DataSpark: Lessons on building a new telco (data) business

Data analytics as a new business

This case study looks at DataSpark, an autonomous business unit of Singtel (www.dsanalytics.com) and evaluates the benefits of creating a separate organisational structure within a telco to provide technology and support for the development of analytics, AI and automation as a new business. It is created after conversations with Shaowei Ying, Chief Operating Officer of DataSpark. The company’s activities include both the creation of internal capabilities and data monetisation capabilities for external customers.

DataSpark was formed in 2014 at a time when not many telcos were actively exploring new data business opportunities. The unit consisted of a small group of data professionals with skills around, particularly, location data. Singtel’s CEO was a strong supporter of leveraging telco data to establish competitive differentiation and therefore tasked them with looking at various location-related external monetisation opportunities. It was considered natural to create internal use cases for the data to defray the cost of the data preparation. In particular, the same mobility intelligence was of use to radio network planners optimising their network roll out using not just congestion, but now subscribers’ mobility patterns, too.

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DataSpark’s progress to date

Telcos’ external monetisation units, such as DataSpark, are not yet large enough to split out the revenues in their reports and accounts. However, in the 2018 and 2019 Management Discussion and Analysis DataSpark’s progress was reported to include:

  • Activity to bring mobility data to sectors such as transport and out-of-home media in Singapore and Australia
  • Partnership in out-of-home advertising with large players taking a data-as-a-service solution to optimise their assets
  • Provision of insights including first party enterprise data in the consumer goods sector to deliver new use cases in advertising and retail store inventory optimisation
  • Recent support for governments in predicting spread of Covid-19, including understanding the socio-economic impact of the virus.

Service example: COVID-19 insight for the Australian local government

COVID-19 data analytics innovation

Source: DataSpark

Table of Contents

  • Executive Summary
    • Two diverging strategies for a small, independent data unit
    • Scaling up the data business as an integrated unit
  • Introduction
    • DataSpark’s progress to date
  • DataSpark’s approach to building a data unit
    • What services does it offer?
    • Go-to-market: Different approaches for internal and external customers
    • Organisational structure: Where should a data unit go?
  • How to scale a data business?
    • The immediate growth opportunities
    • Following in others’ footsteps
    • Building new capabilities for external monetisation
  • Assessing future strategies for DataSpark
    • Scenario 1: Double down on internal data applications
    • Scenario 2: Continue building an independent business

 

Read more about STL Partners’ AI & automation research at stlpartners.com/ai-analytics-research/

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5G’s impact on transport and logistics: $280bn of benefits in 2030

The challenges facing the transport and logistics industry

The transport and logistics industry is a fundamental sector that acts as the backbone to a country’s economy, and plays an essential role underpinning other core sectors such as manufacturing and retail. Challenges and opportunities facing the transport and logistics industry are also closely tracked and influenced by national and local governments, who are often responsible for investments in supporting transport infrastructure (e.g. roads, rail networks etc.).

As the movement of people and goods across the world increases, the industry is evolving to meet these demands. However, it faces challenges in doing so. The logistics industry has been under significant pressure for some time. Capital and fixed operating costs are high, and companies are struggling to differentiate. Despite growing demand, many firms are suffering from eroding margins. The UK market exemplifies these issues, with revenue growth across the industry low or negative. The COVID-19 pandemic has exacerbated these issues and thrown up unforeseen challenges, with the airline industry being particularly badly hit.

UK top 100 hauliers reported operating margin

Declining logistics margins

Source: FTA Logistics Report 2019

Although the rise in online retail and growing international trade have helped to stimulate the industry, there are still pain-points that are hindering growth. These include volatile diesel prices, driver shortages, and increasing pressure from governments and the general public to be more environmentally friendly.

The focus for the majority of the industry is therefore on cost-cutting and improving operating efficiency. For many companies, investing in new technologies provides an opportunity to transform their operations and drive efficiencies. There is significant scope to do this since the industry as a whole is generally not as digitised as other verticals, and because there is room to make improvements to currently under-utilised assets. For example, in the UK, 30% of goods vehicles on roads are running completely empty, and the freight vehicles that are carrying goods carry an average of 60% of their potential capacity.

UK logistics industry focus is cost-cutting and efficiency

Cost-cutting and efficiencies in logistics

Source: FTA Logistics Report 2019

As well as looking to improve efficiencies, safety and environmental impact are key areas of focus for the transport and logistics industry and government stakeholders:

  • Safety: enhancing safety of transport, particularly road transport, which is the most widely used, is an ongoing goal for the industry. Doing so benefits society as a whole, with fewer casualties due to road traffic accidents, for example, but also directly benefits transport and logistics companies through a positive impact on their branding and a decrease in insurance premiums. The industry is adopting new innovations and technologies such as ‘black box’ driver monitoring and/or alerts to improve safety.
  • Environmental impact: the drive to become greener is increasingly paramount. The industry is currently responsible for almost a quarter of the world’s CO2 emissions , and 14% of overall emissions. Road vehicles are responsible for the majority of this, contributing to nearly three-quarters of global transport emissions. As the population becomes more environmentally conscious, governments are passing regulations and setting sustainability targets to try to reduce emissions and consumption of non-renewable energy sources. For example, the United Nations has adopted 17 Sustainable Development Goals (SDGs) that aim to reduce inequality while tackling climate change. The industry must adapt to these regulations, and large players are taking steps to improve their practices. Logistics heavyweight DHL has committed to zero emissions by 2050 and in the shipping industry, the International Maritime Organisation (IMO) have declared they will halve carbon emissions in this time period.

