Reports that BT is to fold its Division X enterprise unit focused on growth areas such as private 5G networking, edge computing, IoT (Internet of Things) and AI (Artificial Intelligence) fully into the new BT Business division (formed from BT Enterprise and BT Global) highlights the organisational and operational challenges of balancing focus on innovation in individual growth areas, against focus on wider customer solutions.
Many carriers have established arm’s-length specialist divisions for technology areas that promise growth or to act as investors into new start-up (so-called ‘moonshot’) businesses. There is no evidence of any significant success on the moonshot front even in an era of turbocharged growth in the broader technology sector.
Telcos successes and failures
Telcos like BT have largely delivered incremental growth from adjacent services to their core portfolio, or by connecting services from cloud and specialist over-the-top service providers. Telcos seem to be able to identify the broader challenges and opportunities but not fully to exploit them.
Where they have succeeded is through extensions of core competences in product areas like 5G, IoT and broadband. Many will also have internal operational strengths in niche areas of AI. Most have partnered with cloud service providers for edge offerings, alongside other cloud-enabled services.
The challenges are cultural – carriers tend to be risk-averse; financial – carriers are having to invest in expanding their core fixed and mobile infrastructure; and operational – cutting costs and automating processes and interactions with customers, partners, and suppliers.
Does the BT move make sense?
Within this context, having a separate unit targeted at growth opportunities potentially makes sense because a specialist outfit can focus on new and growing technologies.
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However, these need to be delivered through the existing core organisation – and traditionally telcos have been structured as a series of silo technology/product activities with a customer segment and/or geographic delivery go-to-market set-up.
At the customer front end, services are combined to meet the needs of enterprise customers of all sizes: from simple bundles for smaller businesses to bespoke, highly customised solutions for the largest corporates and organizations.
On the face of it, both the incubated and the incorporated approaches have their merits and challenges. However, far from shooting for the moon, many carriers would be happy to deliver incremental enterprise revenue and EBITDA growth year on year in a highly competitive market.