The marketing strategy of business network transformation

By definition, Business Network Transformation (BNT) is a marketing strategy in which companies will adopt a different path which normally companies would follow in order to be more competitive in this dynamic business world. The two major phenomenons that are most important from any company’s perspective would be faster technological innovation with respect to products & services and being a reliable supplier.

Extension model: Companies adopt the extension model to spread out their business to gain new piece of business with increasing demand.

The following are the important aspects of Business Network Transformation

    Value proposition: It is important to explicit the type of products or services the company provide to its customers. Moreover, it gives a unique value between a business and prospects of the business. It is also a strategic asset which forms a basis for Market and its strategy , Business Planning , Partner and competitors strategy , operations, Customer service and Pricing .

Customer Interface

    Target customer: This describes how the customer segments are targeted to achieve a profitable growth.

   Distribution channel: This describes how the product reaches the customer by various routes.

Relationship: This explains how the firm is linked with the customer through its various customer segments.

Infrastructure Management

    Value configuration: It specifies the way in which the various activities and resources of the business are arranged

Core competency: This defines how the core competencies required in a business model are executed.

 Partner network: This describes how to collaborate with business partners to harvest the benefit out of it.

Normal way of running a business is to extract value from company’s network which is a tangible asset that bridges the enterprise and consumers in terms of its connectivity capabilities. However, as explained in the definition, now the company’s started adopting different way of doing their business by adopting different models whereby value is extracted from intangible assets like e-commerce initiatives, targeted advertising that will eventually generate service fees from performed transactions or commissions. This methodology of obtaining value from intangible assets will certainly outperform tangible asset -based connectivity revenues.

The two terms, Present Mode of Operation (PMO) and Future Mode of Operation (FMO) are so vital in current business world. What is required from enterprise point of view is to have additional business models which will a best fit for enterprises Future mode of operation that leads to increase in revenue growth of the company and reduction in companies’ operational expenses by measuring the intangible assets of the business.

Alcatel-lucent, a Tele- communication service provider company has been taken as an example.

The company has invested in new IP, IPTV and IMS technologies in order to compete with other service providers who have expanded their network to convergence of voice, data and video services across fixed, wireless and satellite networks.

In order to sustain in the competition, some of the service providers are making their current services less expensive, faster and better.

Forming new Business Transformation Strategies are inevitable in current business scenario. However, there exist some inhibitions in the minds of service providers that these rapid changes in the business model might disturb current business model’s revenue. It has been estimated that voice and data subscription services contributes 80% of current revenue.

It could be seen that a level of saturation is reached for the traditional model. Due to this saturation limit , the company Alcatel-Lucent decided has decided to go in for the advanced business model not only withstanding to allow the service providers to tap new revenue but to distinguish themselves from competitors by subscription-based businesses.

Service providers have to perform critical assessment of Tangible and intangible assets within the legal boundaries in order to evaluate current business model.

Return on Investment (ROI) is a main focal point for the service providers which can be achieved by tactical assets selling

Real-world Business Model Innovations

Due to market demand in communication industry there is increasing pressure from service providers to adopt new business models in order to penetrate through the existing market.

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The following are Business models in the fields of innovation

Sponspered communications

M-banking

Broadband Community Centres

Hosted Platforms

Wholesaling

Outsourcing

Asset-sharing

Content Aggregation and Brokering

Targeted Advertising

UGC and Communities

Fulfilment

E-Commerce and m-Commerce

Sponsored Communications:

Advertising through funded calls is one of the important innovations in the field of Telecommunication. There is appreciable change foreseen while comparing the conventional subscription model. Sort of incentives in the form of more talk time and paying lesser are the added benefits extended to the users if they accept to receive advertisement messages. Initially this methodology was put in to use by a UK Based company who manages to offer these sorts of benefits to targeted customers in the age group between sixteen to twenty four year of people, eventually this approach has yielded a reduction in end user access costs to a range between 20 to 50 %

M-banking: Due to various socio-economical reasons , it can be seen that in most of the countries may not be having basic banking service to its people , on contrary using mobile faculty is so common in most of the countries . It would be rather difficult and rather expensive to manage transactions for especially for those having smaller accounts through the existing banking system due to inadequate number of branches exist in nations where population explosion is on the drive, especially in the rural areas. These shortcomings can be addressed through the M-banking which uses mobile technology.

