Digital Transformation as a buzzword has been around in telecom circles for many years now, but Communication Service Providers (CSPs) have so far failed to realise its full potential. Saleh Bari analyses the trend and identifies ways telecom operators can revitalise their digital transformation efforts.
Digitalisation is transforming many industries across the globe. It is seen not only as a tool to cut costs and boost customer experience, but also as a key growth driver for the future. In fact, digital transformation is offering a great chance for organisations to completely reimagine their processes and systems, and future-proof their businesses.
However, digital transformation in the telecoms sector has been at best a stop-start initiative. According to recent research by TM Forum
, 60% of surveyed CSPs are still at the implementation/planning stage of their digital transformation initiatives. More alarming is the fact that 30% of the total respondents haven’t even taken a step in that direction!
Isn’t it ironic that an industry which is supposed to be at the core of the digital experience is struggling with its own digital transformation efforts? Little wonder then that more nimble businesses have come in and seized the opportunity digitalisation presented in the market. At a time when CSPs are facing growth challenges such as a revenue shift from voice and messaging services towards data services along with increased competition from other sectors, the need to accelerate digital transformation initiatives has never been greater.
Why Digital Transformation?
According to a McKinsey report
, the telecom industry has entered into a period of decline with revenue growth down from 4.5 percent to 4 percent, EBITDA margins from 25 percent to 17 percent, and cash-flow margins down from 15.6 to almost half at 8 percent. Revenues from core business such as voice, messaging and roaming continue to fall, amidst opportunities in newer areas. While voice revenue now accounts for less than a third of total revenues, data revenue accounts for 65 percent of the total revenues today.
There are a lot of change agents that have necessitated the need for digital transformation. The rapidly increasing scope and use of smartphones is one of the primary factors that has had a disruptive impact on consumer behaviour. It has opened up newer channels for communication, engagement and delivery of services which are both faster and more efficient than traditional mediums.
Another critical driver for digital transformation is the need to deliver a superior customer experience. The rise of the internet and cloud-based systems means that consumers have become accustomed to the ‘right here, right now’ experience
. Digital transformation allows CSPs to understand the modern customer’s needs, and helps offer personalised services in real-time.
Digital transformation is also necessary since legacy BSS/OSS that have been the driving force of the telecoms industry for decades are incapable of handling the demands for newer data-centric services. And the current generation of systems is not geared to offer innovative, seamless experiences to consumers.
What is Digital Transformation?
Many CSPs confuse any kind of IT transformation with digital transformation. The key thing to note is that digital transformation covers both external and internal transformations, which improve business outcomes. The following definition provided by TM Forum broadly covers all the facets of digital transformation:
“Digital Transformation covers internal transformation initiatives aimed at increasing efficiency and agility through automation, and external initiatives where the focus is on improving customer experience, providing a digital omni-channel experience and delivering new digital services.”
How to approach Digital Transformation?
Digital transformation presents a great opportunity for telecoms businesses to structurally change for the better. It gives an opportunity to boost profits, capture new markets, rebuild market positions and revitalise business systems. The TM Forum’s Digital Maturity Model
offers a good framework to approach digital transformation initiatives. The model is split into five key dimensions for digital transformation. By assessing the organisation’s maturity across these dimensions, CSPs can easily identify areas where improvement is needed, and more investment is required.
The key dimensions in the Digital Maturity Model are:
- Customer – CSPs must focus on providing experiences where customers see them as digital partners, using their preferred channels of interaction online or offline.
- Strategy – CSPs must focus on transforming to increase competitive leverage through digital initiatives. The initiatives must be aligned with the overall business strategy.
- Technology – Helps CSPs to create, process, secure, store, and exchange data to efficiently meet their customer needs.
- Operations – CSPs must execute and evolve processes and tasks through digital technologies for strategic management and business efficiencies.
- Culture, people and organisation – CSPs must foster an organisation-wide culture in governance and talent processes for progress along the digital maturity curve and provide flexibility for growth and innovation.
