In this series of blogs and interviews with TM Forum Inform, digital transformation thought leader Martin Creaner discusses concepts raised in his book Transforming the Telco, starting with the 10 transformation journeys of the telco.
There is an ancient parable about a group of blind men examining an elephant and trying to work out what sort of creature it really is. Each touches the elephant in a different place, the trunk, the tusk, the leg, the tail, etc., and each comes to a radically different conclusion about what sort of animal they are dealing with. Some believe it is a snake, some think it is a bull, some a wall, some a rope. While this parable has its root in texts over 2,000 years old, it continues to express a universal truth: When we don’t manage to take in the full picture we can end up drawing wildly diverse conclusions.
Digital transformation runs into the same problem. We’ve all become obsessed with the pieces we are interested in, and accordingly, we see transformation as primarily a technology challenge or a new digital service opportunity or a cultural change or a customer engagement issue. Transformation is all of the above, and more.
I view transformation as 10 distinct journeys that embrace every aspect of the telco (technology, organizational change, looking internally or externally, etc.). Each journey represents a distinct transformation challenge, although there are close inter-dependencies between them, which means that several journey capabilities will need to be matured in parallel.
Journey 1: From discrete network elements to an autonomously managed, virtualized communications and cloud infrastructure
During transformation, the telco’s infrastructure must evolve from the expensive and difficult-to-manage set of discrete network elements, to a virtualized communications and cloud infrastructure, which can be managed in a highly autonomous fashion, at extremely low cost.
Network functions virtualization and software-defined networking (NFV/SDN) are making this first journey a reality, but there is a ways to go in making it manageable, and the cost, complexity, and disruption are huge. At the same time, 5G draws ever nearer, its next-generation network capabilities requiring NFV/SDN.
Journey 2: From reactive product-specific security to uniformly orchestrated security
While often considered, the security discussion is surprisingly disconnected from the transformation discussion.
The management of security must become a central transformation consideration, and designing security transformation in anticipation of the following aspects is key.
New digital services will have higher security requirements that necessitate business-wide security transformation covering the full technology stack, the data, the service creation process, the partners, the physical environment and a change to a security aware culture.
The IoT emergence presents enormous potential security issues as it exponentially extends the security perimeter that needs to be managed.
Journey 3: From limited data exploitation to a uniformly orchestrated data-centric enterprise
During transformation, a key telco journey involves the development of a single coordinated approach for the collection, analysis, distribution, security, and monetization of data, which will be derived from infrastructure, services, social channels, business and third-party sources.
New forms of enterprise information architecture and predictive analytics present an entirely new way of understanding and exploiting data. Success in the digital economy will largely depend on how well they use data, both for internal business optimization and external monetization.
Journey 4: From closed management systems to an Open API platform architecture
The telco must evolve from a closed IT architecture, where it only delivers its ‘own services’ to its ‘own customers’, to an open platform architecture – accessed through openly available APIs.
This open platform will be expected to support the development of both internally developed telco services, and externally developed third-party services.
Journey 5: From a limited portfolio of traditional services, to a diverse portfolio of digital services
Telcos will learn how to expand their service portfolios to offer new suites of digital services, addressing new vertical markets, with strong revenue growth potential. The telco must learn which service niches best suit their competencies, and ultimately transform their operations to efficiently manage these diverse service portfolios while minimizing operational complexity.
Journey 6: From managing a limited set of suppliers, to existing in a vibrant ecosystem of partners
In the digital economy, the telco must surrender the luxury of dictating the speed and depth of relationships with vendors and partners.
A step change is needed in the number and variety of partners, and sophistication in how they are governed and engaged with. Ecosystem partner governance balanced with strategic IP management will need to become a strong and core capability to manage open innovation and extensive collaboration.
Journey 7: From a limited set of business models, to utilizing multiple business models in core and adjacent markets
As the telco explores a larger portfolio of opportunities, it will need to develop a new flexibility in how it creates value for othera, and captures value for itself. Optimizing the value of new business models needs new operating models that work in parallel with existing business and operating models.
This journey requires new, lean operational and IT architectures that give the telco the flexibility to support multiple business models at scale, without significantly increasing operational complexity and cost.
These architectures will require a lean transformation of numerous internal process and financial, physical and informational flows to ecosystem partners. Total cost of ownership (TCO) and benefits assessment and realization (BAR) management practices will be needed to effectively manage the enterprise cost base.
Journey 8: From a traditional telco organization and culture, to a digital organization and culture
The culture that worked for typically stable infrastructure-centric organizations offering a limited portfolio of traditional services in competition with other telcos, will be very different from the organization and culture needed to offer a wide portfolio of digital services in competition with internet and over-the-top (OTT) players.
This is probably the most difficult transformation journey to map and the most painful to travel, as it impacts on peoples’ skills and behaviors.
Journey 9: From focusing on traditional channels, to adopting multiple channels to market
How a digital telco sells will be very different from the traditional approach of today’s telco. It will need to open up new communications and partner channels to market its brand and to maximize its digital services and products revenues, while simultaneously enhancing traditional channels.
This will require new operating processes, new ways of incentivizing employees/partners, and new paths for aligning business criteria to vertical market expectations, rather than sticking to telco norms.
Journey 10: From one dimensional management of customer relationships, to 360-degree omnichannel management of the customer experience
Both business and consumer expectations are becoming more demanding! Their expectations are based on their experiences with the numerous internet and OTT players that provide seamless integrated experiences on their phones every day, rather than by their experiences with other telcos. This transformation journey will benefit from increased customer satisfaction and reduced customer churn.
The need for change is urgent and in many telcos this journey is already underway. It involves implementing changes to the systems, processes, data-management, skills and culture across the telco, to ultimately align customer engagement experience with the best-in-class across all other consumer verticals.