This paper discusses the strategic challenge of the Swiss Telecommunications Provider Swisscom AG in the advent of a tight domestic regulation and a limitation of growth options within a domestic telecommunications area.
• How can it transform itself to a revenue growth company whilst preserving its financial profitable base?
• And secondly, what would be the areas Swisscom should invest into in light of a series of new technologies which have a view to be disruptive, sooner or later.
All fields Swisscom might expand into are no “green fields”, which means – in whatever way Swisscom might expand – more revenues from its existing customer base – new services on top of the existing products – new services as a means of diversification – are subject to fierce competition and of course necessarily imply a strategic stretch. 1
All activities Swisscom might undertake in order to get for revenue growth, is stimulated by dissatisfaction, the perception of a gap between current and desired performance. In this Thesis we will look at the performance gap Swisscom has and will quantify this statement of the shortfall between current business results and those that should be expected.
In this paper, we will enlighten the opportunity for growth through an investment into IT Services and check that opportunity gap and try to quantify it. In this quantified assessment the discrepancy between current business results and those achievable with a new business design will be looked at whilst encompassing the looming new disruptive technologies – Voice Over IP and Public Wireless LAN above.
Table of Contents
1 Introduction
2 The Swiss Telecommunications Industry Structure
2.1 Key developments
2.1.1 A maturing voice market
2.1.2 An increasing demand from customers for converged services
2.1.3 New market segments
2.2 Changing shape of competition
2.2.1 The Industry forces in Switzerland
2.2.2 Increasing competition by players from other segments
3 Client relative positioning – Swisscom‘s Key challenges
3.1.1 Swisscom‘s transformation challenge
3.2 Increasing shareholder value
3.2.1 Driving growth
3.3 Strategic priorities
3.4 Swisscom‘s organisational setup – and how IT services does fit into.
3.5 Swisscom‘s Value Chain
3.5.1 Swisscom and its key processes
3.6 Swisscom IT Services
3.7 Swisscom IT Services – the status quo
3.8 The challenge
4 Strategic Choices for growth
4.1 The ICT value chain
4.2 The Target Market Small and Medium Businesses
4.3 The Swiss Midmarket and Size:
4.4 The IT Market opportunity in Switzerland
4.5 Scale and importance
4.5.1 Scale and characteristics of the opportunity
4.6 What is the competitive environment?
4.7 Sidenote: Why do Small Companies outsource so rarely?
4.8 Willingness to Pay for Service
4.9 Swisscom‘s perceived Value Curve
4.9.1 Current value curve
4.9.2 Future value curve
5 Recommendation
5.1 Expanding Swisscom‘s offerings portfolio to generate more revenue
5.2 Examples of potential services to be offered by Swisscom IT Services
5.2.1 Example 1: Desktop Services
5.2.2 Example 2: ERP Horizontal packages
5.2.3 Example 3: CRM packages and Sales Force Automation
6 Implementing the change
6.1 Transformation of the Business model – The On Demand model
6.2 The structural delivery
6.2.1 Deployment platform focus
6.2.2 Enterprise Server Hardware
6.2.3 Mass Server Hardware
6.2.4 Desktops and Laptops
6.3 Changing the organisation
6.3.1 Sales and marketing
6.3.2 Platform Delivery
6.3.3 Project Management
6.3.4 Portfolio management
6.4 Time- Sequencing the change:
6.4.1 Selecting the right entry markets
6.5 Setting vital Checkpoints
6.5.1 Market segmentation checkpoint
6.5.2 Checkpoints on organisational readyness
6.6 Overcoming obstacles – systematising the change
7 Conclusion
Objectives and Topics
The thesis explores strategies for Swisscom IT Services to achieve sustainable revenue growth by expanding its external service offerings beyond its traditional internal captive base, specifically targeting the Small and Medium Business (SMB) market in Switzerland.
- Transformation of the IT Services business model for growth.
- Value chain analysis and strategic positioning within the ICT sector.
- Market opportunities in the Swiss SMB segment.
- Implementation of a Service Provider Delivery Environment (SPDE).
- Organizational readiness and cultural change management.
