Will Maxis’ New Enterprise Strategy Work?

A. Amir

Summary Bullets:

  • Maxis redefined its enterprise strategy to grow its business in the managed services market.
  • The provider needs to tackle the real needs of enterprises instead of just replicating best practices.

The practice of consumer telcos entering the enterprise managed service market is not uncommon, especially for telcos playing in a mature market. Telcos are looking to expand their revenue streams, as business from the traditional services (e.g., data, broadband, voice) is no longer growing. Maxis, a leading consumer mobile provider in Malaysia, started this journey as early as 2010, although the consumer mobile market was still growing at that time and there was no critical need for the service provider to look for new business areas. The move was mainly driven by technology leadership, following ‘best practice’ from other global leaders at that time. Today, while the provider is still playing in the enterprise managed service market, the driver has shifted from technology leadership/innovation to a real need to grow revenue in the segment and hence the overall business. Without much success in the past (with only 1.4% growth in 2017 and 3.1% decline in 2018), Maxis recently shared its new strategy to grow its enterprise service (managed services, cloud and IoT) by threefold in five years, focusing on leveraging connectivity assets and replicating industry best practice. While the strategy looks promising, will it work for Maxis in the Malaysia market?

Leveraging Connectivity Assets

The enterprise managed services market can be very broad. It includes services beyond connectivity such as managed infrastructure, applications, data centre and cloud. There are hyperscale players as well as other established local and global IT providers such as Dimension Data, CSC, HeiTech Padu and Mesiniaga playing in the market. These players have more advanced managed services portfolios, better track records and stronger service capabilities. As the line between telcos and IT is blurring, Maxis’ decision to leverage its connectivity asset is seen as the right move to differentiate itself in the market. The focus should be on the connectivity-based managed services such as IoT, SD-WAN and UCaaS, instead of going all out with its portfolio. As the demand for integrated network and cloud services grows, the provider can also highlight its connectivity strength in the value propositions of its integrated solutions when competing against non-telcos.

Replicating Industry Best Practice

Following what other providers have done successfully in their markets has been a common mistake for telcos in emerging enterprise markets like Malaysia. While many global telcos have been successful in managed ICT services, the examples may not work in another country because of differences in market situations, regulations and technology adoptions. For example, cloud has already become a basic service for enterprises in mature markets and the focus is now around workload orchestration and automation between applications, while in Malaysia, the messages should still be around efficiency, reliability and security to attract enterprises to migrate their workload from on-premises. By replicating best practices, Maxis could be the leader in terms of innovation and technologies used in its solution, but it will not address the real gap between products and demands. It may continue to struggle to win new deals and expand its wallet share. Managed service is about not only product benefits, but also outcome-based solutions that address enterprises’ real challenges.

Maxis should continue to play to its strength by leveraging its connectivity assets and differentiate against other non-telco players. However, there is also Telekom Malaysia, a fixed line incumbent that has a better position in the market, as well as other mobile consumer telcos (e.g., Celcom and Digi) entering the market. The provider should also focus more on understanding the enterprise ICT market, which is different than the enterprise connectivity or consumer segments. The portfolio and value propositions should be around addressing the real market needs instead of going a few steps ahead of the end users. Ecosystem partnership is also important in developing solution capabilities and providing wider technology options to address the diverse needs of enterprises.

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