TM Forum Live – the great digital makeover

TM Forum Live – the great digital makeover
Digital transformation is the telecom industry’s new obsession, but what does it really mean? Dominic Smith reports back from the keynotes at TM Forum Live! in Nice where the speakers and panellists attempted to answer the question “How do you thrive as a business in the digital world?”

Keynote presentations usually set the tone and agenda for an event, however the TM Forum decided to wait until day two before unleashing its star attractions. After a brief introduction from the TM Forum’s chairman, David Pleasance, the baton was passed to Nik Willets, the newly appointed CEO of the TM Forum, who set out his vision for an industry that has reached “its biggest moment since the introduction of mobile”. Willets described this inflexion point as the switch from 20th century (analogue) businesses into 21st century digital businesses, and telcos must act now in order to survive. However, before they can do this, they really need to know where they are going.
Willets went on to explain that digital transformation is about completely rethinking business and reassessing a telco’s role in the digital market. One throwaway line that perhaps captured the essence of this best was the assertion that telcos need to “move from ego-system to ecosystem” and this is a very serious point. Telcos have for too long wanted to “own the customer” and control the end-to-end service delivery, but digital business models are rapidly breaking this traditional linear value chain and replacing it with what Willets called a “value fabric” based on multi-dimensional relationships and collaboration between platforms, producers and consumers.
However, TM Forum research indicates that only 1 in 5 companies are ready for this fundamental change in business model and of course this is where the TM Forum can help too. Building on last year’s launch of the TM Forum Open APIs, Willets explained how this initiative has now expanded to cover 31 APIs and is a key strand in its Digital Ecosystem Management programme. This is all part of what the TM Forum describes as “reimagining IT for innovation” which involves a more modular, micro-services based approach to building and deploying new services. They have also introduced a new Digital Transformation Maturity Model to help telcos understand where they are and measure progress on their digital journeys.

We then heard from an interesting panel of senior execs discussing investing in telecoms and how businesses are valued in the digital economy. After the hype of the TM Forum’s own agenda, Duarte Begonha from McKinsey provided a dose of reality with an observation that in the industry’s current state, telcos are not that interesting for investors. A much-needed wake-up call perhaps?
Nick Pomponi from Goldman Sachs explained that investors are cautious about ensuring new telco business models are going to be completely different and sustainable. Digital transformation requires major capital investment and investors are looking for businesses that are scalable and will provide the expected levels of profitability in time.

The key messages to come out of this panel were that digital strategies can no longer be played out in separate business units; digital transformation must apply to whole companies. And business cases for digital transformation must not focus on cost saving and efficiency, but should be pushing more towards a growth agenda. Encouragingly, Pomponi indicated that investors are much more bullish towards investment in the telco vendor community because of the crucial role it plays in improving revenue growth.
After the reality check from an investor angle, the focus turned to digital transformation case studies and we heard different perspectives from Verizon and GE Digital. Shankar Arumugavelu delivered a powerful story about Verizon’s transition, describing how digital transformation must focus on simplifying processes and policies and not simply be about digitising analogue processes. He cited how self-service capabilities are now embedded into all of Verizon’s products as they are built, resulting in much greater digital engagement – for example 70% of price plan changes for a new unlimited plan are now coming from their digital channels.
GE Digital’s Deborah Sherry set the scene for her presentation with another wake-up call for businesses that are not yet sure about their digital future. She produced statistics showing that global productivity from 1991-2010 was 4%, but in the following 5 years from 2011-2015 this had fallen to just 1% – productivity needs a “reboot” and digital transformation is the key to this.
Sherry described how using their Predix platform, GE Digital is able to create “digital twins” of other applications in the cloud, offering the ability to quickly analyse vast amounts of data and simulate many different scenarios. For example, GE’s jet engines produce approximately 1TB of data per engine on an average 2-hour flight (compare this with Twitter that processes approximately 8TB per day for its entire service). Using these “digital twins” for the analysis, GE is then able to undertake predictive maintenance based on real data, dramatically improving the efficiency for the airlines using their jet engines. Powerful stuff indeed!
The final keynote session brought together a heavyweight panel of industry veterans from KPN, Telefonica, Ericsson and Orange to discuss the future shape of OSS/BSS applications, and they didn’t hold back. Erik Hoving, Group CTO of KPN, set tongues wagging with his opening comments “why do we have billing systems at all?” and “who wants to send a bill?” which prompted applause and cheering from a packed theatre!
This is not the first time such an idea has been put forward, and I think he has a good point. In consumer markets, customers are now used to seamless subscription billing for services such as Netflix and Spotify who never send you a bill. So why should telcos? And with the shift to doing everything online through convergent charging, why would anyone need a monthly billing process anyway?
Aside from regulatory issues that may dictate the sending of bills in some markets, it is crucial to remember that business customers place very different demands on their service providers, with most still requiring invoices and at least 30-day payment terms. And whilst those controlling the purse strings continue to manage their accounts and budget on a monthly basis, it is unlikely that many businesses will agree to being charged in real-time and not receiving any bills.
In this blog from five years ago Billing: reports of my death are greatly exaggerated I covered why I didn’t think that billing would die anytime soon, and I believe the same arguments still hold true today. And this was confirmed on the panel by Phil Jordan, Group CIO of Telefonica, who pointed out that legacy BSS/OSS still underpins a multi-billion-dollar industry!
However, there’s no denying that real-time is absolutely key for digital transformation and the panel were unanimous on this. They also highlighted how customer experience must be front and centre and this means a massive simplification of the services (and billing!) that telcos provide.
The key challenge is speed and agility. Ulf Ewaldsson from Ericsson highlighted the fact that cloud-based companies think differently and act faster and this is the real transformation that must take place in telcos. In fact, all of the morning’s keynote speakers raised the crucial role of people and culture in fulfilling their digital transformations.
In the first keynote session, Nik Willets had paraphrased Peter Drucker by saying that “agility and culture eat strategy for breakfast, lunch and dinner”. However, going full circle in the final panel session, Orange’s Jean-Marie Culpin summed up the size of the challenge that lies ahead when he said that agile means “I want to see it when I’m still alive!” If this is the reality for most telcos, then digital transformation can’t happen soon enough.