2016 has been called the year of conversational commerce, and a recent study would appear to back that up. According to Business Insider, messaging apps have now surpassed social networks in terms of monthly activity.
After several years focused on growing the user base, companies such as WhatsApp and Facebook Messenger, are busy building out and monetizing their services, following the trail blazing example that WeChat has set in China. Around the world users are now logging in to their messaging apps, not just to chat with friends, but also to connect with brands, browse merchandise, and watch content.
WeChat had massive success following a commercially focused approach to conversations. With its Platform as a Service (PaaS) model, WeChat has leveraged the popularity of person-to-person interactions to expand into business-to-consumer (B2C) interactions. Its platform is a trusted gateway, delivering a complete customer experience for users to interact and buy from brands, who in turn benefit from WeChat’s enormous scale and reach. WeChat has broadened its reach far beyond social, its platform is now a fully-fledged marketplace.
Can operators move into this space?
Digital success has so far belonged to the consumer Internet, but the focus has been shifting towards enterprise applications. The next wave of digital transformation will take this to the next stage – the Business Internet. The Business Internet sees the IoT market move away from M2M, and fully embracing closed loop ‘servization’.
The default role for operators in this IoT space is obviously supplying the connectivity – an $86 billion global opportunity (according to Machina Research). But those operators hungry for a bigger slice of the market could be looking at a $598 billion IoT opportunity, if they also take ownership of other aspects of the value chain. The question is – can operators close this gap, not by providing better network capabilities, bit more significantly be developing new business models?
There is huge potential for operators as digital players in the IoT space especially if they leverage their full capabilities, and take ownership of the Enterprise role (a PaaS approach, similar to WhatsApp). This would see them sitting in the middle of brands, channels and consumers, in order to deliver the customer experience, commercial path and partner integration processes. Their IoT pitch is: a trusted partner that can enable brands to monetize and scale their services.
But operators need to offer more than just their brand if they want to maximize their IoT opportunity. In the Business Internet world, operators will become fully-fledged Internet companies with software DNA, enabling cross-enterprise collaboration on an industrial scale. This is the approach that German telco Deutsche Telekom has taken with its Qivicon smart home platform. Qivicon orchestrates a broad number of new partners in the IoT space, and delivers subscribers a simplified and unified customer experience. This is a great example of an efficient operator/ OTT partnership model, working in the smart homes segment of the IoT space.
Telcos could go even further than this, though.
For example, visitors to the BBC Good Food website can, right now, put recipe ingredients into their preferred supermarket online cart with one click. This sounds great but the customer experience is far from frictionless (the customer has to have a separate supermarket login), and the businesses involved are unable to share insights. For example, with the existing setup, Tesco is unable to recommend ingredients based on the user’s recipe searches over at the BBC site.
There’s a bigger problem – and that is scale. The simplicity of this customer experience requires a lot of technical integration between multiple parties, each contributing part of the overall story. But supermarkets are unable to integrate on a case-by-case basis with every single recipe channel.
Instead, what’s needed is an operating system for the Business Internet to make such collaboration easy, and to enable great customer experiences to be created on the fly by multiple connected enterprises.
What does this Business Internet Operating System look like? It turns out that it has a lot in common with the systems the most forward looking Telcos are using to support their customer operations, including business process orchestration, customer service and real-time intelligence based on customer analytics. Telcos can bring a huge amount to the Business Internet. They have existing operational systems containing the essential components of the Business Internet OS. There is valuable DNA in their customer operations and SLA, and they can also access rich customer insights to share with partners in the digital ecosystem.
It’s a matter now of investing in the right technology and business approaches which will enable them to monetize the IoT space.