EBOOK 5G for the enterprise An examination of the industrial adoption of next generation connectivity in the UK neosnetworks.com 5G for the enterprise Introduction The promise of 5G The COVID-19 pandemic has initiated extensive discourse around new ways of working and the pace of digital transformation has rapidly accelerated for many organisations. In turn, this has reinvigorated consideration of a range of emerging technologies that will allow UK commerce, industry and the public sector to modernise and to provide a much-needed boost to productivity. Chief among these transforming technologies is 5G. In many sectors, the imperative of digitalisation is keenly felt. For the Energy & Utilities sector, major changes to the nature of the energy system are necessitating the development of improved connectivity to support smart grids and more active management of networks, with regulatory oversight driving this. For Retail firms, the satisfaction of the customer is inevitably a key driver in the decision to adopt 5G technology, with the promise of more personalised shopping experiences, more efficient systems for stock replenishment and improved pattern recognition of shoppers all on the horizon. In the Transport sector, the prospect of smart and efficient logistics, autonomous vehicles and the real-time monitoring of passengers, freight and infrastructure make for huge appeal when considering 5G use cases. Meanwhile, Manufacturing firms harbour ambitions to build smart supply chains, increase use of process automation and build 5G technology into their own finished goods. The research also identifies which organisations are in the vanguard of 5G deployment; the cohort of UK organisations that are ‘5G Leaders’ by virtue of having both high appetite and suitability indicators for 5G. This report seeks to understand how these leading organisations are thinking and behaving differently about the opportunities presented by 5G and what the rest of the market may be able to learn from this. 2 2 neosnetworks.com neosnetworks.com Within Financial Services, the enabling of Mobile Edge Computing (MEC) architectures are perceived as being relevant, possibly linking with novel approaches to high-frequency trading or local processing of price signals. Applications key for the Government and Public Sector are in security, surveillance and public safety. The aim of this report is to understand the current, on-the-ground reality for enterprises and organisations in those sectors that stand to make use of 5G technology. It comprises results from an independent survey of over 200 respondents across UK organisations in a range of sectors with 250 or more employees. The research was conducted in late 2020 and early 2021 by B2B International, a leading independent market research agency. As part of the investigation into the current opportunities available thanks to 5G, the following key topics were explored: • Evaluating UK business appetite for 5G • Quantifying potential levels of investment in 5G • Identifying ways of boosting adoption 5G for the enterprise The 5G opportunity within UK industry Appetite, sustainability and value The research found that more than two thirds (68%) see this as a high priority compared to other communications technology investment, with the majority (63%) expecting to make significant investment in 5G technology in the next one to two years. As demonstrated in Figure 1, the data also shows that some of the verticals surveyed appear to be blazing a trail when it comes to exploring the possibilities of 5G. Here, those in Energy & Utilities, Retail and Transport appear to be the furthest progressed, as measured by the proportion that have already at least initiated some form of proof-of-concept: FIGURE 1: Sector-specific progress toward 5G adoption Early stages but no specific plans / timelines 40% 36% 24% 32% 28% 29% 25% 40% 3 neosnetworks.com Proof of concept stage 24% 20% 13% 28% 38% 52% 50% Financial Services Public Sector 40% 64% 40% 40% 46% Retail Transport Manufacturing 20% Energy & Utilities 28% Planning 36% 8% Media Professional Services 5G for the enterprise When these statistics were projected across all sectors studied, the research found that this could equate to almost £5bn of annual investment in 5G. Figure 2 below breaks down what this could look like across the key sectors included within the research: With the majority of the market looking to invest in next generation connectivity within the next couple of years, the research also suggests that substantial proportions of business IT budgets could be directed towards 5G and its associated technologies. FIGURE 2: Potential annual investment in 5G by UK businesses (£m) Professional Services 1133 Retail 946 Financial Services 814 Manufacturing Public Sector 4 neosnetworks.com 490 381 Media 288 Transport 267 Energy & Utilities 244 £4.6bn in total across the sectors 5G for the enterprise Respondents were asked a series of questions around the level of appetite for 5G within their organisations