The technological advancement rather the strategy in the Mobile industry is to develop Mobile pre-paid payment engines that manage real time small transactions by the use of SMS (Short Message Service) which is really a less expensive measure to the Mobile users.

This service of Mobile banking has been very successful in many countries especially in growing countries like India and China. A classic example can be quoted from a leading service provider of Telecom situated in Philippines , named as Global Telecom, who introduced a service called ” G-Cash ” service which has got electronic valet facility through which the user can send and receive electronically and payments can be made through short message texting . Due to its easiness in use it has been predicted by World Resource Institute that due to its demand, with in 5 years Mobile banking services will be extended to billion customers.

Broadband Community Centres: Singapore is one of the typical examples for this feature. Community centres provide Internet facility to its residents there by offering services like e -government Tax payment, application forms, etc… . In some countries like Australia, Broad band community centres assume the roles of Bank branches or government agents. Basically these centres serve the residents as a platform in which more industries and social organizations have a greater reach to the people, which become a cost effective measure for the people as well.

Hosted Platforms: This approach is implemented by Alcatel-Lucent company in an African country Senegal where it hosted a mobile data centre where the service providers from four other parts of the world make use of it by providing GPRS (General Packet Radio Service) applications that run at a speed of 115 kb/s. Due to this service facility it becomes possible for the service providers are able to provide services to the end user at much shorter time period of 3 months. The main advantage in this business model can be seen from the fact that the service providers those who are in this need to pay to the host company Alcatel-Lucent as and when they use the platform. This is indeed a real benefit for countries which are under developed like Africa where the country may not sufficient users to attract Telecom companies to invest on stand-alone platforms to deliver advance services in the arena of Telecommunication in an efficient and cost effective way.

Wholesaling: This type of approach is followed mostly in the developing countries where the network operator resells excess net work capacity to a retail service provider VNO (Virtual Network operator) who in turn offer services to consumers or commercial institutions

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Outsourcing: This approach becomes more common in most of the countries. Day to day work functions and managing the resources will be given to an external supplier. The business functions that will be offered will be diverged in nature. The external supplier will take care of related work functions of Data storage, financial accounting, Supply Chain management and HR functions like pay roll etc… . The major advantage of outsourcing lies on the reduction in the total cost of ownership and extending timely service to the consumers

Asset-sharing: The main advantage of this model is sharing overlapping tangible assets between services providers operate same networks in order to eliminate infrastructures that are overlapping among them. Due to this asset -sharing model the service providers can expand the area of coverage and reduce impact on environment to a greater extend.

This approach again reduces the total cost of ownership and more innovative services can be provided to their consumers.

Content Aggregation and Brokering: The main driver for this business model approach is the concept of UGC (User-generated content) and premium content. The user can directly purchase copy righted multimedia files through video-on-demand and pay-per-view models. What is important in this model is to ensure the integrity of the content that is purchased by the user by adopting digital rights management technology to verify the authenticity of the content.

Targeted Advertising:

This type of model encompasses interactive connection between people and the type of brands they are looking for through multimedia screens like TV, Mobile and Computer etc… Due to the current technological advancements, these multimedia sectors become the essential revenue generating opportunities for the service providers.

Premiums paid by the advertisers in this multimedia will add on to the revenue growth to the service provider which is quite substantiated.

UGC and Communities: This model is growing day by day in the field of communication. The examples for this model are social network sites like Face book. MySpace, people information sites like TripAdvisor and YouTube. In these user is allowed to generate multimedia content which is distributed instantaneously to the other users. Once the content is created in these applications it can be amended, rated and commented by many group of users.

The following are the common types of UGC that includes new sites, Photo sharing sites, service review sites, trip planners, social network sites, boards, blogs and gamming sites.

In this concept, forums are used as the platform to share the user’s knowledge, experience on a topic of interest. The industry which has reaped the benefits out of this model is the broadcasting industry which has gained momentum due to persistent consumer interaction and better service orientation. Another mile stone in this model is getting the user’s feedback directly by introducing the option of “voting” via internet or mobile device so that pulse of the user is measured instantaneously.

