Paper or plastic? It used to be a question that was a source of discussion, debate and dilemma for grocery shoppers. In a relatively short time, at least where I live, that question simply went away. For me and most folks I see at the market now, the small fee for disposable bags had a big impact on behavior. Now, it’s a matter of getting into the habit of bringing reusable bags along. For manufacturers of disposable bags, whether paper or plastic, the world changed pretty quickly.
For service providers, I’d argue a similarly fast and fundamental change is taking place, one that’s best described as “the application economy”. If you’re working for a service provider that’s still focusing on the questions of a few years ago, there’s a good chance you’re not going to be providing answers that are relevant to your customers.
Today, applications sit at the confluence of some pretty major trends – mobility, cloud and social, for starters – and these applications are becoming increasingly vital, from a strategic point of view. The quality, innovation and value that get realized through applications will play an increasingly central role in the trajectory of a business and ultimately whether there’s any future at all for that organization. While this is true in enterprises, the stakes may be even higher for service providers.
In the application economy – and our emerging world of crowdsourcing, cloud, DevOps and wearables – what role will the service provider play? I’d argue that having a well-conceived, compelling answer to that question is one of the most vital challenges confronting service providers right now.
Whether you’re working for a telecommunications service provider, managed service provider or cloud service provider, success will hinge on how you adapt to today’s new realities. Deliver services that help your customers thrive in the application economy and your business will thrive. Fail to adapt and you’ll stand to lose business, market share and relevance.
For example, if you work for a telco, the application economy can present a clear fork in the road. One path is the status quo and while mobile traffic is growing more essential, the delivery of that service is increasingly being relegated to the status of plumbing and becoming highly commoditized. The other approach is to build on your unique advantages – to deliver the APIs and integrations that put your organization at the center of application innovation.
More and more, the best way to deliver value to customers is through applications. Harness the innovations of application developers to bring value-added services to customers. Publish the APIs that enable not only internal teams but also a range of external developers to accelerate application innovation. Further, by using APIs to provide self-service access to your service offerings, your organization can boost both recurring revenues and margins.
The battle to avoid commoditization isn’t solely a challenge for telcos either. Managed service providers and cloud providers will also find themselves in an increasingly tenuous position. If they can’t deliver a compelling application-level value proposition, they will be forced to duke it out on who can offer the lowest prices. To compete, these service providers will need to deliver more value. And applications increasingly represent the lens through which customers see and define value.
If a managed service provider only focuses on a server infrastructure but can’t help customers track the actual end user experience for core business applications, its service value will be limited. For customers, differentiators like application quality, innovation and availability will grow ever more significant. Meet this demand with high-value monitoring services and your business will be well positioned to maximize its growth potential.
For cloud providers, there is a huge opportunity in helping customers get new, higher-quality applications to market – and doing so faster and more cost effectively. Application-focused offerings will empower cloud providers to move up the value chain, become increasingly interconnected with their customers and gain stronger competitive differentiation.
To learn more about the application economy – and the threats and opportunities it presents for service providers – be sure to download the white paper How the Application Economy will Make & Break Service Provider Businesses.