We recently held a webinar discussing the macro trends behind the accelerated shift towards digitalization that we are currently witnessing.
Hosted by Telenor Connexion CMO Cristoff Martin, with special guest Bengt Nordström of Northstream, an Accenture company, audience members had many important questions that were answered at the end of the discussion.
Read on for Bengt Nordström’s answers.
Bengt: Digitalization requires a mind shift that companies need to undergo. My most important recommendation is to look at this journey in a holistic way. It requires educating the whole management team. The management team are not necessarily digitalization experts, so it is a lot of education, coaching and guiding. Much of our work at Accenture is to set the strategy together with our clients, look at this holistically, and strategically. The technology part is then easier to solve.
Bengt: That really depends on the use case. The sweet spot of cellular IoT based on 4G or 5G is that it provides wide area coverage not just locally but also globally. It is a very reliable service when you buy it from an operator like Telenor as it comes with service level agreements. For use cases that entail moving objects, cellular is the best solution. In other cases, it may need to be complemented with Wi-Fi. But the choice of connectivity technology should be ultimately use case driven, there is no generic answer. We should appreciate that Wi-Fi is available, has a strong ecosystem, evolves just as cellular does, it is backed by major players and has access to valuable spectrum with lots of capacity. From Accenture perspective, when we work with a client on building a smart factory or smart container terminal or a smart city, we look at this very agnostically. What is the best solution for the use case we are trying to solve – sometimes it is cellular, sometimes Wi-Fi and sometimes mesh. It varies. The advantage in the cellular camp is that we are getting super-fast, low latency broadband available globally and that will be a strong selling point for 5G.
Bengt: We are right now at the stage where we are securing the nationwide footprint of 5G in all countries and primarily addressing the traditional mobile broadband consumer and enterprise market, similar to today, but faster and better, and with lower latency. When we have that in place globally, which will take a couple of years, we will start to look at the industrial applications with massive deployments. My recommendation for the latter is to take a realistic view and assess what the mobile operators are committing to and offering in the respective markets when it comes to availability and roaming agreements to secure a global service. I think we are then talking about more like 2025. But with 4G as it stands today, there is no reason to wait with pursuing IoT because there are already very good capabilities.
Bengt: Many of our clients are in a business that is going well but is under pressure because the differentiation is getting lower, and price becomes a very important element in the offering. Having the courage to cannibalize your traditional business is often the only way to innovate and move forward. Reluctance to do so may eventually result in declining revenues because if you don’t disrupt yourself, competitors or new entrants will.
Digital technologies and IoT solutions mean that, for example, you no longer need to send a field technician to check on the status of equipment and fix issues reactively, but instead you can monitor remotely and predict problems before they occur. That ultimately delivers more value to the customer and when you can increase the value to the customer, you are developing a more robust business. But the service and the business model will look different. You may need to cannibalize in the short term to sustain and grow your business in the long term. The companies that dare will move faster than competition to become data driven and when you come to that point you understand more about the customer and their needs and how to price correctly and deliver value.
Bengt: When it comes to the consumer market, is makes sense because the CSPs are having direct retail access to the end consumer so that relationship is very close and if someone needs to market IoT services, it needs to be the smart device players in combination with CSPs. That is how the market works today.
When it comes to the enterprise market, the situation is a bit more complicated. For example, at Accenture when we work with digitalization we have little focus on connectivity, it is something we solve along the way when we design a major digital solution for an industry client. Therefore, I am not sure that CSPs can go to the enterprise market and only talk about connectivity because it is just one component of the overall solution. I would rather recommend that CSPs partner, discuss, find solutions together with system integrators and IT solution companies. It is very important to embed the cellular capabilities that CSPs have so they become available and easily accessible for companies of our kind. Our clients never ask us about connectivity, they ask us, for example: ‘How smart will my digital factory be? How much better will it operate then today?’ They assume we will sort out whether it is 5G, 4G, NB-IoT, Wi-Fi or Bluetooth. The right path is to collaborate with companies like Accenture to get a broader understanding and put cellular IoT higher up on the agenda for industrial companies and their partners.
Bengt: I assume this refers to private networks where there is spectrum available for enterprises in some markets to build and operate their own network without the involvement of a CSP. We have that happening in Germany and some other countries. However, in many cases, even if you have your own spectrum as an enterprise, you will still need to collaborate with a CSPs because the spectrum you can get access to may not be sufficient to run multiple use cases with high throughput and as soon as the things you are connecting on your premises need to go outside of the premises, you need to do that in partnership with a CSP. Therefore, overall, I think it is good we have the trend that enterprises can buy spectrum, but in most cases, it will require at the end of the day a collaboration with a CSP to enable a holistic use case and business case.
Bengt: First, the important thing is to be very thorough in your specification writing, to sort out in which markets do you expect this product or solution to work, what is the coverage there for LTE-M for instance that CSPs can offer a roaming solution for and what is the data consumption you expect to have.
We have the sunsetting of 2G and 3G happening at scale right now so instead of 2G and 3G you may instead want to plan for 4G and 5G these days, depending on the time horizon. It is good to be thorough in the requirements and discuss with your CSPs and network equipment vendors who can offer what you need and what are the technology choices available both now and in the future.
In addition, when you scale to reach a million devices, you would like to be a data driven company, that probably means that you need to have your data strategy very well thought out, storage, compute, analytics, and team competence because you will gather many terabytes of data and the main purpose is to be smarter about the performance of the product, so everything that you do will need to be scaled up.