Mobile network operators sum up model for the lack of innovation in business

Mobile network operators sum up model for the lack of innovation in business

Yes, there have been innovations in e-invoicing in the last two years but compared to almost all other areas of technology, it has been standing still for about a decade.

The reason for this is simple, most players’ business models have not been driving a need for innovation. In all other spaces, intense competition has driven innovation in software, the technology behind it and how they use it. Which is all fantastic for users. But it’s just not the case here.

Purchasing Insight logoFor a comparison, take a look at the consumer cellphone market. Intense competition between the likes of Apple, Microsoft and Google has really shaken things up on the hardware side and accelerated an almost unrecognisably superior result for users.

But the other big players in the market – the carriers – remain a weaker link in the chain with nowhere near the same pace of innovation. In fact, their contract-based business model actually uses the fast-moving hardware creators as the temptation for customers to renew their relationship. And meanwhile, their business model chugs along without truly evolving.

This disconnect in the quality of service is caused by misaligned motivations. The network operators have no need to innovate because their business model is based around their hardware partners. Even if customers complain, they’re locked into contracts that mean they can’t instantly leave and take their business elsewhere.

And we find serious parallels in the business world. Business models that use enterprises as a sales channel to then move on and sell to all their suppliers fit the same bill. Historically, there was the example of the EDI providers who tried to make their largest customers insist the companies they worked with used the same system.

Of course, in that case, you ended up with those big enterprises insisting that their suppliers adopted the technology, which is healthy for an industry, but not any particular proprietary solution. This fragmentation causes issues when you’re not dealing with open standards.

But, as long as a model prevails where these big buyers are not the real customers, there’s no incentive for companies with the old way of doing things to focus innovation on them. They’re just a means to an end — a way to get to their supplier base, who are the real target.

So you end up with a technically healthy set of providers who are quite happy to sit in the middle and collect their “invoice tax”. And continue to do so for as long as they can protect that model.

Of course, just as with the mobile operators, innovation from new market players is forcing them to start changing their ways. Business models like our own suggest a new way of doing things, where suppliers can access a free account and will only do so if it provides them value too. A platform where you can activate Apps that connect to other services or enable new possibilities like Instant Payments or the Business Firewall

But don’t expect an operator to innovate any more than you should expect AT&T to come up with the next iPhone, it’s just not going to happen.

Christian Lanng is CEO and co-founder of Tradeshift, a platform for all business interactions.

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