5GNews & Analysis

How Telcos Can Help Businesses Deploy Profitable 5G Networks

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Enterprise interest in 5G has increased in the wake of the COVID-19 pandemic, but businesses need better support from their telecom providers if they are to maximize 5G’s role as a catalyst for pervasive business transformation, according to a recent study by EY.

Almost three quarters of enterprises (71%) believe that the COVID-19 pandemic has accelerated existing digital transformation plans, with 52% signaling greater interest in 5G and the internet of things (IoT), according to the EY’s Reimagining Industry Futures Study 2021. The study of more than 1,000 global enterprises finds that 74% of organization respondents across a range of sectors believe 5G will represent an opportunity to reinvent their processes over the next five years.

As organizations continue to build out their transformation plans, 65% of respondents believe that emerging technologies will play a critical role in their business’ recovery from the COVID-19 pandemic. However, most organizations are approaching their deployments with caution, with just 17% of enterprises currently investing in 5G. At the same time, another 73% plan to invest in three years’ time.

64% of enterprise respondents reported that they are struggling to identify the right kind of vendor to address their 5G strategy, while 74% of respondents stated that vendors must provide a more coherent vision of 5G to construct a robust investment case. Priorities stated by respondents when it comes to choosing a 5G vendor include that vendors must deliver business outcomes as partners rather than pure technology benefits (79%), and end-to-end solutions are a preferred supplier attribute (30%).

Telecom providers lack digital transformation expertise

The report finds that only 18% of respondents see telecom operators as digital transformation experts, a vital competence that must be improved as enterprises increasingly turn to 5G to drive transformation agendas forward. The majority of respondents see IT services and application/platform vendors (51% and 65% respectively) as digital transformation experts.

When asked what their top 5G priority was, 36% stated it was around exploring 5G’s relationship to other emerging technologies; while 5G’s integration with existing technologies and processes was seen as the number one challenge, cited by 38% of business respondents.

Tom Loozen, EY Global Telecommunications Leader, said, “Organizations understand the importance of 5G, IoT and other emerging technologies; however, the capability gap among suppliers is a key concern. Telecommunications operators should take steps to improve their transformation expertise, recognizing that businesses want suppliers to act as partners that provide end-to-end solutions. For this to happen, operators should explore new ecosystem positions while focusing on the opportunities for business model overhaul that 5G can enable.”

“Just as 4G networks has fundamentally disrupted consumer technology, 5G will be the game-changing technology for industrial transformation across all sectors,” explained Joongshik Wang, EY Asean Tech, Media and Telecom lead.

“Access to 5G networks will be key to realizing the potential of industrial disruptive technologies such as AI and IoT that will enable enterprises to establish their market leadership. Laggards will face strong barriers to entry and struggle to bridge the digital divide.”

Those who haven’t yet invested in 5G are hopping on board with urgency. Analytics, AI, robotics, automation and other emerging tech dominate the current digital spend across enterprises – although nearly 60% plan to make 5G investments over the next three years. As it happens, APAC is leading this charge in this 5G push.

“Despite strong government support for 5G in the Southeast Asia, the region is lagging behind other markets. After all, telco operators in Southeast Asia are still recuperating their investments from laying out 4G networks.”

“Furthermore, the capital expenditure of 5G technology is significantly higher than that of 4G, and industry demand is still nascent given that 5G business use cases are still emerging. Without clear and established cost benefits, overall delays can be expected in the region.”

Against this backdrop, 5G is more an emergency response than anything else. “If the status quo remains unchanged, and enterprises are unable to leverage 5G as a key enabling technology in their digital transformation plans, this will significantly impact the fundamental competitiveness of the region,” said Wang.

Key recommendations for 5G providers

The study recommends three important steps 5G providers should take to help their business customers take full advantage of new opportunities in 5G-based IoT.

1. Align your 5G vision to the demands of the post-pandemic enterprise
Interest in 5G is higher than ever, but converting this into meaningful adoption requires providers to meet changing use case needs while providing a compelling 5G vision.

2. Convince customers that you are the ideal partner to deliver digital transformation with 5G
5G providers should transform from a supplier to a partner, providing end-to-end solutions that deliver business outcomes through optimized ecosystem positions.

3. Adapt your approach to the needs of specific industries, regions and buyer groups
Agile customer interactions are essential: adapt your approach to cater for more demanding or less engaged customers, while targeting buyer groups outside the technology function.

Key takeaway for the enterprise

1. Explore 5G’s relationship to other emerging technologies
2. Explore 5G’s impact on future business models
3. Align 5G and cloud or edge computing capabilities
4. Explore 5G benefits compared with Wi-Fi and 4G technologies
5. Mitigate cybersecurity risks relating to 5G

“A broad-based and collaborative effort is key: “addressing the complex and critical challenge of enabling 5G in the region will require more than government support alone. The collective buy-in, as well as collaborative investment and effort of enterprises, telco operators and all stakeholders in the entire ecosystem, will be needed for the successful rollout of 5G,” Wang concluded.

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