Here are the top 8 takeaways from 25 senior execs at service providers (including AT&T, Verizon, CenturyLink, T-Mobile and Xo Communications) at our workshop in Dallas last week. The subject is hot – digital transformation for enterprise – and the debate lively. Digital natives might have disrupted telcos’ businesses in consumer markets, but they could themselves become the disruptors in the enterprise services market.
These were the top eight takeaways from the digital transformation for enterprise workshop:
- Digital transformation is a top priority for enterprise service providers.
- The top three barriers to succeeding in digital transformation and deploying new services are:
- cultural and organizational issues;
- complexity (product, processes etc.); and
- lack of budget and resources.
- The main drivers of digital transformation programs are the need for greater business agility (to enable speed, partnerships, new business models and more), and to seize new growth opportunities in new and existing markets. There was widespread agreement that the convergence of telecoms and IT has opened the door for B2B ICT services. Although there is higher growth in emerging markets where there is not so much legacy infrastructure, more established markets are still seeing good amounts of growth. B2B billing and security services for enterprises are two potential quick win areas for telecoms, followed closely by cloud and managed services.
- Most North American service providers are implementing a digital transformation program, but are in the very early stages of deployment.
- Top management support and organizational alignment are the most important critical success factors for digital transformation.
- Service providers think the top three areas of investment to deliver tomorrow’s services are technology, customer experience and organizational design/cultural change.
- The investment in customer experience is to provide customers with a rewarding, convenient, seamless and integrated omnichannel experience. This was identified as the single largest area for investment, whereas spend on technology was spread across five areas but came top in overall, with technological architecture the single largest area for investment, followed by applications.
- Organizational design and talent management must not be overlooked when implementing transformation strategies. Processes and capabilities to manage talent in digital transformation ranked highly for investment. Service providers recognize they need help in this area. The expectations and needs of millennials* in their workforces is important to service providers as they undergo digital transformation. They need to be more flexible with applications and have a mobile-first approach to design in response to their changing talent pool.
What would YOU transform with $200 million?
Attendees were divided into five groups and asked how, if they were given an additional $200 million to invest in their digital transformation strategies, they would spend it? The results were illuminating, especially as it turns out they would spend the lowest amount on strategy – collectively only $40 million out of a potential $1 billion (4 percent).
This reflects that service providers have worked out their strategy and have started deployment (as they indicated), but perhaps also that to some extent the strategy is just to get on with it and start deploying new technologies and services etc. Service providers were asked to make their investments according to TM Forum’s Digital Maturity Model which is based on five core dimensions (customer, strategy, technology, operations and culture). The five are broken down into 28 sub-dimensions, shown in the graphic below.
The top investment on a core dimension was technology at a collective $392 million (39 percent of the total allocated budget). Customer experience came in second with a spend of $260 million, (26 percent of the investment total).
Breaking down investment by sub-dimension reveals that customer experience came out top with $253 million (23.5 percent of the total) and technology architecture at $122 million (or 12 percent of the total).
Great news if only…
This is great news for technology providers as the exercise shows that service providers are ready to make key investments in digital transformation – although there is a big proviso. A common opinion at TM Forum Live! in Nice in June was that service providers’ needs are not being met by technology suppliers (see point 12!). It behooves technology providers to put together compelling business cases to show how they can help service providers with their transformation and to take advantage of the convergence of IT and telecoms to disrupt the market for enterprise services.
* There is no precise definition of what the term millennials mean. Formerly they were referred to as Generation Y – children of the so-called baby boom or Generation X. Demographers and researchers typically use the term to describe those born between the early 1980s to the mid-1990s or into the early 2000s. One of their main distinguishing features, in so-called developed economies at least, is they never knew life without the internet and mobile devices. Another factor is that this generation was hard hit by the global financial crisis that started a decade ago, which meant unprecedented levels of unemployment for millennials in many countries.