The Role of 5G in ICT Transformation

Towards the end of 2020, the year 2021 had been described as the “execution year” for enterprise 5G by leading figures from the telecom industry. Now that the first half of 2021 has passed, it is time to assess where we stand with enterprise 5G, what has happened in the first half of the year, and where developments should be going.

From an enterprise point of view, two important announcements were made during the first half of 2021: industrial automation vendors Siemens and Bosch both have announced new digitization of their offerings during this year’s Hannover Messe (in April 2021). While Siemens launched an industrial router for wireless connectivity (either supporting industrial WLAN or 4G, and later on, 5G), Bosch Rexroth launched their digitization platform ctrlx. An interesting side note to observe was the fact that the announcement, as well as the subsequent presentation, exclusively focused on key manufacturing applications and use cases. The fact that these use cases will be enabled by 5G connectivity (with 3GPP’s Release 16 capabilities) was only mentioned once during the presentation to fellow manufacturers.

Of course, these are not the only important enterprise 5G announcements (System Integrator NTT for example announced their private 5G platform offering just a few weeks ago in August 2021), but it illustrates an important aspect, that has been largely neglected by the telecom industry so far. Cloud service providers (CSPs) and telecom infrastructure vendors have so far been busy trying to deploy cellular connectivity as such to enterprises, while enterprise implementers (and in this case manufacturers) seem to be far more concerned about actual applications that address their respective pain points. Recent system integrator announcements like NTT’s Private 5G can be an important bridge, as they consider not only the provision of cellular connectivity, but also security and device management services.

The previously mentioned observation carries a range of implications (in terms of technology, as well as when it comes to commercial success factors). From a technology point of view, this observations highlights that enterprise 5G cannot be considered in isolation. Rather, it must be seen in a broader context to be able to understand what exact use cases can be addressed and which vertical-specific pain points can be solved through technologies that are enabled by 5G connectivity. The focus of these technologies should always be on what exact use cases these technologies can provide and what exact pain points are addressed.

• Machine vision and quality inspection use cases: As these applications require the transmission of particularly data-intensive video files, 5G enhanced mobile broadband capabilities (eMBB) can serve as a critical enabler for large scale adoption.
• Artificial Intelligence (AI) use case cases: The large-scale adoption of artificial intelligence for automating vital enterprise workflows will increase processing payloads. 5G-enabled mobile edge computing (MEC) can act as a critical enabler to allow the large-scale adoption, without overloading the core network, as it allows certain processing capabilities to be performed within the network edge (therefore enabling what is often referred to as federated learning).
• Emergency shutdown of production machines and other enterprise assets: As technology to provide emergency shutdown of production machines and other enterprise assets are mission critical, or in some cases even life critical, they require particularly low latencies and high network availability. While the provision of sub-10mas latencies and 5 nine’s availability through 5G connectivity has been discussed at length, it should be noted that edge computing will play an important role to realize this.

Certainly, this list is far from exhaustive, but it illustrates the important role of 5G in enabling various ICT technologies to deliver these applications/use cases. Furthermore, it should be noted, that while the above concentrates primarily on industrial manufacturing use cases, the picture becomes even more complex when extending to other enterprise verticals.

To maximize the value of enterprise-grade 5G, the telecom industry needs to align their product development process to the decision-making process of enterprises: for enterprises, the starting point of an invest decision is the respective pain point/use case. The telecom industry should adopt the very same starting point to then conceptualize what 5G capabilities are needed to address this specific use case (which might be by enabling other information and communication technologies (ICT)). In other words, the telecom industry needs to depart from a thinking process that starts with 5G capabilities and then looks at what how applications and use cases could be designed so that they fit to the 5G technology.

First and foremost, the telecom industry needs to acquire vertical-specific expertise. This could be done either directly by going into each vertical specifically or indirectly through channel partners. In deciding for a direct or an indirect approach, CSPs and infrastructure vendors need to carefully assess effort and expenditure versus revenue opportunities. Going directly into enterprise verticals is particularly resource-intensive and should, therefore, only be considered for particularly high-value verticals.

In addition, the telecom industry needs to realize adjacent ICT technologies are not just a “nice-to-have” but are vitally important for the enterprise 5G value proposition as these ultimately enable applications (that carry the most tangible value proposition for enterprise implementers). For the telecom industry this carries two equally important implications.

The provision of an enterprise-grade 5G platform requires far more than just telecom networking expertise, as technologies like AI/Machine Learning (ML) or extended reality (virtual as well as augmented reality) become more important. In addition, integration capabilities will be needed to orchestrate a broader ICT platform. The provision of enterprise-specific applications (which is what implementers ultimately are most interested in) furthermore requires access to expert developer communities. Once again, they could theoretically try to build up all this expertise inhouse. Not only would this be a resource-intensive but also time-consuming exercise, which would ultimately unnecessarily prolong the time-to-market for an 5G enabled ICT platform. Therefore, partnerships, and co-creation initiatives specifically, will become more interesting to maximize commercial benefits.

Secondly, as implementing enterprises are mostly interested in specific applications (as these will directly address respective pain points and therefore result in the most tangible value proposition), this opens new doors for more innovative and enterprise appealing business models. While the platform infrastructure could either be provided in a Platform-as-a-Service (PaaS) or a CAPEX-based model (depending on enterprise financial capabilities and requirements towards ownership), different applications and use case scenarios could be offered to enterprises as individual services. To guarantee maximum possible customizability of an ICT platform, each application or use case scenario can then be offered as separate services.

This presents the telecom industry with three realistic options to provide enterprise 5G: one, they provide 5G connectivity as a platform to enterprises, which then have to source applications for specific use cases on their own. While this might be an opportunity for large enterprises with sufficient inhouse capabilities, it would complicate 5G deployments for small and medium sized enterprises (SMEs). These can be served through two alternative approaches: either CSPs or infrastructure vendors supply their respective components or expertise into system integrators who use their ties to the developer community for application development. Alternatively, the telecom industry can follow examples like the Finnish network operator Elisa and acquire industry 4.0 software developers. Since an acquisition can carry some unwanted business economic risks (for example profitability of the acquired software house), a close co-operation (in the form of joint venture or co-creation initiative) might be more sensible for the time being, at least until the market has matured.