5G is gearing up to change every industry. But how?
The next wave of 5G expansion will allow businesses of all types to reap the benefits of enhanced mobility, flexibility, reliability and security, and provide an entirely new range of possibilities for service providers. Enterprises are investing in digitalization now, and they are open to engage with new partners to succeed.
Translating 5G technology directly into business value
Exploring the role of value chains in digitalization
Digitalization has been explored at length, but the analyses provided typically provide insights into particular businesses and industries but can be difficult to translate to other areas. At the same time, the decisions in one business oftentimes depend heavily on that of other companies in the same value chain. Therefore, in this study, we explored digitalization of the internal value chains within enterprises, as well as the digitalization that occurs along the external value chain relationships between different enterprises.
Drivers for digitalization
For businesses, digitalization is mostly about business and proportionally less about technology. This is reflected in the reasons for and approaches to evolve different processes. Some industries face major structural changes such as transition to e-commerce, sustainability electrification, forces that influence transformations across many different industries. Furthermore, competitive pressure – margin squeeze, productivity or differentiation – holds major influence on their strategies and approaches to digitalization. Lastly, digitalization in the consumer world is beginning to shape the expectations of what customer experience, even within B2B areas, should look like. How these drivers shape digitalization is explored further in the report.
We have identified five different types of digitalization, relevant to different enterprises and situations, each requiring their own types of solutions and with different barriers to entry. Push digitalization deals with accelerating the forward productivity flow in the value chain, while pull digitalization concerns adapting the value chain, to be more responsive to customer demand. Value- add digitalization focuses on increasing the value in the end customer’s domain, whereas coordination digitalization is about bringing together resources needed for producing a certain result. Finally, disruptive digitalization happens when new entrants step into the value chain. The full report explores these digitalization types and their impact.
Depending on their respective digital maturity levels, the choice of what solutions that two enterprises may choose to invest in may vary significantly. Digital maturity is a key factor to consider, and organizations may not be open to these types of solutions. Organizations will not be able to fully absorb solutions that are too far beyond their current maturity level. The report provides further exploration of the topic of digital maturity and what role 5G plays in it.
Service provider paths in digitalization
To become a relevant partner in enterprises’ digitalization journeys is not an all or nothing deal. Rather, there exist many different niches with varying degrees of complexity and barriers to entry that service providers could approach. There are several paths that service providers could take in the digitalization landscape. Within Ericsson’s three existing service provider roles we have identified six paths, each contributing a specific value to digitalization. They are not exclusive to each other and service providers should consider which path they want to follow, and what ecosystem to work in, to pursue that path.
The value-chains, digitalization drivers, types and levels of maturity all affect each other to shape the evolving digital landscape. The aim of this report is to provide a map of some key areas for navigating this complex environment, and to break down the complexity and make it more approachable. We hope that this insights provided in this report will support service providers to identify their path for how to enable the 5G powered business, starting already today.
The findings in this study are based on two parts. The first part is built on in-depth interviews with 25 industry representatives, each with key roles in in their enterprise's digitalization journey –Interviews ranging from CFOs and CDOs to production managers. The second part constitutes of detailed responses from 1100 IT decision makers from enterprises active in the targeted value-chains across Australia, Brazil, Canada, France, Germany, Italy, Japan, South-Korea, Spain, UK and the USA.
Download the full report here