Not to be outdone by the over the top (OTT) players alarming many communications service providers, Etisalat’s Hatem Bamatraf discusses with TM Forum Chief Executive Nik Willetts, how Etisalat is indeed learning lessons from them.
Deeply entrenched in the telco world since 1995, Bamatraf, the company’s Group Chief Technology Officer (GCTO), is now helping the company lead the way in digital transformation.
Bamatraf is also Chairman of the Board of Etisalat Technology Services and a member of multiple boards within the Etisalat group, drawing on his rich regional and international experience to help steer the company’s digital directive.
Here, I bring you Bamatraf’s ‘fireside chat’ with Willetts, where the pair discuss leadership, strategy, business models and 5G. The chat was held before an engaged audience at this year’s TM Forum Digital Transformation Middle East in Dubai.
What is Etisalat’s vision for the digital world, especially with the advent of 5G and the opportunities that come with it? Furthermore, how are you progressing with your journey to achieve that vision?
5G is not just a technology evolution or upgrade of infrastructure, it’s a revolution, a huge upheaval of current business models, and of how telcos conduct day-to-day operations. Alongside complementary technologies like AI and blockchain, our vision is that 5G won’t simply be a network/connectivity technology upgrade.
We’ve signed memorandums of understanding (MOU) with key vendors in 2015 to participate in the standardization of 5G. 5G is a revolution that we’re putting a lot of bets into, and we hope that the supporting ecosystem will be ready in time to support the opportunities available.
Last year, we conducted a pre-commercial 5G trial, testing the technology and reviewing the progress with our vendors. Our objectives and strategy is to launch 5G to the region [Asia, Middle East, Africa] in 2019 as a commercial network and service. We’re working towards that objective and have a commitment to our major stakeholders to be ready by then. Etisalat will be one of the first in the region to launch 5G.
So you mentioned an upheaval in business models, how far are you going to challenge the current business models for 5G?
It’s a mistake to think of 5G as just a technology function; it should cut across a lot of different functions businesswide. It isn’t like the launch of 3G or 4G. We’re involved in a series of discussions and preparations and have established a committee to look at use cases. All our departments are aligned and milestones are in place. We’ve many use cases to introduce alongside 5G, which we can’t reveal right now, but they will start small, and will not just focus on connectivity and voice over high-speed internet.
5G needs to have a different type of thinking; we need to prepare the market and customers. We have to ask them to install equipment such as sensors so they’re ready for what’s coming.
What aspects of digital transformation do you see as the most challenging?
We’re living at a crossroads right now. It’s important to realize that transformation doesn’t just mean technological transformation. You can’t just buy some new boxes, switch on the network and claim you’re transformed. Transformation needs span the whole organization. There needs to be a change in business models and people so they are not operating the way they used to.
The role of IT has to veer toward being more of a business partner. IT can’t be seen as a cost center but a profit center. The IT department needs to work hand in hand with the commercial teams and be actively looking at how to bring in new business.
The biggest challenge is the people side of things which is much more difficult than the technology side of things. How can we upgrade mindsets, skill sets and cultures to be more digital?
Some companies decided to create a chief digital officer; a big mistake and a move I don’t recommend. The culture instead must cut across whole the organization. The human resources (HR) department should be innovative in helping to implement this culture. Finance, Procurement, business processes, everything needs to be revamped and be more digital-friendly. Internal processes must be intrinsically digital before you go out and sell digital services.
How do you think leadership needs to change to unlock innovation?
Leaders have no choice but to bring about the transformation among their people. We met with the CTO of AT&T last year to discuss just that. The biggest challenge AT&T face with their virtualization and ONAP is the people. They worked with HR to create an academy to make sure people are more software trained. Employing new people from outside is very expensive. With brilliant people within the company, it’s just a case of developing existing employees’ skillsets.
The role of leadership is critical and change has to start from the top. You cannot build it bottom up, but top down. The leader should believe in this culture, endorse it and talk about it with employees often. Everyday in the office, I reinforce: “digital centricity is our core focus”, “digital strategy is our future”. It won’t happen in a year. Introducing a new culture will take years, especially with a company the size of Etisalat. This cultural change is very important to the core business – but it will take some time.
Moving onto the industry supply chain, are vendors keeping pace? Are you getting what you need from the supply chain?
We see there is some improvement there and the ecosystem is developing. We can’t introduce 5G without the ecosystem. 3G took five years for each billion customers, LTE took three years. So, there is an improvement, but not enough. We’d like to see infrastructure development to be aligned with the business challenges.
Today, for example, there’s demand for Internet of Things (IoT) and smart cities use cases, with some government use cases specifically. In the UAE we see demand because there’s a gap in the ecosystem where vendors can’t meet this use case demand.
Then, we’re seeing the introduction of new players which might disrupt the journey we’ve started. Any standard out of 3GPP standard is not ideal, as something that is not standardized can cause problems. We want the vendors to keep pace with the overall business developments, focusing not just on 5G, but on a global transformation of the technology through virtualization. Orchestration layers, cloud factory concepts, etc. will still see slow movement; it is better than it used to be, but is still not at the needed pace.
These issues with pace, how much of that is down to the fractured nature of the industry? If the industry collaborated more, would that help? And, how important is collaboration to get what you need from your vendors?
It is very critical. Considering there is only a handful of vendors – five big ones – business relationships have been established for a long time, since before 2G even, so there is no weak, messy collaboration. The challenge is the business of those vendors.
15 years ago, there were more than ten large vendors, many of which have disappeared from the telco industry, I think because of the challenges they faced. They spread their product line too wide, focused on too many things they couldn’t see through and spent money on research and development in unlucrative areas. That’s why we’ve seen the size and scale of such firms change over the years.
We expect to see the same challenges in the future. More open source development might mean new vendors and suppliers, making it difficult for classical vendors to remain in the business.
Etisalat recently opened an innovation center. How do you, in your role as GCTO, manage to drive efficiency and innovation? How do you balance the challenges of today with the innovations of tomorrow?
80-90% of your time is consumed with day-to-day operations. Strategy and innovation would be 10-20% because of the nature of work. How did Etisalat solve this? Through structure. I’m the CTO of the group, but I created working groups within the different operating companies.
We bring ideas that create value for our telcos. We found that this collaboration between different operating companies across different geographies helps. There were initial challenges of course, ego, etc. but we overcame them over time, and we now have completely engaged working groups across different layers of the network.
We’re also engaged with leading data center providers, and are looking at how OTTs build data centers, and how we can bring this kind of innovation into telecoms.
We’re looking at expansion and the mergers and acquisitions strategy for Etisalat in terms of what types of companies to buy and in what geographies. We’re Looking at how Etisalat can lead the region and accelerate digitization. We’ve shared our strategies with the Executive Board and the Chairman who have all endorsed it.
We’re also looking at how to collaborate with the industry, and identify and copy innovation.
The business of telecommunications is challenging and is saturated in a number of companies. The top line is definitely saturated. If there is growth, it’s single-digit growth. This is then being eaten up by the cost of innovation, so the bottom line isn’t increasing, and sometimes, it’s declining. This is often because of regulation, competition, spectrum challenges, evolution of technologies and pricing, etc.
Telecoms is capital intensive. If you don’t make money at the bottom line, you can’t invest for the future. It’s important to be profitable at the bottom line so you can put it back into the market. In understanding the global picture and market, you can understand where to focus. Growing the top line is essential. Bringing efficiency in the way we operate and innovate in technologies is crucial.
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