I have been tracking the activities of Telecom companies and their approaches to Software Defined-Wide Area Networks (SD-WAN). AT&T and Verizon selected VipTela, BT selected Nuage, Orange Business Service selected Riverbed and so on. Many Telecom companies have announced strategic partnerships with a vendor to form and accelerate their go-to-markets a trend in the Telco community for technology partnerships. There are three possible approaches when your company needs to build a new product or service:
- Build the product or service yourself
- Acquire a company that has already created the product or service
- Partner with a company that has already created the product or service
There are pros and cons associated with each of course. To create your own product or service you must have the time, resource and budget along with a deep understanding of the technology and the vision to execute. Telecom is looking for a more stable, reliable, salable product. Although it is much easier to create prototypes nowadays, it can be difficult to develop and time consuming to create the error-free product that Telecom is looking for – perhaps you will miss business opportunity before you launch it.
The next option is an acquisition. Acquisition being the power of money, so you must have the financing in place of course along with the resources required to navigate and successfully complete the purchase. After having identified a prospective company that is willing to be acquired. Then you have to deal with the post-acquisition integration – which is about more than pure technology but involves brands and cultures – perhaps a higher risk strategy.
The trend in Telecom is for partnerships, an easier, faster and lower risk option to quickly tap into new technology and product and exploit business opportunities. However, even the route of partnering, collaboration and/or formal alliances is not necessarily simple and brings its own complexities. It can be difficult, even for companies with scale, to support such a broad range of technologies and applications: IoT, machine learning, AI, voice and collaboration, big data and analytics, cloud computing, virtual reality and augmented reality, 5G, productivity applications and so on. A broad mix of technologies and applications to keep abreast of, especially in terms of developing your own product — indeed many Telco’s in recent times have chosen to divest their cloud businesses and shift to a partnership strategy for example.
So I see this move to strategic partnering continuing in the Telecom sector, with careful selection of partners for each category of service, in particular by those Telco’s with broad portfolios. Global enterprise should consider scale, geographic reach and scope of services that are being offered by potential suppliers — and also their associated investment in R&D, financial stability, quality of service and the suppliers approach to partnering. Whilst there are challenges associated with partnering such as maintaining flexibility, ensuring tight integration, managing dependencies and aligning roadmaps, customers must experience a seamless service. As the number of partnerships increases, more time and resources are required for integration with existing services and this has to be factored in and managed appropriately.
In summary, strategic partnerships are typically key for rapid business expansion especially when taking advantage of new and disruptive technologies for large enterprise — and are a growing trend in the telecom sector. In parallel, Telco’s do need to continue to develop their own innovate product and align with the dynamic business environment that enterprise has become used to — with rapid and agile execution. To achieve this, it is critical that Telco’s also transform from a conservative culture and integrate an entrepreneurial process into the sector.