sales Partners ISV Resellers Digital Marketplace 12

13 Data Monetization - A Business Case for a Telco Player rationals and issues  Advertising Online Market increasingly growing, driven by mobile e video advertising.  Display Advertising growth driven by video online e on mobile audience, with advanced metrics.  Paid-for-Search growth driven by the long tail effect and by searches in mobility.  Privacy and Customer behaviour  Analytics and dedicated platforms and tools  Do we really know our customers and know how to manage the information  Scope and focus  Fierce and increasing competition, driven by OTTs.  The big G effect, Apple, Facebook  Several TLC operators and specialized players, e.g. Millennial Media, InMobi, Smaato, Nexage, Madvertise e Amobee.  Industry in consolidation.  A Market opportunity to grow in an adjacent market worth more than 250 €mln/year, growing double digit.  No need for relevant upfront investments.  Possible collaborations with specialized players, with revenue sharing models. 13

14 Data Monetization - A Business Case for a Telco Player a possible path  Create/establish a dedicated organization devoted to address the opportunity, identify an initial set of specialized partners  Set an on field trial in order to test operational and commercial issues start to deliver value added services based on analytics e CB profiling  Diversify (merchant) offering with more profiled and taylored services  Redirect parent organization in order to extract the value embedded in the customer knowledge and to redesign the existing and new services within the new framework  Verify and solve issues related to privacy, to consumer behaviour and to market acceptance  Start commercial operations  Enrich the echosystem of web agencies and media partners  Leverage on Telco’s salesforce  Leverage Telco’s offerings in order to increase knowledge of customers and improve customer’s experience: security in transactions, digital identity mgmt, e/m payments,digital marketplace  Diversify customer offering with better segmented services and applications  Extract more information and obtain permission from more customers to reach them 14

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