1. © Logica 2008. All rights reserved The death of divide and conquer The roles of integration and convergence in telecoms and media Thomas Breuer Group Director Telecoms

2. Agenda New facts of live – the power of the consumer Business models and ownership Learning's from the retail sector A paradigm-shift in delivering services Conclusion

3. New facts of life Internet & Broadband are mainstream and cheap –Old business models are disrupted ◦ Competition moves from “connectivity” to “customer” based –Industry consolidation –Short service lifecycle Value chain fragmentation ◦ Operators become fixed/mobile convergent bit-pipes ◦ GAMEYS (Google etc) dominate services ◦ Selling done by Brands Service boundaries blur: –Telcos offer TV, cable companies offer IP and phones –Convergence of everything

4. Convergence of everything ! Media Access/Band- width/Internet P2P Fixed Hot Spots Mobile Application convergence “Triple Play” Network convergence “FMC / FMS” Application Environment Level of conv. Business process & systems convergence

5. Express yourself ! User Generated Content Personalized Consumption Based on fundamental human drivers vanity ego need for self-expression

6. Pull replaces Push ? ? ? ? ? Predict demandPackage content Difficult Inflexible Push content Costly Consume content Unfulfilling Unbundling Pull content(on demand) Pull – because distribution is cheap tomorrow... Today … Push – because distribution is costly

7. Everything becomes ”Feeds” Past: The traditional web... Web site Web site Get Content Future: Pull – the next level Web site Web site Web site Web site Aggr site Aggr site RSS FeedsRemix Consume User/App

8. Unbundling of media … and everything Unbundling creates an abundance of content Consumer’s attention is the scarce factor! The birth of the “Attention Economy” CD’s iTunes TV Ads TV DVR’s News media RSS Telephony VOIP Unbundling of TV from advertising Unbundling of songs from CD’s Unbundling of news from papers Unbundling of voice from access

9. The Long Tail Short Head Long Tail Few/Large Markets/Customers Many/Small Markets/Customers Examples EBay, iTunes, Amazon, Craigslist, YouTube..., VoiP...

10. Agenda New facts of live – the power of the consumer Business models and ownership Learning's from the retail sector A paradigm-shift in delivering services Conclusion

11. From Operator Club... Narrow pipe Service Interconnect Business model: Create interoperable services and compete on price

12. …to Internet Club What if real competition is about mobile subscribers? great services are access independent? running a community is much different from just having subscribers?...? Business model: Differentiate and reduce churn Interconnect

13. Moving from vertical integration to core competency ecosystems Design (Spec) Implement, Test, Deploy Manage lifecycle Integrate Partners Config. Systems Fulfillment Partner Set-Up Sell in –Shop –Call centre –Web –Partners Execute Campaigns Operate networks Operate Applications Trouble shooting, E2e monitoring Service & process engineering Production Set-Up Service Sales Service Delivery Care Invoicing AccessCoreAppl. Provide customer helpdesk Cust. Data changes Billing (Rating) Invoicing Factoring/Clearing Main Tasks NO = Network Operator Fixed NO Mobile NO BB/ISP 3rd party content External SI Actors                    Virtual Operator         

14. Agenda New facts of live – the power of the consumer Business models and ownership Learning's from the retail sector A paradigm-shift in delivering services Conclusion

15. How does Zara do it? Focus on reactive speed, don’t predict the market –Order fabric based on forecasts –Supercharged product development ◦ Identify 10,000s of style ideas (60 styles per designer and year) ◦ Create and approve designs rapidly Sales force uploads data onto customised devices –What sells –Customer queries on style, fabric, colour –What customers wear Creates small volumes –Spread risks –Create artificial scarcity -> buy now Keeps image fresh –Delivery to shops twice a week –New styles every week

16. Time to reconsider: What we can learn from it No detailed roadmap –Short response times to provide “hot” services Emphasize governance & business process –Technology is not the focus Agile environment and process –Minimum pre-integration Launch many new services per month –create an innovative image –spread the risk –reduce cost per service –increase ROI

17. Agenda New facts of live – the power of the consumer Business models and ownership Learning's from the retail sector A paradigm-shift in delivering services Conclusion

18. Traditional Service Launch cycle is too long … 12 to 18 Months Service Launch Costs Market Opportunity Idea Impact Analysis Feasibility Study Business Case Service Development Service Testing Service Integration Lots of integration Required Lack of openness Inhibits Creativity Lengthy approval process Due to high costs and risks Missed the Market Window

19. … and must be drastically shortened 2 to 6 Months Service Launch Costs Market Opportunity Idea Proto- type Concept Approval PilotService Development Service Testing Little integration required=> less risk Ecosystem provides many Ideas Right Time- to-Market

20. Sandbox Service Factory Processes Approved Concepts Ideas Marketplace De- livery Mass Market Service Factory approach shortens TTM Innovation Deployment Production Sales Classic Telco Processes Managed Innovation Business Transformation Partner concepts Managed Innovation Business Transformation Partner concepts Rapid Service Creation Managed concept pipeline Concept Implementation Rapid Service Creation Managed concept pipeline Concept Implementation Service Delivery Hosting Off-the-shelf services Business Process Outsourcing Service Delivery Hosting Off-the-shelf services Business Process Outsourcing Go-to-Market Running a marketplace Go-to-Market Running a marketplace Live Beta Improvements/ Perpetual Beta Improvements/ Perpetual Beta

21. Mashups Operate in open Eco-Systems No. 2115 May 2015Title of Presentation Customers Partners ISV’s Developers Eco-System Applications Application Portfolio Application Portfolio Selection and Sign-up Competitive Hosting Competitive Hosting SaaS Incubation/ ISV Ecosystem SaaS Incubation/ ISV Ecosystem Network Services OSS/BSS Services Strategic Partnerships Strategic Partnerships Consumers SMB/SOHO Enterprises Integrator

22. Converged products require other functionalities and processes TrendEffect on ProductsEffect on Systems ConvergenceAbolish pre/ post-paid divide “n”-Play service bundles All rating is on-line Complex bundling Pull replaces push Products purchased/ used “on demand” Complex and asynchronous order fulfilment needed UnbundlingFlat-rates (n videos per week)Rating at purchase time, not at usage time -> less need for performance Attention economy Advertisement financed products – pay the consumer Complex community structures “reverse” charging Long tailHuge number of items with low usage per item Central product catalogues with advanced life-cycle management

23. Agenda New facts of live – the power of the consumer Business models and ownership Learning's from the retail sector A paradigm-shift in delivering services Conclusion

24. Current trends offer a multitude of potential business models –Not possible to predict the results! Openness to all possible business models needed for –Business ecosystems –Business processes –IT systems Paradigm must shift –from „in-house creation“ … –… to „fast and smart trend tracking & following“ Driver to achieve superior time to market –is not technology … –… but IT governance and processes!

25. Contact address: thomas.breuer@logica.com Thank you