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With disruptive internet companies increasing their dominance in the communications space, CSPs need their own digital disruption strategies and action plans to face the challenge of this changing business environment.
May 25, 2016
Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Indrajit Chaudhuri, SVP, Product Management & Technology Office at Tecnotree looks at the activities that define digital transformation and the benefits they confer to CSPs.
With disruptive internet companies increasing their dominance in the communications space, communications service providers (CSPs) need their own digital disruption strategies and action plans to face the challenge of this changing business environment.
For the last decade, CSPs have experienced diminishing returns due to market saturation, price pressure and consumer demands for increasingly complex mobile services and also the rise of over the top (OTT) competitors who are able to provide free communication services over the internet.
On one hand, the physical, network-centric world is being disrupted by software-defined, cloud-based network and on-demand micro services, which helps to optimise operational costs and brings in IT agility. On the other hand, new consumer experiences are getting defined by the internet companies, and customers are no longer content to take what they are given or accept a process because it suits the limitations of a CSP’s technology platform. In response, CSPs must now turn to new strategies by removing internal process, organisational and technical barriers to manage growing customer expectations and bring in new services with speed and business model agility and reduced opex.
The implications of digital transformation for CSPs’ businesses
The importance of making this transition from a legacy CSP to becoming a proficient digital enterprise must not be understated, given the fate of digital and non-digital companies in other industries. For example, while the fortunes of online and on-demand film and TV site Netflix are soaring, on the other hand, Blockbuster, the physical store for DVD rental, has gone bankrupt. CSPs must avoid a similar fate. One option to consider is collaborating with disruptive brands and adopting new digital business and operating models.
CSPs need to anticipate not just what their closest rivals will offer, but also their current relationships and the systems and platforms that currently support them. They must understand that everyone, even these disruptive brands, is a potential business partner for forging mutually beneficial commercial relationships with, to deliver the services and experiences that customers will truly value.
Commercial transformation is a key part of a digital transformation strategy. CSPs must combine commercial transparency and new ecosystems of partners to deliver services that address businesses’ needs. Consumers prize speed, reliability, agility and innovation, but this does not have to be delivered via sturdy, tried-and-tested (and expensive) carrier-grade technology. Google, for example, is not afraid to launch “beta test” sites in the commercial domain and then launch new software releases or patches as and when in-life usage identifies any shortcomings. This strategy does not seem to have harmed its business or its share price. It is important, however, that CSPs combine this approach with a strong customer support system.
Agile and automated processes
Agile technology and automated processes will lead to faster service deployments and response times. CSPs will also need to be able to process and compute data on a vast scale. By automating crucial processes such as order capture, fulfilment, billing and payments, CSPs will be able to capture and generate relevant data sets to enable them to operate business with data-driven decisions based on analytics. Machine learning should also be used to learn and respond with event-triggered actions to manage churn, loyalty, personalised offers, monitor order fall-out, network performance and care operations.
CSPs will need to ensure that their own architectures, processes, and systems are developed to open standards. However, if CSPs want to leverage their existing or legacy estates, they need to ensure that they can interface with potential new partners.
As the ecosystem grows, no single organisation will be in a position to manage it from end to end. This will increase the need for a common set of standards so that large and small developers and partners can all be part of the ecosystem. It will also ensure that CSPs are not locked into an unending cycle of multi-vendor integration and migration programs.
Reusable components that accelerate the speed of deploying new functionalities are gaining traction, leading to a sharp increase in interest in the Application Program Interface (API) economy. In the past APIs were relegated to the status of tactical assets defined and designed within the context of individual projects or development teams. Now however, by connecting and orchestrating complex software interdependencies with minimal effort and impact on the underlying architectures, APIs can be used to create platforms that cut across the ecosystem of applications and domains. Disruptive brands for example, have become very fast at launching services and offers to customers because they rely on other developers producing APIs or applications to enrich their ecosystems. In July 2015 1.6 million applications were available via the Google Play store for Android users and 1.5 million applications were available from the Apple App Store.
Scalable, virtual systems
Virtualisation is another enabler for the digital world and one that also addresses CSPs’ need to reduce both capex and opex. Virtualising platforms allows CSPs to pay as they grow for the activation, billing, or CRM of new digital services. They can also use the same approach to support their own wholesale and enterprise customers by embracing a new business model that will deliver greater flexibility in cost structures, pricing, and innovation of digital services.
CSPs are keen to adopt virtualised platforms and many have begun to migrate service and application management and revenue management systems to private and hybrid cloud environments. Virtual and cloud-based systems will also be especially important for supporting the Internet of Things (IoT) services in adjacent sectors.
Compared to the traditional telecoms approach, the digital world requires a more expansive and customer-facing interpretation; in summary, there is a strong case for CSPs viewing the digital world as a ‘greenfield’ project. This approach would leave them free to deploy light, scalable, flexible systems that are cloud-based, without integrating the new stack and legacy systems. If the system is easy and quick to install and operates at web-speed it will be able to support new digital services and potentially help CSPs to become serious competitors and/or viable partners for the disruptive brands.
By spending more time looking at the business issues and less looking at the technical issues and integration, CSPs can address the business problem first and develop their strategies, business processes and solutions in the right way.
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