Disruptive technology is positive for telcos but sector is struggling to adapt

TECHNOLOGY POSITIVE TELCOS SECTOR STRUGGLING ADAPT

Telcos are enthusiastic about emerging disruptive technologies, but many lack a clear strategy and mission for managing disruption, according to new research.

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Also on KPMG.com

  • 58 percent of telcos that have adopted new technologies report a positive impact on their business models and operations
  • But, only 11 percent feel strongly that their organisation has a clear strategy for innovation    
  • 54 percent of decision makers say their company only invests in proven technologies leaving them ‘behind the curve’

Telcos are enthusiastic about emerging disruptive technologies, but many lack a clear strategy and mission for managing disruption, according to new research.

The report, compiled by Forrester Consulting for KPMG, found that 58 per cent of those to adopt new technologies, such as cloud computing, the Internet of Things (IoT) and data and analytics, reported a positive impact on their business models and operations.

However, the research, which surveyed 580 telco sector executives across 16 countries, revealed that only 11 percent feel strongly that their organisation has a clear strategy for managing disruption, with almost four-fifths (79 per cent) worried they don’t have the capabilities to take advantage of opportunities in key areas such as over-the-top (OTT).

New competition is putting telco leaders under pressure with over two thirds (69 percent) concerned disruptive technology is opening the door to new competitors from outside the industry, and half (50 percent) are also seeing new challengers from within.

The pace of the market is making it difficult for telco providers to keep up. Telcos are investing in a broad range of investments, with the most common being cloud (65 percent), mobile (64 percent), marketing platforms (59 percent) and D&A (58 percent), according to the findings. However, of those that reported a negative impact from disruption, more than half (54 percent) believe their company only invests in proven technologies leaving them ‘behind the curve’.

Alex Holt, Head of Technology, Media & Telecommunications (TMT) KPMG in the UK, said: “Disruption is the new normal for telcos. Businesses across the sector are accustomed to running large networks and customer service operations with significant staff numbers, and many are burdened with traditional ways of thinking and need to undergo a substantial cultural shift to embrace new disruptive technologies.

“This traditional model is changing and 78 per cent of telco leaders fear their
businesses lack the organisational flexibility and agility to adapt to new ways
of working. Just eight per cent strongly agree that their company has the right
skills in place to embrace disruptive technologies.

“To compete effectively, the telco of the future needs to be staffed with digital architects, data scientists and developers to remain agile and the industry has considerable work to do to reach that position.”  

The research found that telco leaders are keen to improve customer experience by exploiting the possibilities of the IoT, wearables and data and analytics (D&A) by tracking user behaviour, adapting to needs and demands in real time and sharpening their marketing. Over 70 percent said D&A, IoT and artificial intelligence (AI) are changing how they engage with customers, with 38 percent reporting improving the quality of products and services as the single most important investment objective.

“Despite having billing information on millions of customers, many telco providers are not realising its potential to offer a heightened experience,” said Alex Holt. “D&A plays a vital part in understanding customer behaviour, provides insights on how to better serve customers, and in turn this should increase customer loyalty,reduce churn and drive growth.”

 

-ENDS-

 

About KPMG International’s “Powering a connected world. Disruptive Technologies Barometer: Telecommunications sector”

This report is based on a commissioned global survey conducted by Forrester Consulting on behalf of KPMG International’s Global Technology, Media & Telecommunications practice.

580 senior executives within telecommunications companies in 16 countries were surveyed. The respondents represent wireline or wireless carriers, satellite providers, VoIP services providers, and other similar organizations.

The 16 countries include: Australia, Brazil, Canada, China, France, Germany, India, Israel, Japan, Portugal, South Korea, South Africa, Spain, Taiwan, the UK and the US. This survey is part of a wider body of research into the technology, media and telecommunications industries, involving 1740 senior executives (580 from each sector). The technology report was released in November 2016 and the media report will be available mid-December 2016.

Please visit www.kpmg.com/TMTbarometer to access the full reports.  

Media contacts

KPMG

Alastair Henry, Citypress (on behalf of KPMG)

E: alastair.henry@citypress.co.uk

T: 0161 235 0320

David Bertram, Citypress (on behalf of KPMG)

E: david.bertram@citypress.co.uk

T: 0161 235 0316

KPMG press office: +44 (0)207 694 8773

About KPMG International

KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and
separate entity and describes itself as such.

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