For the first part of this article go here: http://www.globaltelecomsbusiness.com/Article/2656285/Connect-interact-transact-rethinking-communications.html
Better communication tools improve customer experience, increase sales and reduce cost. Enterprises are – compared with consumers – therefore disproportionately willing to pay for such tools:
• The more pervasive the opportunity to communicate becomes, the more chance there is of the buyer being able to express a demand in the moment of desire, and the seller being able to respond.
• The richer the interactive media, the less the need for human effort to overcome any limitations; as a result, both the enterprise’s costs and the customers’ usability barriers will be lower.
• As communications media become more sophisticated, value-subtracting tasks such as authentication and payment become invisible to the user, and the security of the exchange is better assured.
To achieve these benefits, the communications tools’ enhanced capabilities must be integrated with applications in both the data centre and call centre. Better communications tools will enable machines increasingly to provide complete automation of business processes, which will also readily absorb spikes in demand for customer contact. The relatively inelastic commodity that is human labour can then be focused on dealing intelligently with complex, custom or exceptional business processes.
These powerful tools will have utility only if they are placed in the hands of consumers. To achieve widespread distribution and adoption, the operator revenue model for voice and messaging will flip. To compete against free offers from search and social media services, the marginal price to the user must be zero. Metered minutes and messages will be replaced by a flat access fee with unlimited usage, which, critically, will ‘feel like free’. Instead of metering end user activity, operators will charge enterprises for each use of a rich communications capability to connect, interact and transact with their customers.
Whichever party carries the cost of the conversation medium, the conversation gap must be addressed by the parties that supply these tools:
• Telcos and postal providers, as primary suppliers of ‘legacy’ (yet universal, popular and profitable) telephony, SMS, MMS and mail services to both users and enterprises
• Consumer search and social media services, e.g. Google, Facebook, or Skype
• Enterprise unified communications providers, e.g. Cisco, Avaya, or Microsoft
• The media and advertising industries, comprising TV, radio, print, billboards.
Each is vying to provide compelling conversation channels between customers and enterprises. Over time, these communications service providers will increasingly converge on a similar set of capabilities. Each system integrates voice, messaging, collaboration and commerce into a single suite, delivered using cloud technology.
All these parties are destined to become cloud communications service providers if they wish to remain in business. As each moves in this direction, there will be intensified competition across traditional industry boundaries. Significantly, none of these players – neither telcos, nor social media services, unified communications providers, media companies, telecoms equipment suppliers, or IT vendors – has yet truly risen to the challenge of rethinking their business models for the new patterns of conversation and commerce that are brought by the cloud.
For operators, there has been little innovation in the core voice product since Caller ID. Mobile telephony simply extends the reach of what is essentially the same product as landline service. If this stasis persists, users will perceive operator voice and messaging to have diminished value and will find better things to spend their money on. The operator share-of-wallet for core communications spending will plummet, in the same way that Skype has displaced the phone card for international connections among family and friends by being both cheaper and better.
To remain relevant and thrive in the cloud, all communications service providers must rethink their products so that they help enterprises to:
• Connect cheaply and easily to their customers,
• Interact richly and seamlessly with their customers,
• Transact securely and swiftly with their customers.
Until now, operator communications products have had only limited capabilities to service enterprise users’ needs for customer contact.
Consider as an example today’s freephone product. The burden of the call cost always lies with the enterprise, despite the value of a customer's inbound call varying according to where in the business lifecycle it is received. Before a sale, the enterprise typically wishes to carry the cost; after the sale, the tendency is for the user to have to absorb it. A more fine-grained charging approach is possible, allowing cost to be varied and allocated more dynamically and intelligently.
Examples of opportunities to create new revenue models are as follows:
• Connect: A ‘Mobile Freephone 2.0’ might allow free calls to automated call-handling systems, but offer human contact for after-sales support only in return for a fee that the enterprise could choose to refund if the cause of the call is a fault in its business processes.
• Interact: Voicemail could offer a suite of new interaction capabilities, such as the possibility of programmatically deleting a message or making messages interactive (for example, ‘press 1 to confirm your dinner reservation’).
• Transact: A ‘PayPal for voice’ capability would enable users to authorize a payment by hearing an automated message from their operator that asks them to enter a PIN. This functionality would remove the need for users to insecurely and inefficiently dictate name, address and credit card details to a call centre agent.
Additional value will be created through integration of all three sets of capabilities, such as a SIM card being used to authenticate the customer to a CRM system and a bank to complete a payment.
All parties must also master the skills to manage the critical privacy and regulatory issues associated with acquiring and utilising abundant cheap information.
The applicability of this Connect-Interact-Transact framework is not unique to operators. Social media players can become a rich channel for interaction between enterprises and their customers. Monetising social media usage through advertising alone demonstrates a severe shortfall in vision. Unified communications players need to extend the reach of their products out of the silo of the individual enterprise (or federations of enterprises) to connect with their customers.
Make communications services fit for purpose
To satisfy customers’ needs for cheaper and better service, enterprises must turn their attention outwards, focusing on communication and collaboration with customers and suppliers. Communications service providers of all kinds have little choice but to rise to this cloud communications challenge, and give enterprises the tools to do the job.
Failure to build ‘cloud-ready’ business models has serious consequences for operators, who face gradual substitution of operator services by new entrants. These services are frequently advertising-funded and thus free to users, or come ‘free’ with a smartphone. The newcomers better understand how communications services need to create and consume cheap information as an integral part of their function, and enable new forms of commerce.
The pattern from previous eras of mainframes, PCs and mobile phones strongly suggests the emergence of a small number of dominant global or regional cloud communications platforms. There will be a consequent upheaval in the business models of providers of pre-cloud technologies such as post and telephony that are patterned on an era of analogue communications.
Media companies have found themselves increasingly subject to intermediation by cloud search and social media giants. If operators do not act, it may be their fate to become equivalently subservient to ‘the next Google’ that aggregates not media content but the operators' network APIs. The ultimate threat is one of envelopment, as operators are left with all the costs of media delivery for voice and video, whilst value migrates to signalling in the control of ‘over the top’ applications.
Over a trillion dollars is spent every year on post, telephony and SMS. We are nearing the moment of ‘peak telephony’, where we pass the high water mark for combined fixed and mobile voice revenue. The question every cloud investor must ask is, who will seize the moment and build the cloud communications services that are the new growth channels for customer contact? Will it be operators, social media players, unified communications providers, traditional media companies or someone new and different?
Do business in the cloud
To succeed against this new competition, operators must get to grips with enterprises’ real requirements for customer contact. This can happen only if visionary operators commit to a purposeful dialogue with enterprises to develop this understanding. Operators can then exploit the success and ubiquity of their legacy services, and build on earlier successes in offering new communications capabilities that support commerce, such as SMS short codes.
I have developed the ‘Connect-Interact-Transact’ framework to model the cloud communications opportunity space. The framework helps enterprises and operators to reshape their business models to fit the new cloud reality. I am exploring the most promising opportunities with a few pioneers, and invite you to participate in creating the future of communications as part of that community, discussing the ways we can explore, map and cultivate this new territory together. GTB
Martin Geddes is the founder of Martin Geddes Consulting Ltd., a London-based global provider of business model innovation services in the telecoms, IT and media sector. For more information visit www.martingeddes.com , or email email@example.com .
This is a two-part article. Part one is at http://www.globaltelecomsbusiness.com/Article/2656285/Connect-interact-transact-rethinking-communications.html