One of the reputed IT firms in India created an industry focused vertical encompassing CSPs, Energy and Utilities. This led me to think as to how the firm can leverage competencies across these seemingly disparate industries and how these different entities fit into the game plan and create synergies for the firm.
In simple terms both CSPs and Utilities are in the business of providing ‘essential’ services for their customers and in the absence of which modern life will come to a grinding halt. If we look at the infrastructure needs of Utilities and CSPs, both the industries have a hub and spoke model of distribution with central grids/mobile switching stations/telephone exchanges forming the hub and the network of sub-stations/transmitters/transformers/transceivers connected thru’ copper or Optic cable acting as spokes.
There are tonnes of copper criss-crossing the world as the customers need the ‘last mile’ wired connectivity to be able access these services. Though this commonality might appear to have ceased to exist somewhat with the advent of wireless communication, it is to be noted that even wireless/mobile communications would need setting up of towers/transmitters for last mile wireless access and the connectivity between the towers and the switching stations/exchanges is still via optic-fiber cables.
Even coming to the landscape and challenges being faced by the CSPs and Utilities there is a common thread running through industries:
1. The service offerings by both Utilities and CSP have now fallen in the realm of ‘commodity services’ and it is getting more and more difficult to offer differentiation in these businesses.
2. There used to be a monopoly in both the CSP and Utilities sector till recently. However the monopoly has started to gradually even out in the CSP sector in the recent past
3. The coverage of the world’s population is almost 100% in case of Utility industry and it is going to get there very soon for CSPs as an industry
4. Regulations and government policies have a big impact on both these industries
5. The investment needed in infrastructure and equipment is very large for these industries thus creating higher entry barriers
6. When it comes to overall technology/IT adoption however the CSP are far ahead when compared to the Utilities. This is however changing with the advent of the Smart Grid.
Let me now discuss what lies in store in future for these industries. The CSPs as an industry has evolved rapidly and is facing extreme competition especially in the mobile communications space. There is a preponderance of triple play and quad play options where in the service provider gives broadband internet, landline, cable TV, mobile, 3G internet all as a single bundled service offering. There is an emergence of Apps and Mobile Internet which has led to the prevalence of devices like smart phones and tablets which has given us access to information in ‘anything anywhere’ format.
New modes of communication like social networking has changed the way we communicate and even as we digest the revolution brought about by entities like Facebook and Twitter we are seeing the evolution of hybrids like the integrated versions of Skype with Facebook which allows voice chat on a social networking platform.
Differentiation by creating attractive value propositions/value added platforms/products for the customers are the key to success in the CSP world. The CSPs will need to look for ways and means to make the customer increase the usage of their service so that it results in higher ARPUs. Intensive customer profiling needs to be done so as to prevent defections of customers as bandwidth becomes a commodity and innovations like Multi Number Portability reduces the exit barriers for customers.
While CSPs tries to increase usage, the problem is exactly the opposite in the Utility industry where there are energy shortages and inability to balance the equilibrium in the power grid. The utilities must try to encourage users to conserve power and ensure there are no blackouts in peak times due to grid overload. Smart Grid is a great initiative that addresses this issue well and it leverages the technology especially IT very well for solving the problems.
Using smart grids it is possible to predict the patterns of energy usage in different areas at different times and hence move energy from one grid to another based on the load in different areas. The equivalent of smart phones and tablets in the utility space are the smart devices which ‘know’ the peak time of power usage and can switch on automatically when there is less load on the grid and thus creating equilibrium and preventing grid overloads. There will be a plethora of devices like smart washing machines, smart ACs and the like which are smart grid enabled and communicate in both directions with the grid to ensure power usage is optimized and prevent spikes in power usage.
In summary both CSPs and Utilities will adopt technology in a big way to achieve their objectives and IT systems like Business Analytics/Integration/BPM/Complex Event Processing will be the key enablers in the success story of these industries!