The role of technology in driving efficiency

For the industry to address these challenges and achieve efficiencies, it will need to adopt new technologies.

The catalyst for digital transformation will be data – in particular the generation of richer and more comprehensive data and the analysis of this data to produce insights to better inform decision making. The figure below shows the four pillars of technology that will drive improvements in efficiency.

The four pillars of technology that will help in driving efficiency

Digital pillars for efficiency

Source: STL Partners

Digital transformation: Transport and logistics lags behind

The need to digitise is not only driven by internal ambitions for greater efficiency in operations, but also by external pressures as customer expectations change. Requirements for last mile experiences in particular are evolving, as customers become accustomed to shorter and more flexible delivery times and greater visibility of the delivery process. Their cost expectations are also changing, with these improvements being expected for a smaller fee or even for free.

Despite the impetus to transform, the logistics industry lags behind other industries when it comes to digital transformation. There are two core reasons for this:

  • The degree of automation is limited
  • There is a reluctance to share information

The role of 5G networks in digital transformation

5G especially holds the potential to help drive digitalisation and address some of these challenges, both through enabling new and improved use cases and in its role in helping to catalyse the digital transformation journey. As 5G is rolled out, it could have a significant effect on supply chains, the wider transport industry and society more generally. This report explores the benefit of 5G to the industry and consider the actions that need to be taken by the industry, by governments, and by telecoms operators to reap the benefits.

Report findings are based on extensive research into the impact of 5G on the transport and logistics industry, including 10 interviews with enterprises and telco executives and an industry survey with more than 100 participants in both developed and developing markets.

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Table of contents

  • Preface
  • Executive Summary
    • 5G can provide $280Bn of benefits to the transport and logistics industry
    • 5G’s unique capabilities enable new and enhanced use cases
    • However, there are challenges to adopting 5G
  • Introduction: A major industry under increasing pressure
    • The challenges facing the transport and logistics industry
    • The role of technology in driving efficiency
    • Digital transformation: Transport and logistics lags behind
    • The role of 5G networks in digital transformation
  • The impact of 5G on the transport and logistics industry
    • What is 5G?
    • 5G’s relevance in transport and logistics
  • New and improved use cases and applications enabled by 5G
    • Real-time routing and optimisation
    • Automated last 100 yards delivery
    • Connected traffic infrastructure
  • 5G impact: Increased productivity to drive $280bn rise in GDP
    • It’s not just about money: 5G’s socio-economic benefits
  • Next steps for the T&L industry
    • The role of governments
    • Collaboration with the telecommunications industry
  • Conclusion

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Recovering from COVID: 5G to stimulate growth and drive productivity

For the accompanying PPT chart pack download the additional file on the left

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Related webinar: How will 5G transform transport and logistics?

In this webinar, we share learnings from 100+ interviews and surveys with industry professionals. During the presentation we will look to answer:

  • How will 5G accelerate digital transformation of the transport and logistics industry?
  • What are the key 5G-enabled use cases and what benefits could these deliver?
  • What must change within the industry to unlock this transformation?
  • What is the role for telcos – how can they work with industry leaders to increase adoption of 5G and build new revenues beyond core communication services?

Date: Thursday 10th September 2020
Time: 4pm BST

View the webinar recording

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The 5G opportunity and value to verticals

In October 2019, STL Partners published research highlighting the benefits 5G-enabled use cases could unlock for industries. Our forecast predicted a potential $1.4 trillion increase in global GDP by 2030 across eight key industries.

In this short paper we look to update these numbers and explore new insights and conclusions based on two key factors:

  1. STL Partners has produced new research on the impact of 5G on the transport and logistics industry. This has led to more granular insight on the unique benefits and use cases for this vertical.
  2. COVID has changed the global landscape. It has increased demand for some 5G use cases, such as remote patient monitoring or video analytics solutions that determine if the public are respecting social distancing, but has also brought about economic uncertainty. We reflect these nuances in our updated figures.

5G enabled use cases could increase GDP by $1.5 trillion by 2030 – an increase from our original forecast

Source: STL Partners

5G’s impact on transport and logistics: Fresh analysis and new use cases

In 2019, we deep-dived into the 5G opportunity within two key verticals: healthcare and manufacturing. We have since performed a similar deep-dive on the transport and logistics industry, consisting of primary research with experts in the industry. We interviewed 10 enterprises, solutions providers, and members of 5G testbeds who were focused on transport and logistics, as well as surveying 100+ individuals who work in the industry to test the impact they predicted for three key 5G use cases. We will shortly be publishing a full report on these findings in detail.