Excerpt from the Book
4.7 Sidenote: Why do Small Companies outsource so rarely?
It is shown that small companies apparently have a lower tendency to outsourcing than larger enterprises – Interestingly; the largest enterprises often did outsource IT the fastest. Companies such as ABB, Zurich Financial Services (ZFS), Novartis in Switzerland or global players such as General Motors, Daimler Chrysler or American Express are well-known candidates for outsourcing. Reasons for outsourcing – after discussions with small customers - can be found on the following:
• Low confidence in foreign or glibal services provider, local reach is important.
• Weak sales model from Services provider – only capable of making “big deals”.
• And as a result out of the point above, a weak services model with low capabilities in mass-provisioning.
In essence it can be elaborated from studies that the reluctance to outsource IT is less driven from low demand but rather from weak offerings which do not fit into a medium sized businesses structure, with lean processes and quick decision-making. Often, too many services providers appear to be too bureaucratic.
Summary of Chapters
1 Introduction: Provides an overview of Swisscom's 2003 financial results and identifies the strategic need for top-line growth in light of market saturation and disruptive technologies.
2 The Swiss Telecommunications Industry Structure: Analyzes the macro-environment and the shifting competitive landscape, emphasizing the emergence of convergence and new market segments.
3 Client relative positioning – Swisscom‘s Key challenges: Examines the challenges Swisscom faces, including the need to increase shareholder value and the constraints of its existing IT services delivery model.
4 Strategic Choices for growth: Details the ICT value chain and identifies the mid-market in Switzerland as a significant growth opportunity for standardized IT services.
5 Recommendation: Proposes specific growth strategies, advocating for an expanded offerings portfolio that includes managed services, desktop solutions, and standardized ERP/CRM packages.
6 Implementing the change: Outlines the necessary organizational and structural adjustments, including the adoption of an "On Demand" model and the implementation of a Service Provider Delivery Environment (SPDE).
7 Conclusion: Summarizes the strategic imperative for Swisscom IT Services to evolve into a regional niche player, emphasizing that success depends on efficient delivery and targeted market execution.
Keywords
Swisscom, IT Services, Telecommunications, ICT, Value Chain, Strategy, SMB, Outsourcing, Growth, Business Model, Managed Services, Digital Transformation, Market Segmentation, Service Provider Delivery Environment, Innovation
Frequently Asked Questions
What is the core problem addressed in this thesis?
The thesis focuses on how Swisscom IT Services can generate external revenue growth and transform its business model, given that 85% of its current business is internal and the traditional voice market is saturating.
What are the central themes of the work?
The primary themes are strategic growth, the commoditization of IT services, the transition to an "On Demand" delivery model, and the untapped potential of the Small and Medium Business (SMB) market in Switzerland.
What is the primary goal of the author?
The goal is to provide a strategic blueprint for Swisscom IT Services to capture a sizable market share in the SMB segment by ascending the ICT value chain and implementing a multimodal service delivery platform.
Which scientific methods were used?
The research relies on value chain analysis, Porter’s Five Forces for industry structure assessment, and the resource-based view (Grant) to identify strategic options and organizational requirements.
What does the main part of the thesis cover?
The main part covers the current industry structure, an analysis of Swisscom’s performance gap, the selection of strategic entry markets, and a detailed implementation plan for service delivery models.
How would you characterize the work with key terms?
The work is characterized by terms such as strategic transformation, organizational change, service-oriented architecture, SMB focus, and competitive positioning within the Swiss telecommunications sector.
Why is the SMB segment considered the "holy grail"?
The SMB segment is seen as highly attractive because it has shown relative resilience during economic downturns and currently has lower penetration of professional IT services compared to large enterprises.
What role does the "Service Provider Delivery Environment" (SPDE) play?
The SPDE serves as a business framework for IT and telecom providers to streamline the implementation, provisioning, and billing of standardized services, enabling faster time-to-market and operational efficiency.
- Quote paper
- Christoph von Gamm (Author), 2004, Swisscom IT Services, Munich, GRIN Verlag, https://www.grin.com/document/143444
