5G has revolutionised the future of work. Unlike the transition from 3G to 4G, 5G’s success is not solely reliant on consumer adoption. Instead, the technology has sparked a wave of industrial innovation. From Artificial Intelligence to Robotics to the Internet of Things (IoT), the business case for 5G is boundless, and enterprise customers are in a unique spot to capitalise on the opportunity. Whether it’s a reduction in response time from cloud applications, or enhanced customer data collection capability, 5G is poised to transform the way the world does business. And the first movers have the most to gain.
To understand the 5G business case for enterprise customers, we sat down with Elena Villar, Financial Controller for Telefónica Group. She’s been exploring the key factors driving success in the 5G era, as well as some of the greatest challenges that organisations will face.
Q: Talk us through Telefónica’s 5G strategy.
A: Our strategy is built on two pillars: first, we’re focused on investment in the network. In Q1 2021, Telefónica hit 80 percent coverage in Spain. Second, we established Telefónica Tech, which has enabled us to focus on Cloud, IoT, and Cyber more intentionally. This move has been fundamental to our success, as it allows us to white label key products and go directly to market.
Q: From your perspective, what benefits can 5G offer?
A: For Telefónica, 5G’s benefits fall into two categories:
- Revenue generation: Top-line growth opportunities are significant. It's expected that 5G's total market size will climb to $47.6 billion by 2027. We view 5G as a catalyst for the Fourth Industrial Revolution and have already seen substantial revenue opportunities come to life. A few of these include network solutions for mining operations in Brazil (Vale), industrial automatisation production in Germany (Daimler), or ports digitalisation in Spain (Maersk in Algeciras port).
- Cost optimisation: On average, our customer’s service lines have seen a 30 percent reduction in cost.
Q: 5G will drive spectral efficiencies, which are critical to the telco industry given the explosion in data consumption. What's your perspective on this?
A: 5G has higher velocity, lower latency, and increases the capacity of our network. These features enable better communication in both rural and urban areas. They’ll also enable greater IoT adoption across a range of sectors, including the mobility, industrial, and utilities sectors. (By the way, check out a recent interview with Gonzalo Martin-Villa, Telefónica Tech’s IoT and Big Data Director, for more on this topic).
These efficiencies will bring our customers—across a range of sectors—opportunities to unlock disruptive business improvements through 5G. From tracking livestock and directing self-driving tractors in agriculture, to enhancing safety underground in mining, 5G’s potential is limitless.
Q: What are the biggest barriers to 5G adoption you’re seeing?
A: To capitalise on the potential of 5G, there are several challenges that organisations will need to overcome. Specifically, we’ve identified three among our enterprise customers.
- Strategy: Without an effective digital transformation strategy, enterprise customers will miss opportunities to maximise 5G’s potential. Your 5G roadmap must reinforce, and be guided by, your broader digital strategy to truly become a core part of your transformation agenda.
- Investment: Businesses need to make meaningful investments in 5G to generate a return. Because the payback periods for 5G investments can be complex to understand, securing adequate investment is often a barrier. To support businesses in their 5G initiatives, Government is increasingly investing in 5G, either in the form of infrastructure space or funding to support organisations’ digital transformation journeys.
- Time to market: 5G technology is here and the organisations that have started along their transformation journey are already reaping the benefits. Those that wait to see the technology prove out will forfeit valuable market share to competitors that have bold adoption strategies.
Q: How can enterprise customers set themselves up for future success?
A: Two thousand twenty-one is just the start of the 5G revolution and the second half of the year is set to drive significant growth for those that are capitalising on the opportunity. The key to success will be setting the right strategy for the future, investing in business model transformation, and acting quickly to capture market share. Beyond these initial considerations, it’s critical that organisations look at their core processes, operating model, and ways of working to maximise the potential of 5G.
While 5G connectivity has the potential to transform the future of business, the winners will already be well on their transformation journey. We explore some of the steps you’ll need to take when ‘Venturing into the World of Enterprise 5G.’
About Elena Villar
Elena is the Financial Controller for Telefónica Group. She has over 20 years of experience in various finance positions throughout the company. In the past two years, she has overseen planning and control for the IoT and Business Development functions. Elena is responsible for managing the organisation’s revenue and cost models, budget forecasting, and strategic planning. As an enthusiastic and passionate professional, she regularly advises the CEO and IoT Business Development Telefónica Tech Committee on decisions that drive strong financial results.