and the perceived suitability for it to solve known connectivity challenges. Here, identified use cases and benefits were explored, as well proposed timescales for implementation, progress to date and perception against alternative solutions. From this, it was possible to calculate that 16% of large UK organisations can currently be considered as ‘5G Leaders’ – those demonstrating both the highest degree of enthusiasm for the technology, as well as the greatest practical consideration of relevant use cases. As such, one might expect leaders to be closer to the proof-of-concept stage in their adoption programmes. At the opposite end of the spectrum, almost half (47%) of UK larger organisations are ‘Starters’ in that either appetite or suitability is currently a little lower. The remaining 37% of firms are ‘Followers’ (see Figure 3); those perhaps waiting to evaluate the way in which Leaders innovating with the technology do so with the greatest success and efficiency, before adopting at pace with the benefit of reference points. FIGURE 3: Split of UK businesses based on 5G appetite and 5G suitability Appetite score HIGHER SUITABILITY More use cases for 5G seen as relevant and more communications challenges perceived as being solved by 5G Suitability score Low Lower Mid Higher 5G Leaders (16%) Highest High 5G Followers (37%) Higher Mid Lower Low High Highest 5G Starters (47%) Percentages are the split of companies participating in the survey 5 neosnetworks.com HIGHER APPETITE 5G higher priority than other communications investments, likely to make investments sooner and more likely to have PoCs underway 5G for the enterprise What makes a 5G Leader? Characteristics of those innovating and where to find them Businesses that have a culture of being more ambitious, early adopters of technology are more likely to be 5G Leaders. However, this relationship is not absolute. Indeed, as Figure 4 shows, there are many early adopter-types that may not be when it comes to 5G: FIGURE 4: Split of 5G maturity by overall technology adoption disposition Quite / very ambitious attitude to tech adoption More cautious / neutral attitude 60% 32% 40% 30% 28% 10% Starters Followers % falling into each maturity group 6 neosnetworks.com Leaders 5G for the enterprise When comparing all segments (Leaders, Followers and Starters), there were clear indications of what makes Leaders different. First, 5G Leaders had a much stronger knowledge and appreciation of 5G and related technologies such as IoT and SD-WAN (Figure 5). Linked to this was a firmer appreciation of the transformative power of 5G. 69% of Leaders agreed that ‘5G is a truly transformative technology that is more than just an upgrade on 4G’, compared with just 43% of Starters. FIGURE 5: Strength of knowledge of 5G and related technologies IoT 63% 39% 25% 38% 55% 75% 47% 33% 5G Leaders 69% Followers Starters SD-WAN % with very strong knowledge and understanding of each technology 5G Leaders also tended to: • Prioritise digital transformation (72% mentioned this as a top business priority versus 47% for Starters) • Be focused on improving business resilience (56% mentioned this versus 39% for Starters) • Benefit from strong senior technology leadership, with 50% of these organisations identifying such roles as key influencers in driving decisions around 5G adoption 7 neosnetworks.com 5G for the enterprise A final characteristic of 5G Leaders was their tendency to have more optimistic expectations of short-term profitability. 37% of 5G Leaders expected considerably higher profits in five years compared to just 12% of Starters. This hints towards the link between 5G and bolder, more transformative business plans. 5G Leaders also looked to be strongly considering building out edge computing approaches (Figure 6), including MEC. This will be to enable functions such as remote monitoring, security and more effective use of IoT telemetry. FIGURE 6: 5G use cases by segment Leaders sensor data, incl ML % regarding the following 5G purposes / use cases as being potentially relevant to their organisation 8 neosnetworks.com 63% 39% 27% 43% 50% 66% 23% 50% crime prevention 33% 17% 21% 25% 66% 63% 49% 39% 27% 27% 42% 33% 26% 25% 43% 66% 38% 49% and apps 72% Improving access mobile Vir Faster adoption Security, Virtual Remote Enabling Security, Remote controlRapid of Enabling Mobile Reality control surveillance,of cloud assets processingEdge / Computing surveillance, (VR) and of assets to edge devices edge public safety & (MEC) Augmented infrastructure analysis of IoT public safety & computing crime prevention Reality (AR) 66% Rapid processing / analysis of IoT sensor data, incl machine learning 75% 27% Faster adoption of cloud infrastructure and apps 38% 72% Leaders 42% Followers 26% Starters 75% Followers 43% Starters (MEC) 5G for the enterprise When applying this 5G leadership framework to different vertical markets (see Figure 7), it becomes clear that businesses in the Transport, Energy & Utilities and Media sectors are markedly