Digital transformation in Telecom industry

Introduction

I had written an article few years ago to evangelize digital transformation for the Telecom industry.  It is refreshing to see that some major players in the industry have since made good progress, while other are still facing challenges. I updated and republished it here as the issues and themes are still playing out, and we have lessons to learn and reflect on.

The Need for Digital Transformation

The word Transformation has been ringing very loud at Communication Service Providers (CSP) for the last several years. Let us review the reasons why this latest transformation wave started, what it is about, what the major challenges are.

    • Disruptive Waves of Innovation

The traditional telecom industry is facing a perfect storm best described as “digital disruption.” Disruptions include the huge success of new devices (smartphones) and digital services (apps/content/convenient shopping) and social media infiltration into our everyday lives, and emerging competitors (OTT) who have successfully created and ridden these waves of digital innovation using new business models such as Freemium and Ad Financed. These combined events have created a deep transformation within society (the CSP customer base) and even heralded a new age in our civilization. They have triggered a significant change in customer behavior and expectation, and put pressure on the traditional telecom business model and revenue.

    • Slow Initial Reaction

CSPs have been slow in effectively responding to this paradigm shift due to several organizational and technical reasons. One such reason we will highlight is the ability to transform the mindset, systems, and processes to effectively leverage their rich and rapidly increasing data assets. For CSPs worldwide, undergoing their own transformation to a digital service provider (DSP) to ride the fast-growing wave of digital services is unavoidable. Their customers have already gone through a cultural revolution driven by social media, and we are now looking at a digital-native generation of users who needs to be catered for.

    • Consensus to Start Transformation Now

Leading industry analysts and forums such as TMF have been widely supporting this CSP-to-DSP transformation for years. Major CSP partners have also undergone their own transformation. Huawei, for example, has stepped up to the challenge and is now strategically and actively invested in supporting and enabling this transformation through its own wave of innovative solutions. Open digital platforms, business agility solutions, and new customer engagement models are all now available for CSP consideration.

Why Customer Centric?

    • Rise of Customer Experience as Competitive Strategy

Customer experience is now in focus as it becomes an efficient weapon in the constant fight for customer mind-share and wallet-share. To counter the challenges of falling revenues from voice services, CSPs need additional business opportunities by providing new digital services to their consumers. However, a CSP brand alone is not enough to keep customers loyal. CSPs need to step-up and also compete on customer experience by means of a customer-centric organizational and technological re-alignment.

    • Rise in Customer Expectations

How can we ensure that customers will like and adopt the new digital services offered by their CSP? Customers are known to appreciate a wider selection of services, personalized offers, smooth operation of the services they are using, and pricing transparency.

    • Deep Understanding of Customers is a Key Requirement

One things that CSPs need to do is to leverage the wealth of data that is running through their systems in order to better understand, segment, serve, and delight their customers, thereby generating more loyalty and ensuring more revenue through a full strategic commitment to customer-centricity. The customer should feel the carrier is catering for their specific needs in a way that exceeds their expectations with every new service released, every promotion made, and at each and every interaction thereafter. The risk of not doing so is that they will be out-done by the rising wave of digital competitors, who in the long run will make their business model unsustainable, and vulnerable to future waves of consolidation.

Why Big Data Driven?

    • Higher Revenues from Current Services

Transforming your organization to implement and embed big data analytics in its culture and processes is a prerequisite to achieve the desired revenue-boosting customer-centricity. It is estimated that CSPs can achieve 15% more revenue on average by leveraging big data to optimize current services and marketing processes. Some have achieved even more.

    • Lower Operation Costs

However, big data–driven organizations can implement big data use cases that yield significant cost-savings necessary to support more competitive business models:

-CAPEX reduction with much lower cost per TB (big data vs. legacy data warehouse) and prevalence of open source options

-OPEX reduction through streamlining current processes by embedding analytics in them (data-driven enterprise), and through new proactive use cases (log analysis to predict and prevent systems down, customer and network analytics to predict incidents and reduce calls to customer service, and so on)

    • New Data Products and Services

Once an enterprise has taken control of its data assets and built a platform to efficiently process data to gain insight, it can then move to more innovative areas:

– Offer new data-intensive products such as IoT connectivity and network-edge analytics.

– Provide innovative value-added services for industries and verticals like automotive and health.

– Engage in new ventures around the Smart Home and Smart City concepts.

How can Aiqual Technology support this transformation to Digital?

Aiqual’s founder is a pioneer of digital transformation and started this new venture specifically to support more businesses succeed in this critical journey.

There are various ways Aiqual can support your digital transformation. We can look at it from a couple of perspectives to illustrate it:

1- Must-Have Business Capabilities

You are an inspired business leader and you want to meet head-on the digital challenges and ensure that your organization has all necessary business capabilities to succeed. You have re-imagined your business model and you know that you need to achieve high performance in the following domains:

– Customer experience: Deliver a much improved user experience across all your channels trough personalized services and smart in-context recommendations

– New Revenues: Disrupt the disruptors and enable new business models with multi-sided trading platforms

– Operations efficiency: Leverage new technologies and architectures such as Cloud, Big Data, and Artificial Intelligence to reduce both CAPEX and OPEX

2- Agile Infrastructure and Architecture

On the technology and infrastructure side, CSPs need a way to quickly convert their costly and inflexible legacy systems to the same type of technology that their digital competitors are using to great advantage. There is an urgent need to have the matching “guns” to help level the playing field.

The consensus is that CSPs should leverage ICT convergence, cloud architecture and virtualization-everything technologies to gain infrastructure agility, and use a new generation of customer-oriented applications designed to thrill the customers, and to promote innovation in products and services. In addition, to make it all affordable (both CAPEX and OPEX reduction) and to cover any gaps in people and process readiness, CSPs are increasingly considering managed services options.

Conclusion

When it comes to solutions for CSP-to-DSP transformation, no one-size-fits-all approach can be used. We have to allow for variations in CSP specific situations, which lead to differences in strategy.

Aiqual digital consulting can provide as-is assessment and transformation road-map advice. Some organizations are taking a cautious approach and leaning towards incremental digitalization while others are exploring bolder and more effective strategies that can accelerate the transformation process to gain a competitive advantage as a digital leader. Either way, Aiqual digital consulting will support de-risking the transformation journey by weighting the different approaches and providing an agile road-map tailored to your situation, industry and market.

 

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