Digital Transformation and BSS/OSS
To enable digital transformation across your business, you need to lay a solid foundation for it with your business and operational support systems. Some of the key elements are:
- Digital Channels– Today’s customers demand a seamless omnichannel experience that works across all touchpoints with their CSP, from sales through to after sales service and care. It is therefore crucial for CSPs to identify key areas which are ripe for transition towards digital channels, such as self-service portals and apps, and design these channels with the primary goal of delighting their customers. Furthermore, organisations need to build capabilities that allows their sales teams to sell seamlessly across multiple channels without affecting user experience. Investing in omnichannel sales can help CSPs bolster revenues and reduce costs.
- Enterprise Service Bus (ESB) – ESBs are essentially integration platforms that allow CSPs to build rich integration between applications and support complex, service-oriented business processes. ESBs also make it easier to implement common security and compliance measures along with the tools to monitor transaction performance. One great advantage of using ESB technology is that it allows for building CSP specific customisation at the edge, rather than having it within the core of the BSS/OSS platform. This means your BSS/OSS platform doesn’t diverge from the standard product (making it harder to upgrade), but still offers the flexibility to customise the logic to the needs of your own business. In addition, open standards-based interfaces such as the TM Forum’s Open APIs provide a standardised methodology for partners to integrate their applications and offer value-added services to end consumers along with opening newer opportunities in other industry verticals.
- Enterprise Product Catalogue – The ability to centrally manage all products and services and publish to different channels seamlessly in a user-friendly manner is a must-have during the digital transformation process. This is needed to quickly and efficiently prototype and launch new products that are tailored to specific market segments.
- Scalable systems – A no-brainer really! All your systems and processes need to be scalable with the ability to handle large volumes and velocities of business and operational data. A lot of telecoms businesses across the globe are now adopting microservices architectures for improved scalability. This architecture is essentially about developing an application that is comprised of a set of smaller autonomous services that are independently deployable and communicate with each other. Each microservice handles a single business capability. The big advantages include fault isolation, lightweight technology structure and improved scalability.
- Cloud Ready – One of the largest opportunities in digital services will undoubtedly be in monetising cloud-based services. However, to be able to take full advantage of this, CSPs must have cloud native BSS/OSS platforms which will allow them to quickly transform their business models, reduce costs and increase innovation. You can harness the power of the cloud for your own business through Cerillion Skyline.
- Robust Charging Systems – A powerful and flexible charging system is a critical weapon in your digital transformation arsenal. The ability to seamlessly rate and charge from different systems with real-time charging and balance management capabilities allows CSPs to streamline processes and offer customer-friendly pricing plans.
- OTT services – Many of the leading CSPs across the globe are already moving towards offering their own ‘OTT’ style services or providing the infrastructure to integrate and monetise OTT services provided by partners. This will open up newer revenue channels and is crucial to offset dwindling revenues from traditional voice and messaging services. Analysts predict that in the future, telecom operators will be more like hi-tech train lines - a smart backbone for others to ride the digital wave.
- Best of breed technologies – The only thing certain about technology is change. New paradigms such as quantum computing and blockchains will dramatically alter the telecoms landscape. So, it is important to adopt agile and rapid development methods to launch new systems quickly. Using newer automation technologies, cloud architecture and containerisation platforms to standardise and streamline developer workflows, CSPs can provision quickly, build more efficiently, and get apps and services to the market much faster.
- Internet of Things (IoT) – CSPs will play a significant role as enablers and managers of IOT devices and services. The IoT market will be worth trillions in the future and the more nimble telecoms operators will transition from providing voice and data services towards ‘smart’ services. They will invest in technologies that help them build IoT platforms and applications along with capabilities in integration and analytics to help other businesses leverage the power of IoT.
Telcos have to quickly let go of the inertia and reimagine their processes, systems, products, services and customer experience with digital transformation. Becoming a digital service provider is the only way to combat declining growth rates, saturated markets and newer competitors. While the areas listed above are some key elements that will help them get there, every CSP has to carve out their own digitalisation path with complete commitment from the top leadership.
It is also important to understand that BSS/OSS digital transformation is not a one-time activity; it is a continued focus towards acquiring digital capabilities that will help businesses seize newer opportunities. Here at Cerillion, we are focused on helping CSPs transition to becoming digital service providers with our broad range of digital transformation solutions. Feel free to get in touch.