Posts Tagged ‘Telecommunications’

Differentiation critical in commodity markets

January 8, 2018

Any business that supplies a product or service that cannot be differentiated against its competitors is at risk of being undercut and thereby losing its customers.

Environmental and Ambient Data

Commodity markets, such as electricity and other energy types are particularly exposed to price cutting, due to the fact that no matter which supplier a customer chooses, the end product, or service, is essentially the same. Sometimes there is a small difference in service or product quality, but often that is not a strong enough argument to compete against a lower price.

The stark choice that businesses in commodity markets face in order to compete, is between cutting prices or finding a point of difference that will motivate customers to choose them over a lower priced competitor.  Cutting prices leads to price wars with competitors and a downward spiral to the bottom, so differentiation has to be the preferable option over price cutting.

In the New Zealand electricity market, Trustpower has proven that bundling electricity with broadband and/or telephony services together in a single offering makes a very compelling proposition to customers. It is also very difficult for other electricity (or broadband) suppliers to compete with, unless they can also provide the same bundled services – which most don’t.

How can you compare the price of an apple with the price of an apple and an orange?

Trustpower’s leadership position in bundling electricity and broadband has been exceptionally successful in the New Zealand market and we are now seeing other suppliers starting to follow in their footsteps.

Another successful point of differentiation is locality.  In the New Zealand region of Taranaki (known fondly as “The Naki”), local managed service provider “NakiCloud” prides itself as being the local guys, who sport Taranaki’s famous black and yellow colors.  NakiCloud (and their sister company “Speedster”) offer locals the same products and services as the big guys in Auckland, but when things go wrong they are there on the spot to help, which is far preferable to the locals than spending hours on the help queue for one of the bigger providers.   This point of differentiation is working exceptionally well for NakiCloud in the Taranaki region.

In a reversal of Trustpower’s bundling, NakiCloud is in the process of bundling electricity with their current offerings, thereby adding a further point of difference for their customers – as well as an increased revenue stream from their existing customer base.

This bundling is facilitated by NakiCloud’s use of the Datagate billing portal, which can combine telecommunications services, data services and electricity on the same invoices to their customers.

In my role as CEO of Datagate Innovation, I see that a big part of our purpose is helping our clients differentiate their service offerings through various means, including bundling different services from a multitude of suppliers, improved information flows with our clients’ customers and superior invoice & data presentations.

As they say…“Differentiate or Die”.




The Age of the IT Service Re-seller

December 19, 2017

New business models appear as the technology landscape evolves.  Most of the sales and service companies within the ICT sector have now evolved into service re-sellers, or service aggregators.  This is a direct result of the Internet and Cloud computing.

Inspiring productivity with a wealth of technology

Businesses today have access to a huge range of cost-effective, scale-able, public-cloud computing and communication resources, available on subscription or usage-based pricing plans that can scale along with business growth and demand. “Everything as a Service”.

What do businesses need to make productive use of all this readily available ICT resource?

Most businesses need external expertise and support to provide a service layer over the top of these on-line resources to produce functional business solutions that perform correctly for the business’ requirements.

This service layer of expertise and support is typically provided by Managed Service Providers (MSPs) and in some cases, Value-Added Re-sellers (VARs) that focus on particular business applications, such as ERP or accounting software, CRM solutions, communications, inventory or production solutions.

MSPs and VARs typically have a good understanding of  their customers’ business models, workflows and processes. They are able to recommend, advise on, design and sell business solutions to suit the customer’s business requirements. These solutions are often hybrid, meaning that some parts of the solution might be their own services, while other parts may be on-line services wholesaled by other suppliers.

Convergence of IT and communications (computers and phones have merged) means that IT-focused MSPs are now being looked upon to provide voice solutions, such as VoIP, virtual PBX and mobile along with data and connectivity services.  We are even seeing electricity sales converging with telephony, to add to the mix.

Businesses customers are showing a clear preference for simplicity and buying their ICT and on-line services from a single supplier, who can be held accountable for their entire technology framework, including voice and data connectivity – maybe even electricity as well.

What is the biggest challenge for MSPs re-selling services and hybrid solutions?

The biggest challenge of the Service Re-seller is to combine a collection of services from any number of suppliers (both internal and external) and then bundle, price and present it all to the customer in the most simple and easily understandable form – a single bill. This is no easy task because often the services involved have a different pricing basis, different display requirements, different suppliers and may need to all be bundled together on the same invoice.

Billing of voice and mobile services is already complex, let alone when it is combined or bundled with other types of services.

What solutions are available to help service re-sellers manage the complexity of combining multiple services?

A new generation of Cloud-based billing solutions, such as Datagate, is designed to simplify and automate the job of combining, rating and billing different types of services from any number of suppliers. Datagate will also present usage data and invoices to end-customers via a white-label, end-user portal. It also integrates with most common accounting or ERP systems, such as Xero, Quickbooks, MYOB, SAP, Sage, Microsoft and others, meaning invoices get passed through to the re-seller’s accounting system, without the need for any re-keying.

Where is this all heading?

