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Survey: 5G investment to soar, but enterprises cautious

February 26, 2020

Fifteen per cent of enterprises are currently investing in 5G, rising steeply to 69 per cent within three years. Yet, less than half (48 per cent) are confident they can transition to 5G-based Internet of Things (IoT), with 74 per cent indicating that they need to overhaul the operating model to realize implementation. That is according to an EY study, Maximizing the 5G opportunity for enterprise, which surveyed more than 1,000 enterprises globally on the 5G opportunity.

The study finds that most enterprises (74 per cent) believe 5G will enter the fabric of their business over the next five years. However, of those investing in 5G today, 67 per cent are either engaging in trials or are in discussion with suppliers, rather than moving to the operational phase.

This caution is driven by several key factors, including knowledge gaps around use cases (75 per cent) and a perception of 5G as an incremental progression on 4G (69 per cent). In addition, respondents cite integration with existing technologies as the biggest internal barrier to 5G adoption (37 per cent), while the perceived immaturity of 5G technology tops the list of external challenges (35 per cent).

Tom Loozen, EY Global Telecommunications Sector Leader, said: “Enterprises are aware that 5G can fundamentally reshape their organisations. To succeed, they need to develop a road map that is aligned to the broader landscape of technology transformation, but anxieties persist around technology integration, maturity and cybersecurity. To overcome this inertia, 5G vendors need to articulate a more compelling vision of the opportunity, while enterprises need to educate themselves on the game-changing possibilities that go beyond efficiencies alone.”

The study reveals that forming the right partnerships could be the key to unlocking 5G potential. Seventy-nine per cent of respondents believe they require external support to generate robust 5G use cases, while 77 per cent say they will prioritise vendors that can deliver 5G business outcomes as partners – rather than offering pure cost benefits. Notably, 60 per cent indicate that their organisation is currently struggling to identify the right 5G vendor, and 67 per cent say their vendor interactions to date have largely been transactional and tactical.

Adrian Baschnonga, EY Global Telecommunications Lead Analyst, said: “It’s clear that enterprises now want consultative dialogue that delivers business outcomes through end-to-end solutions. 5G providers need to reinvent themselves as trusted partners, prioritising access to an ecosystem of competencies that can deliver 5G capabilities at scale. Delivering actionable solutions that encompass the full spectrum of enterprise needs – from use case creation to cybersecurity – will be critical in the long-term.”

Geographically, US enterprises lead the 5G adoption curve according to the study, with 19 per cent currently investing compared with 13 per cent in Europe. Just 10 per cent of Asia-Pacific enterprises are currently investing, despite representing the highest level of planned expenditure over the coming year. Overall, US enterprises are set to remain ahead, with almost half (48 per cent) planning to invest within the next 12 months, compared with 43 per cent in Asia-Pacific and 38 per cent in Europe.

The energy (23 per cent) and technology (22 per cent) industries are currently 5G investment leaders, with health care (61 per cent) and financial services (58 per cent) organisations projected to emerge as the biggest investors within three years.

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