Fulfilment: This model ties the service provider and the user in terms of billing relationship leverage once the transaction is completed and service is delivered to the end user on third parties behalf. A typical example would be downloading a music album to mobile phone via internet…

E-Commerce and m-Commerce: This model envisages an electronic transaction in terms of buying and selling operations in the mobile services.

The following electronic transactions are the typical examples for this model, consumers can use the wireless network infrastructure for Internet banking electronic funds transfers, Internet Marketing, SCM (Supply Chain Management), on line trading and electronic data interchange

M-Commerce provides the end user an opportunity to pay for goods purchased using their mobile device. In other words, mobile phones are considered to be “Virtual Credit Card” with the usual securities in place to avoid tampering in any sort.

It can be inferred from the above business model that the main drivers are reduce operational cost and increase top-line revenue. Either of the above action will lead to increase in business margin.

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Consultative Approach to Business Transformation

It is also a newer approach being followed by Alcatel-Lucent to its service providers there by suggesting a right strategic direction by developing a structured and consultative frame work in the form of simple process

Step 1 – Identifying our customer’s PMO.

Step 2 – Understanding the customer’s top priorities and objectives

Step 3 – Identifying the customer’s intended FMO

Step 4 – Identifying the appropriate products, services and solutions

It is anticipated for a failure if the steps are not followed which may lead to negative impact to the business results in a increase in the cost and decrease in the revenues and low margins. Failure to do so can result in negative consequences – in the form of a negative spiral of growing costs and flattening or decreasing revenues and margins.

The real transformation of PMO to FMO will happen after the service providers going through a transition phase in which the cost for operations will certainly increase due to deployment of new IP based system in terms of legal maintenance .

Comprehensive approach to transformation has yielded good result for the enterprise.

Strategic Impact Analysis

The company Alcatel-Lucent has worked with both kinds of operators – the “modernizers” and the “comprehensive business transformers.” . Not with standing to the fact that both operators yielded good result , however their strategies will be different . The operator “Modernizers ” gives at most importance to technical details with tactical execution, where as the another operator’s emphasis is on emerging business needs and implementing strategic objectives .

Creating Convergence

The challenges are growing as the technology grows, hence the strategies being adopted by the enterprises and service providers should take a realistic and feasible approach in order to move forward with the transformation initiatives that nurtures Consumer relation and profitable growth . Hence creating convergence becomes so vital on the current business environment..

The following layers should be bounded together in order to bring IT and network environments connected at each and every layer of the network

User exposure

Business process

Service abstraction

Application

Physical / Technical base

It is not expected to have “one-size-fits-all” approach to transformation, however it is imperative to have each transformation initiative evaluated based on respective strategic direction thereby assessed according to its own characteristics and further tailored to meet the need .In this context what is more important is to have clear understanding of Present Mode of Operation (PMO) and to develop strategies to reach required Future Mode of Operation (FMO).

Ensuring successful transformation also means finding a knowledgeable, committed network integrator partner that can act as a trusted adviser every step of the way. The best partner brings expertise and experience in IT and networks, as well as a comprehensive services methodology built on best practices and experience to mitigate risk, minimize complexity, capture new revenue, reduce costs, and position organizations to reap the business transformation benefits going forward.

Today, the service provider delivers traditional voice and data services while introducing new, innovative media and entertainment offerings that generate new streams of revenue over a common network infrastructure. In addition, the service provider is reaping full advantage from Alcatel-Lucent’s field-proven solutions and integration expertise, enabling the provider to meet its strategic network and business transformation goals as well as commercial and operational objectives.

Conclusion

It can be seen from the strategies implemented by the company Alcatel-Lucent clearly exemplifies that business growth was seen by Business coordination, adopting network transformation and extending customer services.

It is imperative that the organization and the service providers should start adopting non-traditional ways to monetize their intangible assets e.g. community, location and billing relationship that could be influenced to enhance Consumer’s trust and confidence

The strategies adopted by their service providers determine the emerging demands and define key business drivers that will lead to transformation.

Furthermore, these strategies pave path way for a market winning situation by adopting new technologies

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