Carlos Valero, Director, Global IT Strategy and Architecture, Vodafone, is part of the team guiding the company’s operating companies through a digital transformation program called Digital Vodafone. This has emerged as a major strategic imperative for Vodafone. Last November, in an address to shareholders and investors, Group CEO Vittorio Colao outlined the three main areas of the program – customer touchpoints, technology management and supporting operations. He expressed confidence that Vodafone’s digital programs would “provide a sustainable platform to deliver continued margin progression over the coming years.”
MN: Carlos, you moved from CIO at Vodafone Spain to your global IT role in 2015. How different do you find the two roles in terms of the challenges around digital transformation?
CV: The main difference is that while my current position is a strategic, guiding role, my responsibilities at Vodafone Spain were more around execution. In Group, we set the vision and direction; we capture best practice and make sure it is shared. The local CIOs take the lead in terms of making it happen. Best practice comes from all different types of operators. Smaller operators are more flexible than larger ones and the speed of adoption is much faster.
Larger operators, on the other hand, provide a bigger impact on the group in terms of their actions. Issues such as regulation and data privacy vary from market to market. For example, in African markets public cloud is a particular challenge. But we try not to let these challenges get in the way. So, in Africa our approach has been to build our own private cloud capabilities in certain markets.
MN: How is the role of IT perceived within Vodafone?
CV: I think there is a growing confidence about IT within Vodafone as we have developed a number of initiatives to improve the overall performance, agility and quality of our IT services. We have taken the decision to pivot to the market to lead our transformation and to take decisions as close as possible to our customers.
The role of IT is changing as it needs to get closer to our customers. We are changing from being an order-taker to a recipe-maker. IT needs to be much closer to the business, and more vocal in terms of how it communicates with other functions and departments.
MN: To what extent do hyperscale players give you inspiration for your transformation programs?
CV: We are looking to learn from the things that have worked for them such as their culture or working practices, but to apply them according to the Vodafone reality. For example, a greenfield approach to technology is not always feasible for us because our company has grown through acquisitions and there is are significant differences between each individual market. We need to acknowledge who we are and what our reality is.
We have set up “digital accelerators” – these are small groups of business and technology people who come together to work on developing digital capabilities for our customers. These accelerators work like hyperscale companies and we hope that these teams will influence how the rest of the company works. They use agile practices and co-creation. This is how we are building the My Vodafone app. We also use digital accelerators to deliver our digital marketing capabilities.
MN: What is the main objective of digital transformation at Vodafone? Improved customer experience? Operational efficiency? New revenues? Or is it a combination of all three?
CV: Our first priority is always to deliver a great customer experience. Our digital transformation program is an evolution of our customer experience program (CXX) launched three years ago. This program had one simple target, to be the number one operator in NPS in all of our markets. We take the view that other benefits to the business will follow off the back of great NPS results. In the last years a significant portion of our bonus scheme has been linked to customer satisfaction KPIs.
MN: Is it easy for people working in IT to see a link between what they do and improved customer experience?
CV: It is in some cases. For example, if you are developing online portals then there is a clear linkage with customer experience. But there are some areas where it is not so obvious. However, when we define our year objectives we do try to always link them to what the customer impact will be. For example, it may be that the work that we do has a direct influence on a sales person or a call center representative.
We try to get everyone to go through this process of linking their objectives to the customer impact, so we insist on it when it comes to setting objectives and doing reviews throughout the year.
MN: Are the different operators across the Vodafone footprint transforming at the same speed?
CV: No. We are all moving in the same direction but the starting point is different. Each market has its own market dynamics and competitive scenarios. Our digital transformation program sets specific targets for each market, based on their specific situation and priorities. For example, one of the targets is moving more than 40% of our sales online. But each market may achieve that target at a different speed according to market dynamics like smartphone penetration levels.
MN: How do you measure the progress of transformation programs?
CV: We have very clear, defined targets. One of them, as already mentioned, is increasing significantly our online sales. Another is to make all of our digital marketing based on our customer value management capabilities.
MN: Do you see your relationship with technology partners changing as part of your transformation program?
CV: This is one of the areas where we have looked at hyperscale companies. They don’t use outsourcers extensively and they manage their core business mostly with their own resources.
We are very clear on which are our core competencies and which are not – in which case we might outsource. For example, for our digital accelerators we have decided that 80% of the resources that are needed will be Vodafone employees.
Our core areas in IT are those ones allowing us to keep control of the lifecycle management of our technology – like architecture, solution design, project management or operations. Additionally, we are insourcing according to our key technology drivers such as cloud, Agile [methodology]or analytics.
MN: Is insourcing an important element of transformation at Vodafone?
CV: We view our employees as a key driver of our IT transformation. We have already identified the skills gaps we need to address. As mentioned before, we have an insourcing plan in place that will cover part of those gaps, but a big part will be covered by the evolution of the skills of our current employees. We have developed a number of tools over the last few years that will help us on this journey like the Vodafone University or specific training programs for cloud, Agile or API management, among others.