closer to being 5G Leaders. This is driven not just by higher levels of appetite for the technology, but also by relevant use cases being more readily identifiable for these sectors, such as those referenced in the introduction of this report. It is worth noting that these early mover organisations for 5G are themselves responsible for modernising key aspects of the UK’s infrastructure – including the example of the Energy & Utilities industry identified earlier. Meanwhile, businesses in the Manufacturing sector are currently more likely to be ‘Follower’ organisations in terms of 5G adoption, many potential use cases for the technology are recognised by decision makers. Unlocking the substantial annual investment opportunity in this sector is likely to require careful support from the telecoms industry and service provider partners. Likewise, Professional Services firms will have a vital role to play in assisting organisations across a range of sectors to adopt 5G-enabled business models. Appetite Score LOWER HIGHER FIGURE 7: LEADERS Manufacturing, 490 HIGHER Sector opportunities based on 5G appetite and 5G suitability Transport, 267 Suitability Score Bubble sizes show the potential annual investment in 5G by UK larger organisations (in £m) Energy & Utilities, 244 Public Sector, 381 Media, 288 LOWER £ STARTERS 9 neosnetworks.com Financial Services, 814 Retail, 946 Professional Services, 1,133 5G for the enterprise Accelerating and optimising 5G adoption How 5G Followers can step up 5G Followers comprised 37% of survey respondents. With this group still expressing healthy but more moderate levels of 5G appetite and suitability, 5G Followers would benefit from reinforcement of the benefits 5G offers, and remediation of any slight apprehensions that may remain. Figure 8 shows that 5G Followers were more likely to be organisations that are custodians and processors of ‘extremely sensitive’ types of data, and so need to feel especially assured about the security of any new technology. Follower organisations also appeared to face greater challenges in not knowing where to turn in the supplier ecosystem for help and advice. This will be especially important to address, given that a significant number of Followers (57%) report having important knowledge gaps in terms of the applications to which 5G is best suited. FIGURE 8: Characteristics of 5G Followers Starters Starters Followers Followers Leaders Leaders 64% 36% 18% 36% 66% 57% 26% 47% 26% 33% 41% 18% % Processing “extremely sensitive” data “The 5G supplier ecosystem is too complex - don’t know who to turn to for advice” % agreeing with each statement 10 neosnetworks.com High priority knowledge gap: Understanding applications where 5G is best suited / where 5G is more effective 5G for the enterprise What’s clear is that knowledge of benefits (in a general sense) is positive. Helping larger UK businesses to become more informed about 5G remains vital, however. The research showed the following three areas in which organisations would benefit from assistance in their 5G adoption journeys: 1 More help to build the business case for 5G would appeal to 70% of organisations. For instance, how to initiate and conduct proof-of-concept trials and setting realistic expectations for when related technologies will reach maturity so that investment can be sequenced accordingly. 2 64% of organisations would benefit from greater practical 5G implementation knowhow that will allow them to make good on their plans. For example, how different communications technologies can be combined with 5G for maximum effect. As a still-nascent technology the research has shown that the availability (or otherwise) of clear reference cases for 5G and its associated applications will be what moves the market towards maturity. Based on the results of this survey, the following may be judicious areas of focus as part of a refreshed, post-COVID-19 industrial strategy: • Encouraging 5G adoption and integration as part of national infrastructure efforts (e.g. smart grids, transport infrastructure, etc.). • Identifying the best candidates for 5G-enabled business models and supporting early adopters within them as much as possible. • Enabling 5G to improve digital access for all citizens and businesses alike. This has become an especially acute concern given the strong migration to home working. 11 neosnetworks.com 3 53% of responding firms sought greater clarity on how best to apply for 5G, particularly where its advantages are most keenly felt over other communications technologies. 12 About Neos Networks Neos Networks provides class-leading connectivity and data centre services that deliver very high performance, cost efficiency and a competitive edge. The company operates a 24,480km private telecoms network and an estate of 90 commercial data centres that span the UK. With its extensive telecoms and data centre operational expertise it offers commercial security with unrivalled in-house engineering resource. [email protected] +44 (0)345 070 1997
