SAS Research Unveils Telcos’ Concern Over New Market Entrants and Reliance on Customers for Innovation
A new study from SAS, the leader in business intelligence and analytics, and the Economist Intelligence Unit (EIU) reveals how the telecommunications industry is undergoing an innovation transformation. The study, Opening up: How R&D is changing in the telecommunications sector today, shows that telecommunications companies are struggling to maintain competitiveness and are grappling with the challenge of how to develop new technologies and adapt existing ones to remain commercially successful.
In the survey of more than 320 telecommunications executives worldwide, 64 percent of respondents have seen a new competitive player enter their market through a new innovation over the past 5 years. There is a growing concern in the industry that the flood of new competitors will start to dominate higher value services leaving the traditional incumbents to offer commodity products with smaller profit margins. The survey shows that telecommunications companies are transforming the way they innovate, so as to be able to survive and compete in this volatile marketplace. Seventy four percent of the respondents agree that their approach to innovation is significantly different from five to ten years ago.
At a time when many telecommunications organizations offer similar products and use comparable technologies, companies need to differentiate their offerings from the rest of the competition and develop products that will not only appeal to their target customers, but will also be profitable. It is therefore essential for telecommunications companies to truly understand their business-wide data for the right innovation decisions to be made and to stay ahead of competitors.
By employing advanced analytics and having the right insight, telecommunications companies will be able to understand their customer groups, speed up responses to technological change, identify future revenue streams and generate ideas for new products and services as well as identify which of their current product sets are sufficiently successful to warrant further development.
The survey results also show a major step-change towards an ‘open innovation’ environment, with a focus on the development of new products/services in conjunction with a range of third parties, especially customers. Almost two-thirds of the respondents to the survey confirm that they have involved customers in the innovation process over the past two years. The consumer environment is helping to drive application development; with the proliferation of the internet, every customer now has the ability to openly share their views with their peers groups and, as a result, the telecommunications industry has no option but to treat customers as an integral part of the innovation and decision making process.
“Telecoms firms are under considerable pressure to innovate in a rapidly changing technological landscape,” says James Watson, editor of the Economist Intelligence Unit’s report. “Involving more third parties and, especially, customers in the R&D process is increasingly being seen as a means of fighting back, but this in turn also brings new challenges for organizations.”
Ian Manocha, Managing Director of SAS UK, states: “This survey highlights that in order for telecommunications companies to be innovative and thus become more competitive, they need to have the right insight into every aspect of their business. Customer insight is particularly essential; these companies need to be able to understand the customer to anticipate which products will be successful, as well as predict if and when a product may fail. Only by having the right insight, will telecommunications companies be able to make the right decisions to drive their innovation agenda forward.”
The Economist Intelligence Unit conducted a wide-ranging online survey of senior technology and telecoms executives worldwide during February 2008. In total, 327 executives took part. To supplement the survey results, the Economist Intelligence Unit also conducted in-depth interviews with senior executives from a range of technology and telecoms companies globally.
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