Gearing up for IoT through Digital Transformation

Gearing up for IoT through Digital Transformation The challenge of supporting the explosion of the Internet of Things has already been set in motion, meaning that Communications Services Providers (CSPs) will have to evolve their existing business models to support these services. Chris Ankers explains how Digital Transformation is the foundation needed for CSPs to succeed.

With so much hype around the Internet of Things, it is quite clear that Communications Services Providers (CSPs) need to do a lot to keep up with the meteoric change that is heading their way. In fact, Gartner estimates that half of enterprise business architecture initiatives will focus on digital business platform strategies by 2018. This is significant since CSPs will be at the heart of many of these initiatives through their infrastructure and platforms.
 
To quantify a little about the size of the opportunity, Gartner is projecting 8.4 billion connected things by the end of 2017, which is an increase of 31% compared to the corresponding figure last year, whilst Cisco estimates the business potential to be US$19 trillion of economic value by the end of 2022. Clearly, these numbers are very hard to ignore!

 
Why transform?

The why transform question is the starting point for all Digital Transformations. Performing even the smallest of transformations for any business is quite a challenge, let alone undertaking a transformation on such a massive scale. The organisation needs to be very clear about the reasons for change. Among the emerging technologies such as network functions virtualisation and software defined networking, CSPs have to single out areas where new capabilities need to be developed and establish a case for transformation. Otherwise, they risk being stranded with legacy products and become just a follower of their more nimble competitors.
 
For CSPs to succeed in the IoT era, they will have to overcome significant challenges around data standardisation, security and privacy. The General Data Protection Regulation (GDPR) coming into force from May 2018 onwards is one such challenge. They also need to develop a superior value proposition that fits their business goals. Furthermore, CSPs must explore symbiotic business and technology partnerships that can lay the foundation for a truly robust ecosystem.
 
One of the biggest challenges is the change in mindset needed to shun tried-and-tested processes and adopt newer ways of doing things. This cultural shift is a huge barrier for organisations embracing a Digital Transformation programme.

 

What to transform?

What to transform may seem like a simple question but there are many considerations before arriving at that decision. The following table lists some areas to be assessed:
 
CSP Business Area        Qualification of impact and change
Business Model The new paradigm of IoT provides the opportunity for driving new revenue streams, but what is your role in the IoT value chain? What makes you different from other CSPs? Will this be a major change for your existing customer segments? Will IoT take you away from your existing business?
Organisation and People What difference will such a step change in data volumes bring to your organisation? Where does the support for IoT services sit within the company? Are your teams going to be effective within the existing organisational structures?
IT Capability Two pillars for IT capability, specifically around the volumetrics and flexibility:
  • BSS: customer relationship management, charging and billing
  • Network/OSS: Resources inventory, network monitoring, logistics and processes
From an IoT perspective, these systems and processes needs to be as self-fulfilling as possible. Hence, architecture of the solution must be open and easy to integrate. 
Products and Services How does such a step change in product types affect your existing offerings? How can you manage the multitude of new products? What external resources might be needed?
Engagement How will your customers find out about the IoT services you offer? What is the route to market? How do you attain loyalty?
 

How to transform?

Before beginning your Digital Transformation journey, here are some essential checks for your business as you decide how to transform:

Align your management – The complex nature of Digital Transformation means that it is necessary to get buy-in from top management. It is the leaders who establish the vision and guide the teams through the transformation process. Senior management allocates the necessary resources, reduces friction between cross-functional teams and fosters a shift in mindset. Everyone in your organisation must be aligned with their goals and objectives.
 
Customer-first approach – Remember that customers always come first when working on transformation projects. This outside-in view ensures that cross-functional teams across your organisation are focused towards one unifying point – superior customer experience.
 
Motivate your teams – Digital Transformation is as much about people, as it is about technology. Implement good learning, development and rewards programmes for your executives. This is important to motivate your employees towards change.
 
Break out of traditional silos – Staff can often have a hard time breaking out of their existing organisational teams. A cross-functional approach is critical for the success of your Digital Transformation initiative.
 
Improve continually - Digital Transformation is not a one-time process. It is a commitment to continual improvement and constant change across the business. Market realities, customer expectations and organisational objectives will change with time, and it is important to embrace this constant change.
 
Manage your data well – With the onset of IoT, be prepared to be faced with a deluge of business data. Not handled well, it can snowball into unmanageable problems for your business. Data management programmes and data visualisation  are extremely important to ensure accessibility and usability.
 
Define KPIs - It is important to define the metrics for your success. For some businesses it may be about reducing costs, whereas for others it may revolve around revenue from newer services.
 
Watch and learn – The market is a great place to learn from other businesses who have undertaken similar initiatives. The big advantage is that it allows you to pivot quickly in case the trends in the industry change.
 
Get the basics right - Remember that there is no magic bullet to transform your business for the grand IoT challenge. Each operator will have to come to terms with their own set of challenges. However, there are some prerequisites that all providers should keep in mind, prior to embarking on a Digital Transformation programme:
  • Rationalise existing products, allow the right people access to the product catalogue, and keep all aspects of your products and tariffs in one place.
  • Simplify and automate business processes as much as you can. If you deploy complex processes to support IoT, then the margins will not stack up based on the ARPU these products generate.
  • Review your current KPIs. Just carrying them forward from the “as is” to the “to be” process may not be appropriate, so get these right before you start.
 

Conclusion

Essentially, Digital Transformation is all about managing change quickly and efficiently. IoT will bring about significant change to existing businesses not only in terms of management of products and services, but also in the ARPU that can be achieved. The challenge for CSPs then is to leverage the IoT revolution and prepare themselves for what will be yet another exciting chapter in the fast-moving world of telecoms.