Company Overview

XYZ is a Telco giant named as #1 telecom operator in the country. In tune with the times, it has
made huge strides in driving a large share of these customers to its online platforms. In addition to
over 80mn customers who manage their services through its app and web platform, it also extends
service via apps that boast of ~50m customers on a monthly basis. Add to that the 16mn homes
pervaded by DTH screens powered by XYZ, and it makes for the largest connectivity platforms in
the country. Many of XYZ ‘s 300mn customers have been availing these services for many months
or years, leading to ABC garnering a deep understanding of their profile and preferences. This
digital reach, bolstered further by the 1.2mn retail points which sell ABC’s services, has enabled
ABC to deliver many lucrative products and services delighting its customers.
But the growth is limited by the industry concentration and extensive competition. Those that do
not make any new move risk commoditization and lower revenue as subscription services decline
and their prices drop. The disintermediation of telecoms has gone beyond just OTT services
displacing CSP offerings to the disintermediation of the entire relationship between customer and
operator. Current limitations in network quality and capacity, along with a relatively high cost of
access for consumers, have meant that some digital businesses are choosing to reduce their
reliance on existing service providers. Web-scale players such as Google, Microsoft and Facebook
are moving quickly – more quickly than telecom operators in most cases – to fill key gaps in core
telecom services and connectivity. Twilio, for example, has a suite of APIs that let enterprises build
their own versions of commonly available platforms (call centers being important for telecoms in
particular).
Some in the industry are beginning to recognize this. Telecom operators report being bullish on
XaaS and are expected to invest significantly in this approach over the coming years. Those that
embraced cloud technologies early are enjoying greater flexibility, lower costs, improved
functionality and an overall increased customer centricity—and therefore are able to stand out
from the competition. The next decade of digitization will look markedly different from the past
and the company will need to be well-prepared to take advantage of the sweeping transformation
taking place in consumer lives, enterprises and the broader economy. XYZ is looking to expand into
a similar direction and seems to have found some solace in the revolution Telco 2.0. The company
currently has a few solutions in the video conferencing platform and Platform-as-a-service (PaaS)
domains but hasn’t been able to optimize their returns.

Telco2.0

The Telco2.0 concept is a network evolution movement, that focuses on helping Telcos move from
a unidirectional business model, in which they create service offerings and provide them to
consumers, to a bidirectional business model where information and communication technologies
(ICT) and applications become the platform to interconnect multiple providers (upstream
customers) with different users (downstream customers); turning the CSP becomes into a broker
that allows them to exchange services, information or even goods. The goal is to transform the CSP
into an entity that offers hundreds of services that bring together applications and content from
various sources (including Internet-of-Things, wearable, B2B, etc.) to create composite
product/service offerings enhancing their relevance in the digital economy.
Telcos can take various roles to address the Telco2.0 market by becoming:
• Platform providers – exposing their own capabilities as well as partner and third-party capabilities
to create new and exciting communications products and services
• Service providers – exposing a smaller subset of their own (or third-party) capabilities to offer a
service (voice, video, sms, collaboration, etc.) to developers
• Application providers - creating and providing applications and services from their own capabilities
(and those of third parties) to consume as retail or over-the-top (OTT) white label applications
• Application resellers and agents- offering a marketplace (resell and revenue share) with
applications created using the Telco’s (and/or third-party) capabilities and platforms.

The UCaaS Story:

The Everything-as-a-service (XaaS) environment has seen phenomenal growth in recent years with
the expected revenues to reach $2 Trillion by 2021. Offering a way for companies of all sizes to
transform their communication strategy, UCaaS combines affordability and convenience into a
single package. According to Markets and Markets, the sector should be worth at least $28.69
billion by 2021. UCaaS has for the marketplace, showing an annual growth rate of 29% and is
capable of providing revenues of over $400 million every quarter.
Unified Communications as a service is one of the best-known terms in the everything-as-a-service
economy. While the concept of unified communications has been around for years, the as-a-service
model makes an entirely cohesive technology stack more accessible to the masses. UCaaS offers
features, such as voice and telephony, video and audio conferencing, real-time messaging and
presence and is hosted by your provider. That means that you don’t have to set up any of your own
infrastructure to get started. The flexible and cloud-based nature of UCaaS makes it an excellent
choice for businesses of all sizes. With UCaaS, you can avoid the initial expenses often associated
with setting up an advanced communication strategy. However, you still get to tap into the latest
disruptive technology on the market. Some of the features you might expect from UCaaS include:
• Voice and Telephony: Rather than merely offering VoIP or video messaging, the concept combines
everything you need to reach your employees and customers into the same environment.
• Video and Meeting Solutions: The cloud ensures that your team members don’t need to be in the
same room to work together on projects anymore. With video and a collaboration tool, it’s possible
to share files, host conversations, and even launch presentations from a desktop, smartphone or
tablet.
• Messaging: In UCaaS environment, messaging can refer to anything from real-time conversations
hosted on collaboration applications, to SMS and MMS texts. It also provides an excellent way to
reach out to customers too. These days, many younger clients prefer text messages and instant
messaging to phone conversations.
• Presence: Many UCaaS solutions are becoming increasingly entwined for the demand for better
collaboration in the workforce. The right service will not only give you a multitude of ways to
connect with your teams and customers, but also provide insights into who is available for you to
speak to.
• Mobility and Apps: The demand for mobility is rising – driven by mobile and remote workers,
among other things. Even if your employees don’t work remotely, there’s a good chance that you
have field workers in your midst that you need to support with the same tools as your on-premise
employees.
• CPaaS and APIs: Communication Platforms as a Service bring additional flexibility into
the UCaaS world by allowing companies to integrate their preferred communication tools into their
existing applications and processes. In a world where one size doesn’t fit all, service providers and
resellers can create more bespoke solutions for their customers based on the value they genuinely
need. Through APIs and implementations, anyone can build the custom communication stack that’s
best suited to their employees and their target audience.
XYZ is trying to identify the perfect opportunity for expansion in the UCaaS market that utilizes
their touch points, current strengths and re-affirms their power as a service provider, maximizing
their profit margins from the end users of the value chain that they themselves created, reclaiming
it from OTTs and other digital businesses. As a first step, XYZ recently launched the
cloud communication suite to help businesses unify communications across marketing, sales,
customer services and operations. Here are the features that were offered to the business clients in
the first launch phase:
• Smart IVR for smarter interactions with contextual analytics to ease and shorten your
customers’ wait time to your representatives and services.
• Intelligent call connect with customized routing and call features to optimize customer experience.
• Monitoring through dashboards to gain insights into customer demography and deliver
richer experience or take strategic decisions.
• Re-configurable and highly intuitive API’s to change your runtime features
• Secure conversations across Omni-channels (web, mobile etc.) through a variety of
CRM applications.
• Additionally, they’d be rolling out the personalized messaging services for B2B segment
soon. Keeping these in mind, it is for you to wonder what should be the next step of XYZ.
Questions to answer:
• Which segment can XYZ opt to enter hereafter and why?
• Which industrial solution pertaining to UCaaS could be a potential driver for growth and gain the
highest market share?
• What should be strategy for market expansion and penetration in this particular segment?
• What is the customer value proposition and factors used for identifying the market opportunity
as well as competitive advantage for XYZ?
• What is the financial investment required and when can we expect to achieve a breakeven
followed by an analysis of the profit/loss expected in next 5 years?
• What should be the most appropriate mode to enter- merger, acquisition or partnership or
proprietor in-house development?