DTWS: At Telekom Deutschland, the CFO is the new CDO

Telekom Deutschland’s CFO Klaus Werner was speaking with Mark Newman, Chief Analyst, TM Forum on October 22 at TM Forum’s Digital Transformation World Series, in an interview which was part of the 'It’s all about the data strategy' session. The session, sponsored by Huawei, comes under the Forum's AI, Data & Analytics theme, and is available to watch on-demand, now. Communications service providers (CSPs) have learned that to become data-driven companies by harnessing big data analytics, someone needs to take charge of the program. This often involves creating a specific role in the form of a chief digital officer or chief data officer. Unusually, Telekom Deutschland made data strategy the responsibility of its chief financial officer (CFO). So far, it’s working. Telekom Deutschland’s CFO Klaus Werner explained that the operator started its data journey three years ago with a chief digital officer (CDO) – but it didn't work out because the board eventually realized that digitalization needs to be driven in each domain, by everyone.

Engaged not detached

He added that the person overseeing the overarching data strategy needs the cross-functional ability to work with those domains, and CDOs tend to be too detached from at least some of them to get the job done holistically. By contrast, Werner explained, a CFO is in a far better position to put together a cross-functional team that can serve as an enabler for all departments and get everyone involved. “With this, we are able to become a good enabler for the whole company,” he noted. Another reason it made sense to put the CFO in charge of data strategy is that the CFO office also has skin in the game, he added.

“As finance people, we use data all the time [for] prediction, forecasting and all this kind of stuff. So I'm a data fan,” Werner said. “But we face many challenges because this flood of data, as well as the legacy systems we have – ERP [enterprise resource planning] systems with BI [business intelligence] landscapes. We see manual, inefficient and error prone processes. This is the reason why I took over responsibility for data.”

Not another expense

Werner added that CFOs are in a prime position to appreciate the cost savings that big data analytics can produce, as opposed to seeing it as just another technology expense.

“You can save a lot of money if you get rid of all the old BI ecosystems you usually have in companies like us,” he said. “In the end, you will have a better customer experience, you will have better processes in the company, and you will not spend more – from my perspective, you will spend less.”

Indeed, Telekom Deutschland’s data strategy is essentially all about the bottom line. The primary goal is to leverage big data analytics across the board to improve efficiencies and transform the customer experience into a strategic market differentiator, which will in turn generate more revenues. To date, Telekom Deutschland has been breaking down data silos and creating a data lake that everyone can access. The first fruits have been realized in several areas, from beefing up digital touch points such as its Magenta-branded customer app, its personalized offers and recommendations, its predictive routing – that is, intelligently anticipating complaint calls and directing them to special teams to deal with the problem – and its predictive servicing. This involves informing customers of an anticipated line problem or outage and offering data vouchers as compensation.

For data, it’s far from over

Werner added that Telekom Deutschland’s data journey is far from over – the data lake is still under construction to support more use cases. Meanwhile, the CSP is working to establish a 360-degree view of customers to understand them and their needs better. Telekom Deutschland is also improving its data catalog to enforce proper governance.

“If you're filling a data lake with poor quality data, you achieve nothing,” Werner said.

Amy Cameron, Senior Analyst at STL Partners, commented after Werner’s interview that putting the CFO in charge of data strategy was a refreshing and sensible move, given the fact that digital transformation is changing telecoms business models to a software-driven model in which OpEx is the main cost driver rather than CapEx.

“In a software-first world, telecoms operators have to be able to shift from the CapEx-heavy model that they have now and free up more spending on OpEx so that they can drive innovation, product development, service development and experimentation,” Cameron said. “So the CFO needs to be behind that as well, because they're holding the purse strings.”

You can watch the full session on-demand now. Watch the rest of Digital Transformation World Series content live and on-demand now too! Not registered for DTWS yet? There’s still time. Join 12,000 of your peers online through November 12. CSPs receive complimentary passes. Sign up here.