The B2B2x market is $224 billion opportunity for operators, if they can overcome outdated preconceptions and execute digital transformation projects, according to a new report.

Management consultancy AD Little (ADL) interviewed over 100 telco executives for its “Major strategic choices ahead of TelCos: Reconfiguring for value” report.

At the launch event, ADL revealed a majority of respondents, 35 percent, said new services outside of the core would drive growth over the next few years.

One of these is B2B2x, which ADL defines as the operation of enterprises’ digital solutions.

It cited Vodafone’s work with airlines on the likes of credit card fraud prevention, and Orange and Sorin Group’s remote patient monitoring solution as examples.

There is a “material opportunity” to provide platform-based digital services over the next few years, according to ADL.

In 2020, it is forecasting this market to be worth $166 billion globally, with a further $58 billion opportunity in systems integration and operation.

ADL claims the main perceived drawbacks are unsubstantiated.

For example, it said telco uncertainty about when to enter the B2B2x market was misplaced given the digitisation of industries is “already in motion”.

ADL also noted that fears that IT providers were better placed to profit from B2B2x were wrong, as telcos are better at operating technical assets at a lower cost.

However, telcos must make some significant adjustments if they are to improve on their attempts to address the B2B2x market thus far.

ADL said they needed to amend the design, sale and operation of their offerings, and increase the agility and openness of their internal systems and processes.

This digital transformation offered the carrots of cost reduction and improving the likelihood of getting innovative products to market more quickly.

Operators also need to start working more closely with customers to better understand their needs and to co-create solutions, ADL said.

[Read more: Vodafone struggles to solve the co-creation conundrum]

Internal changes come in several flavours, according to ADL’s report.

When it comes to IT and network transformation, operators are currently focused on rebuilding parts of existing platforms, rebuilding entirely or creating overlays.

Each option has its pros and cons.

Overlays are cheaper but only delay the problem, while new builds offer wide functionality but do not guarantee success, ADL said.

Operators should also look carefully at whether full ownership of network assets was strictly necessary.

If it could be argued that an asset did not provide differentiation in the long term, for example, then diluting ownership could free up cash to fund key digital transformation projects.

[Read more: Telefónica sells minority stake in infrastructure arm to private equity]

Bela Virag, Partner at Arthur D. Little, said: “The digitalisation of the telco industry has made possible a variety of strategic choices.

“Some will leverage synergies from globalized production models, while some will become exceptionally lean local players.

“Some will go asset-light, while others will remain asset heavy.

Some will master the B2B2x opportunity, while others may ignore it altogether.

“It is these choices that operators face regarding their configuration that will drive them to be less look-alike than they are today.

“Ultimately, there are multiple forces that will drive operators to take on much greater design responsibility for their IT, network and services.”

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