ICT services: the telco perspective

By Jan Dawson, Dr Katy Ring and Chris Lewis

The history of offering converged IT and communications services often stands testimony to the triumph of hope over experience. However, with the investment in next-generation networks on the one hand and new IT hardware and software delivery and management capabilities on the other, convergence is once more on the agenda. In its ongoing research stream in this area, Ovum has analysed telco strategies in ICT in the report 'ICT strategies for telcos'.

Why are telcos developing ICT strategies?

Four basic sources of pressure either motivate telcos to expand their ICT portfolios or prevent them from doing so:

• internal financial pressures
• competitive pressures
• customer perceptions
• business model changes.

The degree to which drivers and barriers in each of these four categories influence each telco will determine to a large extent whether they seek a greater role in the ICT market. Figure 1 gives a high-level overview of these four sources of pressure.

Figure 1 Drivers and barriers for telcos expanding their ICT portfolios

Source: Ovum

What ICT strategies are the telcos pursuing?

Figure 2 shows a sample of telcos positioned according to our judgement of whether the ICT services they provide are at a national or global level, and an indication of the breadth of the portfolio of ICT services they provide. A more detailed view of each player can be found in the full report.

Figure 2 Positioning of telcos' ICT services

Source: Ovum

Telcos developing an ICT portfolio tend to divide into those looking to add incremental network-centric IT services and those looking to expand more aggressively and acquisitively into the IT services space with a more IT-centric proposition.

What do end-user organisations think?

Not surprisingly, cost and control are among the main drivers for end users when it comes to the ICT subject. IT and communications have, for too many years, been a cost drain on companies. Under more stringent economic times the CIOs have been asked to rein in the expenditure on the ICT area. According to the 2005 European VPN Users Association (EVUA) Members' Survey there is a small amount of growth in ICT budgets, but it is small. The only areas receiving double-digit growth come in data networking, especially in mobile data services. For the vast majority of ICT areas, the expectation in end users' minds is that industry and technical convergence will mean cost savings for them. This is, of course, at odds with the industry, which believes that convergence is an opportunity to make more money!

Jan, Katy and Chris are senior practice leaders within Ovum's North America, Outsourcing and Enterprise practices respectively.