2014 in the Telco and IT industry

I was recently asked to highlight what are the hot topics to monitor in 2014 in Telco / IT industry. Here’s the list I provided.

1. Software Defined Everything

Beside making IT infrastructure more efficient, and therefore cheaper, virtualisation delivers elasticity of the same infrastructure. While efficiency is the ability of running multiple servers on a single physical machine, elasticity is the ability of spinning up a new server in seconds (there’s no need to buy new hardware, everything happens at the software layer) allowing (virtual) resources to scale up and down with demand. Software Defined Network and Software Defined Storage deliver the same functionalities in the network and storage respectively. Technologies aside, this drives two significant changes in the demand for IT services: first of all IT managers will get used to “close to real time provisioning” and will no longer accept delivery times of tens of days; second, IT managers will not procure IT resources based on peak or future demand: they will buy what’s needed in the short term, and ask for elasticity to be built into the contract.

2. Shadow IT will push office IT closer to home IT.

It all started with Bring Your Own Device, ie the desire for employees (executives first) to bring and use their own devices in the office. It continued with BYO connectivity, eg employees using FaceTime or Skype for business purposes in the office through their own  – or corporate paid – mobile network connection or, for the more sophisticated, through a MiFi. It has now expanded into BYO application eg FaceTime, Skype, but also functional VP choosing IT services, e.g. SalesForce, independently from the CIO. The more conservative CIOs have deployed decoys and counter measures to counter this trend. On the contrary, the IT Managers that are being looked up at are the more open minded ones: they’ve built a much more mature relationship with other executives, for instance by having the IT team acting as an advisor to other departments (eg marketing leads the choice of the content management platform for the new website, using the IT department as an advisor). They also have a more orchestrated way of managing budgets, and finally they hire consumer IT experts (eg former Facebook, Amazon or Google developers) who are used to think User Interface and Usability first, and have lived and breathed lean startup methodologies.

3. Ramp-up of telco players consolidation.

There are not enough revenues in the market to justify so many parallel network infrastructures. Add to this that EU regulations are putting more pressure on operators’ roaming revenues and that Countries’ governments around Europe are finding ways of rolling out new network infrastructure (fiber) with taxpayers money. Moreover while 3G was a viable data connection alternative for single devices, LTE is fast becoming a viable data connection alternative for entire households or offices (just travel to Stockholm to see how fast LTE is becoming a substitute for DSL). All in all, this will drive a hunt for economies of scale (horizontal consolidation, ie the merge of operators of the same kind, such as cable operators buying other cable operators) and economies of scope (vertical consolidation, ie the merge of operators with complementary assets, such as mobile acquiring cables).


What do you think? Anything I got wrong or that I forgot?