There is still much debate about the meaning of the term ‘digital transformation’ in the telecoms industry, and what, in practice, it really means. Telephony switching started to be digitalised in the 1960s, and mobile has been digital since 2G. So why are we still talking about digitalisation and digital transformation in the telecoms industry in 2017?
For many telcos, digital transformation has become synonymous with the evolution of business processes that will help them to compete with over-the-top (OTT) competitors, such as Skype, Netflix and WhatsApp. At the same time, organisations such as AWS, Airbnb and Uber are changing customer expectations about how they consume and pay for services.
One of the ironies is that in the smartphone and tablet age, and with the evolution of services and apps, many telecoms providers still rely on manual processes in their business operations.
So, a recent paper from vendor Comarch, entitled ‘The State of Digital Transformation in Telecommunications’, is an interesting addition to the debate around how telecoms providers view digital transformation.
The report is based on a questionnaire Web survey of 119 respondents from 83 separate service providers around the world, including AT&T, Bell Canada, British Telecom, Comcast, Orange, Proximus, Sprint, T-Mobile, Telecom Italia, Telefónica, Telenor, TELUS, Verizon and Vodafone.
When asked the three most important aspects of digital transformation for their company, process automation was the highest-ranking option, closely followed by network virtualisation, with big data analytics the third most popular response. DevOps was the lowest ranking aspect of digital transformation – although this was a major topic at the IMS World Forum, as we reported some time ago.
In terms of digital transformation investment priorities over the next 12 months, business intelligence and analytics was the most popular response, closely followed by customer-facing applications (such as self-service portals), customer experience management (CEM) and operations support system (OSS).
Interestingly, given the industry’s poor reputation for customer experience, customer relationship management (CRM) was a slightly lower priority, with workforce collaboration tools and identity/access management both scoring poorly. Perhaps there’s a level of self-delusion here, as no operator wants to admit that its service is poor, while most seem to admit there is an industry-wide problem to address.
When asked to what extent their company had adopted various technologies and practices for digital transformation (aggressive, moderate, early-stage or not at all), respondents scored service agility and NFV/software-defined networking (SDN) highest, with more than 60 per cent of respondents saying their company had adopted these two aspects aggressively or moderately. Self-organising networks scored lowest, with 28 per cent having no adoption and 27 per cent being at an early stage.
Despite the hype, DevOps did not score well, with 11 per cent saying their company had not adopted it at all, and 31 per cent saying that their company had no plans to adopt it in future – again, at odds with the buzz at IMS WF.
For many, it’s the threat from OTT players that’s driving digital transformation. Responses to the question: ‘What is your company’s strategy regarding OTT players?’ are thus of great interest.
The most popular response (42 per cent) by a wide margin was partnership: to offer bundled services together with OTTs. A courageous 24 per cent said their company sought to compete head on with the OTTs by developing their own applications (let’s see how that goes), while a more pragmatic 18 per cent said they would become a platform provider for multiple OTTs. A further 14 per cent said they would focus on quality of service (QoS) to maintain their competitive position at the network layer, says the report.
When asked how their company planned to monetise big (user) data, 28 per cent unsurprisingly stated direct marketing and advertising, closely followed (26 per cent) by those who had no plans to monetise user data and instead hoped to simply understand their customers better through analytics. Location based services (20 per cent) proved popular, as did selling the data to third parties (anonymised or otherwise).
Finally, each was asked when they thought their company would have moved at least 50 per cent of its operations/services to the cloud, a third of respondents said it would take place within the next three years, with a further 37% per cent saying between 3 and 5 years. A quarter said it would take 5 to 10 years, while a small minority (5%) thought it would take more than 10 years. No rush, then.
In conclusion, the report suggest that it might be better to consider ‘digital transformation’ as an ‘umbrella’ term for implementing the technologies and business processes that will allow telcos to thrive in future. That way, they can increase the agility of network operations through automation, improve their ability to rapidly respond to new customer requirements (internal and external) and to improve customer engagement. At the same time, digital transformation, regardless of the definition we use, should enable the development of new service offerings, and lay the foundation for internal innovation.
It’s an interesting perspective – and clear. There is no single answer. Rather, it’s a combination of activities that, combined result in transformation of approach. Of the responses, we’re drawn most to the partnership model. After all, it’s too late for operators to develop a globally attractive consumer service (such as many OTT providers deliver), but it’s not too late to leverage capabilities to enhance and extend existing offers. However, the really interesting thing is to consider activities that are focused on customers rather than consumers – and on enhancing the overall experience, regardless of the underlying service.