Point of View

Discover the expanding AND converging telecom-media-technology (TMT) value chain

November 13, 2020

HFS Research launches its first-ever Telecommunications, Media, and Technology (TMT) Services Providers Top 10 report, due in Q1 2021.

Many of the world’s best-known companies found their fame by occupying sweet spots in the individual telecom, media, and technology (TMT) industries. They’re now seeing a seismic change in the landscape that demands nothing short of a complete competitive rethink. Amazon’s tentacles reach every corner of the TMT industry cluster with Prime and AWS, legacy telcos are innovating with emerging technology and providing B2B connectivity, and Facebook has become the world’s dominant media force by connecting us and shaping the conversation through advanced analytics and artificial intelligence (AI) capability. The lines aren’t just blurring—they’re being ceremoniously torn apart at a phenomenal pace. TMT enterprises now need 360-degree views as existential competition comes from every angle. Service providers are changing their go-to-markets (GTM) to keep their TMT clients relevant and sustainable; the newest addition to HFS’ Top 10 portfolio will map exactly this.

HFS’ first TMT Services Providers Top 10 report will assess how leading providers meet the technology, organization, and strategy requirements of their TMT clients

In line with HFS Top 10 methodology, we will evaluate providers’ capabilities across the HFS TMT Services value chain (see Exhibit 1) based on execution, innovation, and voice of the customer criteria. TMT services span:

  • Connectivity, business enablement, ecosystem, support, and development services for TMT enterprises.
  • The use of emerging technologies like automation, artificial intelligence (AI), 5G, IoT, blockchain, and many more—alongside cloud software and services.

Our focus is TMT industry-specific services; horizontal services are out of scope unless they have clear industry elements. These solutions and services can be delivered through outsourcing (IT-related or business process-related), traditional delivery modes, and consulting.

Exhibit 1: HFS defines the TMT value chain for our upcoming TMT Services Top 10 report

Source: HFS Research, 2020

 

The boundaries that define services and solutions across telecom, media, and technology companies are blurring.

Each sub-vertical in TMT has traditionally had a separate and distinct remit and go-to-market: telecom was all about connectivity, media was physical, and high-tech was about having the best hardware and software. But now there is increasing convergence. The most powerful companies are trying to master the whole value chain—and in doing so, oust legacy firms that are stuck with siloed business models and high cost bases.

HFS’ various COVID-19 studies have emphasized that across the TMT cluster, product and services portfolios are also having to shift to survive the volatility caused by the pandemic—and enterprise investments into emerging technologies are fluctuating monthly. This volatility is compounded by the existential threats posed by stakeholders in each pocket of the shifting ecosystem…

Cloud hyperscaler AWS would once have been defined as a technology firm through and through—but as the Amazon machine proliferates, all TMT companies must watch their backs.

Amazon’s e-commerce platform was just that, to begin with. Amazon Prime was a first step: a service model complementing the platform’s core purpose of brokering buying and selling. Prime then spilled over into media (as a streaming service) and into competition with Netflix and co. AWS cloud is now providing businesses and cities with connectivity—taking up the telco reins and, in doing so, locking many clients into a broader services portfolio—as well as mining a frightening amount of multi-dimensional data that maps a large part of all our lives.

Traditional telcos are gunning for the B2B connectivity market.

Intra-company communication was previously a matter for web chats or email (both could have been provided by Microsoft, for example, through Skype and Outlook). Among network expansions, massive 5G investment, and new as-a-service offerings, telecom firms are shifting from a focus on B2C connectivity toward enterprise (B2B) clients. They’re wielding emerging technology beyond 5G: mobile, IoT, and combinations of analytics and AI are providing enterprise clients (and themselves) with growth and innovation opportunities—and are providing technology firms new competition (but also monopolizing opportunities like Microsoft’s partnerships with both AT&T and Verizon).

Facebook’s capability with analytics and AI is turning it into one of, if not the, most powerful media companies in the world.

By fine-tuning what we see (based on what we “want” to see), Facebook (and other social media giants) have a phenomenal amount of power to control the conversation. It’s influenced how traditional media companies like newspapers and broadcasters frame their content and reach their audiences. It arguably has the most influence on any election worldwide. Facebook also provides its own form of connectivity—which, for many, has been so essential during this pandemic. Albeit, someone must provide access to a platform like Facebook via a network.

TMT digital “natives” have customer experiences (CX), cloud, and data at the heart of their operating models; traditional players simply must catch up by truly transforming.

To respond to this changing market dynamic, many service providers are combining their solutions and GTM efforts across the TMT verticals.

Despite this TMT convergence—our Top 10 does acknowledge and account for services specific to the individual TMT components. We’re seeing a mixture of providers GTM in a unified manner or address each vertical individually without grouping them from an organizational or GTM standpoint. Other service providers are making conscious efforts not to cover certain verticals for competitive reasons. All these approaches are legitimate and can ultimately optimize a provider’s focus on its core markets. One approach or the other is often a legacy decision driven by acquisitions, an organizational strategy, or an investment priority. A leader can emerge in our Top 10 by covering one or two of the verticals very well or by covering all three moderately.

The Bottom Line: TMT enterprises must have a 360-degree view of the industry cluster—existential threats are bearing down from all angles.

The TMT narrative is becoming one ecosystem. Enterprise leaders and providers alike must quickly realize this. TMT companies face competition from all fronts—and they need their providers to keep them relevant to their customers and financially sustainable.

 

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