Telcos have a lot to be proud of, TM Forum CEO Nik Willetts told an engaged audience during his keynote speech at TM Forum Live! 2017 in Singapore today. “We as an industry have connected the world,” he asserted before listing three principal factors enabling this:
- A massive and very exciting evolution in mobile technology, combined with…
- An unprecedented wave of innovation in consumer device and electronics, combined with…
- An ability to operationalize that through sophisticated IT at massive scale.
The challenge, as Willetts put it, is that the industry is seeing the services that have been so profitable for communications service providers (CSPs) and have underpinned so much growth are commoditizing. CSPs are seeing their share of this hyperscale market that they’ve created shrinking as it becomes increasingly challenging to stay profitable.
The question on a lot of the minds of companies and boards that TM Forum has worked with around the world is: Where’s the next wave of growth going to come from? And, how do they transform to seize it?
They are struggling to understand how to cope with matching their level of investment in resources and development, while hyperscale internet companies are doing that at a scale that we can only start to comprehend.
“The telecoms industry globally accounts for about 1.6 percent of all investment in R&D. The hyperscale internet and computer industries account for about 23 percent,” Willetts said. “That 1.6 percent [CSPs] is split across hundreds of different companies; we’ve all got a tiny slice that we’re trying to innovate within. So, is it any wonder that we’re struggling to understand where we drive that innovation from?”
Not all doom and gloom
But it’s not all bad. We are entering a phase of reimagining the industry and what we can do, and as we start to think about the role of new technologies and the opportunities of 5G, the projections are promising.
CSPs will see over $500 billion in additional revenues from new kinds of services, a 20 percent upside on their current revenue trajectory through various services, but seizing them requires a lot more than doing what they did in the last four generations.
“Seizing them requires CSPs to embrace a true business transformation, and transformation of their role in the industry,” Willetts said.
How can operators do this? Here are some of Willetts’ suggestions in his own words:
A different mindset
The industry is only transforming at a technological level. It’s not yet embracing the level of transformation that needs to happen at the business layer to seize those opportunities and be more than just a technology provider.
We’ve labeled this transformation with a rather ambiguous word, ‘digital’, but what does it really mean? You need to go beyond being just a more digital version of yourselves and see that the next role for this industry is to be a true partner to other industries like healthcare, manufacturing and cities.
Helping them to digitize requires you to be a true partner, not just a provider of connectivity.
Getting quicker for your customers
Monetizing and profiting in a 5G era is going be about transforming the agility of your businesses. It’s about how quickly you can move to respond to a customer need to stay competitive, how quickly you can you seize that and turn it into something viable.
If we’re honest with ourselves today, as an industry, we’re simply too slow. It takes us too long through our culture, through the way we work in our companies, the way we manage and think about the role of IT and operations to make those changes. That’s what we need to change.
Knowing what’s in store
We are however, getting a clearer picture of who we’re going serve. It’s no longer just a shiny handset or a faster mobile connection; it is connectivity into every single device. Everything that can be digitized will be, and everything that needs to remain physical in the world around us will be connected.
We will see streams of data coming from those devices. It’s no longer just about the next sexy handset; it’s about actually embedding this capability into the world around us. That’s well understood.
What’s not well understood and the key to monetizing this, and to really succeed in playing role as an industry beyond just connectivity, is managing the IT and operations.
Getting focused to get organized
If we’re honest, in the last decade, IT and operations haven’t had a clear target. It hasn’t been clear what the next generation of that needs to look like. There’s no similar bar for IT and operations to what we have for 5G.
We need to set a new bar, and that’s exactly what TM Forum is going to be doing over the next year with something we call our open digital architecture, building on the suite of APIs into a clear new vision of where OSS and BSS systems need to be. This is underpinned by a fundamental rethinking of the role of IT in our businesses.
A new dawn for IT
The majority of companies in the industry, in fact the majority of established companies in the world, still manage IT in a 20th century mindset. We look at IT as this internal provider to be managed within a certain cost budget. You don’t think of them as partners. So we’re managing IT within typically 5 percent of our OpEx.
The whole reason we have IT though is to transform the rest of the business. It should be there to automate and speed up the way we can actually operate our businesses.
We need to shift that mindset to saying not how much have we managed to constrain IT spending within, which doesn’t tell you all that much about that actual impact, but to what is the impact on the rest of the business. What are you managing to save when you improve your ability to meet changing customer needs and accelerate your internal processes.
Transformation at the top
Many TM Forum members are starting to embrace this new mindset, but this kind of change also means a big change in leadership. We see that there’s a shift from the traditional chief information officer, to an evolution over last few years. A combination of network and IT coming together. But still, we see often that while both have one leader, there are two siloed teams working under them.
The network will become a software entity, and it has to be something that works closely in partnership with IT, but it means a very different role for our tech leaders too. It’s no longer about being the smartest technologist; it’s about understanding how that technology can play a meaningful role in the business.
That makes the role for CIOs and chief technology officers very complex because they’re having to understand the application of technology, and play this integration role that goes well beyond the tech roles of the past.
There’s the integration of partners of businesses, ecosystems, collaborators. This role becomes the chief of intelligence in the business, the data of what’s actually happening in the business and the maintenance of this ecosystem. Ensuring that we can deliver the right quality of service and integrity signals a shift that starts with the leadership of these functions, but affects all those that work in those functions too.
Advancement through automation
We have to understand that we’re building on top of a network that will progressively become more virtual, but we won’t wake up tomorrow to a pure software software defined network. It’ll be many years of hybrid, but, we’re driving towards that target. Perhaps the most fundamental change for us to understand, is that this will not be operated by people, but by an artificial intelligence (AI) that allows us to liberate a lot of our people from menial roles. We still have people around the world doing swivel chair jobs between systems, and very manual tasks. Let’s put their intelligence to a bit more use than that by automating a a huge amount of that. Through AI we can get the speed we need, to complete in the market we’re entering into.
And of course these three pieces of: simplification and automation and intelligence, are building on TM Forum’s very rich history and asset base in terms of tools, libraries, frameworks and materials, all of which we’re going to reimagine to be fit for this market. We’ll be building on years and years of knowledge and intel of how we can drive this level of automation and intelligence into our systems.