We have revised our estimation on the impact of 5G on the transport and logistics industry. In 2019, we predicted 5G enabled use cases could increase the GDP value of the transport and logistics industry by 3.5% in 2030. We now believe the impact could be as high as 6%, though importantly some of these benefits are indirect rather than direct.

New forecasts show a bigger impact to the transport and logistics industry

Source: STL Partners

The three 5G-enabled solutions newly explored in detail in our study were:

  • Real-time routing and optimisation: Sensors collect data throughout the supply chain to improve visibility and optimise processes through real-time dynamic routing and scheduling;
  • Automated last 100 metres delivery: Using drones or automated delivery vehicles for the last ‘hundred yards’ of delivery, where the delivery van acts as a mobile final distribution point;
  • Connected traffic infrastructure: Smart sensors or cameras are integrated into traffic infrastructure to collect data about oncoming traffic and trigger real-time actions such as rerouting vehicles or changing traffic lights.

Benefits from these use cases include fewer traffic jams, more efficient supply chains, less fuel required and fewer accidents on the roads.

COVID has changed the landscape and appetite for 5G services

COVID-19 has caused a global economic slowdown. There has been a widespread fall in output across services, production, and construction in all major economies. Social distancing and nationwide lockdowns have led to a significant fall in consumer demand, to business and factory closures, and to supply chain disruptions. The pandemic’s interruption to international trade has far exceeded the impact of the US-China trade war and had a major impact on national economies. Lower international trade, coupled with a precipitous fall in passenger air travel, has also caused the air industry to enter a tailspin.

Table of Contents

  • Preface
  • The 5G opportunity: Updated forecast on value to verticals
  • 5G’s impact on transport and logistics: Fresh analysis and new use cases
    • Increased productivity through more efficient roads: An impact beyond transport and logistics
  • COVID has changed the landscape and appetite for 5G services
    • COVID has impacted the GDP of every country – and outlook for recovery is still unclear
    • Operators’ 5G strategies and roll out have also been impacted
    • Appetite for 5G-enabled healthcare services has been accelerated
  • Conclusion: Where next for the industry?

Telcos and enterprise verticals: 5G is not the only opportunity

Introduction

This report outlines key challenges within selected industry verticals, and how telcos can help resolve them with three emerging networking technologies – 5G, IoT and edge computing.

This research builds on many previous reports:

Enterprise services evolve alongside communications and information technologies

The early days of 2G/3G

  • Basic M2M connectivity
  • Early versions of private networks, bypassing the internet for sensitive data transfer

Improving mobility and capacity with 4G and fibre

  • Better connectivity drives demand for video-conferencing and more sophisticated UCaaS
  • Mobile and fixed data connectivity is powerful enough to enable greater enterprise mobility and support the shift towards cloud-based services
  • Different verticals increasingly require bespoke solutions for unique needs – which are easier to deliver through the cloud

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Greater flexibility and frictionless experiences with 5G, IoT and edge computing

  • Increasing complexity of connectivity, IoT, cloud and IT ecosystems are driving demand for flexible yet seamless solutions:
    • Mobile connectivity across geographies without onerous roaming charges
    • Seamless mobile connectivity across multiple networks and technologies, especially in remote areas
    • Frictionless remote set-up of IoT devices shipped directly from manufacturer to live environment
    • Ability to migrate to new technologies seamlessly (e.g. public sector move from TETRA to cellular)
    • All of the above controlled and monitored on user-friendly, cloud-based dashboards
  • The shift from product to service-based business models means a growing number of enterprises want to embed connectivity into their offer to customers
    • i.e. demand for greater control over wholesale connectivity solutions
    • remote maintenance, asset-tracking, etc.

5G applications will arrive at different times…

evolution of 5G technology eMBB, URLLC, private 5G, massiv IoT

Source: STL Partners

…in the meantime, other technologies can help address enterprise needs

The interdependencies between 5G, IoT and edge computing

Source: STL Partners

The problem with 5G for enterprises

  • Most enterprises are not looking at 5G in isolation, but as one of many technologies that will help resolve pain points around efficiency and innovation. The Internet for Things (I4T) and edge computing are two other key technologies that many enterprises need, and which telcos could potentially provide
  • In the long term, STL Partners does not expect 5G connectivity on its own to deliver growth for telcos. So to grow enterprise revenues, telcos should also develop I4T and edge computing solutions
  • But developing expertise in 5G, I4T and edge computing will be expensive and complex to manage
  • Therefore, telcos should start by targeting their investments to meet specific enterprise pain points

This report helps telcos assess how to target their investments by highlighting key pain points in a selection of industry verticals, and how relevant 5G, I4T and edge computing are for solving them.

Sectors with strong demand for all three technologies hold the highest potential value, but this will be difficult for telcos to capture owing to strong competition in I4T and edge computing from other technology companies.

This report covers a selection of verticals that STL Partners has developed knowledge of through research and consulting activities: manufacturing, construction, utilities, agriculture, transport, automotive, healthcare, and sports, media and entertainment. 

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