Worldwide, across so many industry sectors, there is a growing trend towards subscribing to services and paying based on usage of those services. This behavior is being driven by the dominance of the Internet (or Cloud), which itself has a predominantly service-based business model.

Service re-sellers are the way of the future!



Paradox of the Telecom Sector

August 20, 2017

The telecom sector is facing a paradoxical mix of circumstances. On one hand it provides the mission-critical technology platform for innovation, growth and disruption across nearly every industry; whilst on the other hand, it faces enormous changes and disruptions to its own traditional business model and revenue streams, more so than perhaps any other sector.

Furthermore, the average revenue per user, across the entire global telecom industry, is falling every year.


The telecom sector provides the platform for innovation and disruption across nearly every industry, yet faces the challenge of innovation and disruption itself, perhaps more so than any other sector.

Incumbent telecom providers need not be the victims of disruption and reducing revenues in their own industry; they can be the agents of change and disruption, by recognizing (or even creating) shifts in the market, differentiation and moving faster than their competitors to meet the new market dynamics.

Recognition of new trends, agility and speed of execution are critical factors. Reinventing business models, bringing new offerings and services to market must be done in quick time.  A major factor, once new offerings are selected, is how quickly billing systems can be adapted to facilitate new offerings, bundles with new services and pricing plans. Billing is so often the Achilles heel in the telecom world.

Differentiation between Telecom providers can be achieved by bundling complementary or value-adding services or offerings with standard telecom services. This can often be achieved through partnerships with service providers outside the traditional telecom sector.

A significant disruption (or opportunity) for the telecoms sector is its convergence with other on-line service providers.  Telecom services are now being successfully integrated and sold by the I.T. industry, managed service providers (MSPs) and other service sales businesses. Electricity companies are bundling telecom services such as broadband with their offerings. Cloud software businesses are also selling and bundling telecom services.  Phones and computers are now one and the same.

Billing is so often the Achilles heal in the telecom world.

Bundling different yet complementary service types under a single pricing plan, on a single invoice makes it more difficult for competitors to undercut pricing with only a single service type. Service bundling is said to make telecom customers more “sticky” and provide differentiation.

Rather than competing with and resisting new convergent players in the sector, some telecom providers are actively embracing and pro-actively driving this convergence. A prime example in New Zealand, is Spark Wholesale that offers a range of telecom services to its clients, to enable them to sell telecom services under their own branding, giving Spark access to more customers and markets that it might not otherwise be able to reach.

Wholesale telecom providers enable service businesses, such as Managed Service Providers (MSPs) – who have trusted adviser status with their customers, to market and sell telecom services such as broadband, SIP, VoIP and mobile offerings to predominantly business customers.

Telecom resellers require specialized automated usage-billing solutions. Datagate is an agile, white-label, cloud-based billing solution which partners with Wholesale Telcos to get new telecom re-sellers up and running quickly, with billing functionality that integrates with the Telco’s usage data to rate, produce and distribute invoices to their end customers. Datagate can connect to and bill most usage-based services and make it easy for convergent bundling of service types, where multiple service types are combined on a single invoice.

Embracing new business models, new offerings, partnerships, agility and speed to market are the key requirements for success in the telecom sector of this new disruptive, paradoxical world.

The Convergence of IT, Telecommunications and Electricity

October 14, 2015


This is a time of great opportunity and also great risk of disruption, for businesses working in the fields of IT services, Telephony and Electricity.  Each of these three industries on their own are under increasing margin-pressure, because each industry can be seen to lack a great deal of differentiation.  All can now be classified as on-line infrastructure services. Phones are computers, computers can be phones – all require a network and electricity to operate.  Increasingly, all must work together to provide a working platform for the common customer.

The needs of the market, the customers, will ultimately drive the outcome of who wins and who loses.  The market favours those who are efficient, those that have the best understanding of the customer’s needs, those who adapt, those who offer the best service, those who are easiest and least costly to deal with.

Increasingly we are seeing the rise of businesses who offer combined IT and telephony services. These are now intertwined services, where phones and computers share the same networks, Internet connections and infrastructure,  They are now very much one and the same.  The technology of both has converged.  Furthermore, the sales process and the customer relationship are now the same. It no longer makes sense for the customer to source telephony and IT from different suppliers.

Now add the supply of electricity to the mix of IT and Telephony.  It’s a logical addition – another on-line service. It can leverage the same sales process and the same customer relationship as IT and Telephony. Companies that provide all three of these services to their customers, can offer a better, more complete offering, while at the same time getting maximum return on their sales and on-going relationship effort.

This convergence of on-line services, is the reason why I’m so convinced that my new company Datagate is on the right path.  Datagate is a white-label, Cloud-based billing engine and customer service portal for companies that sell services including Telephony, Electricity, Hosting, IT services and other utility services.  Datagate produces a single unified bill for the end customer that includes all subscribed services and lets them review and analyse their bills and consumption of services in their own private on-line portal.

Datagate is rapidly building a base of on-line service re-sellers, covering IT, Telephony, Electricity and other services, enabling these businesses to pick and choose the services they want to sell and allow them to create their own bundles and pricing plans.

Convergence is a great creator of business opportunities …and also a great disruptor.