Telcos’ top digital transformation challenges
Operators across the globe are racing ahead of many other large enterprises in the marathon to get digitally fit, i.e. to transform their internal operations and not just their end offerings.
12 Oct 2018
Telcos’ top digital transformation challenges
The author of this article, Fadi Nasser, General Manager ICT Business / Senior Advisor to CEO, Omantel, will be speaking at Digital Transformation Middle East in January 2019. Here's some insight from him before the big event.
Operators across the globe are racing ahead of many other large enterprises in the marathon to get digitally fit, i.e. to transform their internal operations and not just their end offerings.
The reason for this aggressive pace is that such a transformation lies at the heart of their “raison d’etre”, its reason for existing. After all, telcom operators peddle in digital services all day long, but until recently, these services have been rudimentary, without connecting specific needs in the application, or establishing connectivity business needs.
That speciality was always left to the digital equipment and software vendors. Until recently that is. Enter the new telcos of the globe (Microsoft, Facebook, Netflix to name a few, let’s call these operators v2.0) offering their own digital value-add over-the-top (OTT) services riding over local networking infrastructure in a particular geography. This new breed focuses on content and applications while riding someone else’s cables and wireless spectrum, ushering in an age of quickly democratization of local telecom infrastructure.
For telcos, it’s either evolve and compete higher up the value chain, or be rendered insignificant to their customers.
The top three challenges facing operators when undergoing this transformation are:
Introducing over-the-top services which relate to content and ancillary telecom services. This means a new set of relationships for the operators, shifting alliances and flexible business models, whereby the operator might have to split new revenue streams in their alliances.
Introducing services beyond their core ICT capabilities. New services could include big data, artificial intelligence, fintech, Blockchain, etc. Such services require a completely new skillset, in-house. Skillsets that are applicable to devising such offerings, from the value proposition and price/bundle perspective, to the go-to-market, enabling channels and direct-sell skills for B2B, B2C or B2B2C.
Enter the cloud, the cloud of everything. Clients, from enterprises to government accounts were embracing the cloud with a varying degrees of enthusiasm, but embracing it nonetheless due to cost efficiencies. SMEs in particular were ahead in the adoption curve due to cost savings. However, when operators tried to compete, they always ran into the big barrier that is it the top three global cloud operators such as Amazon, Microsoft and Google.
In the pre-operators v2.0 era, local operators boasted of strong purchase powers and stronger balance sheets. However, those balances often are negligible when compared with the same of a trillion-dollar company like Amazon or Apple. This, plus a much smaller target and addressable audience for any local or even regional operator, means that the runway to recoup cloud investment is often smaller/shorter and hence the pricing of the cloud services needed to be higher. Operators delivering costlier cloud offerings, based on the mere fact of data locality has not assured operators in their monetization efforts.
Things become more complicated when we turbocharge this race with the onslaught of even newer frontiers like 5G and IoT. The lines are meshed between traditional ICT applications and classic operations requiring connectivity. This uber-connectivity with its billion endpoints and excessive bandwidth coming online will enable video conferencing in an unprecedented way, unlocking new revenue streams potential in healthcare, education, tourism, industrial factories and many other segments. Mixing Big Data analytics with IoT and AI will further accelerate such market transformations. Unless operators make their digital transformation projects lean to introduce newer services faster and with more relevance to more clients, operators will not be able to match the client maturity curve rates.
Operators across the globe are racing ahead of many other large enterprises in the marathon to get digitally fit, i.e. to transform their internal operations and not just their end offerings.
The reason for this aggressive pace is that such a transformation lies at the heart of their “raison d’etre”, its reason for existing. After all, telcom operators peddle in digital services all day long, but until recently, these services have been rudimentary, without connecting specific needs in the application, or establishing connectivity business needs.
That speciality was always left to the digital equipment and software vendors. Until recently that is. Enter the new telcos of the globe (Microsoft, Facebook, Netflix to name a few, let’s call these operators v2.0) offering their own digital value-add over-the-top (OTT) services riding over local networking infrastructure in a particular geography. This new breed focuses on content and applications while riding someone else’s cables and wireless spectrum, ushering in an age of quickly democratization of local telecom infrastructure.
For telcos, it’s either evolve and compete higher up the value chain, or be rendered insignificant to their customers.
The top three challenges facing operators when undergoing this transformation are:
Introducing over-the-top services which relate to content and ancillary telecom services. This means a new set of relationships for the operators, shifting alliances and flexible business models, whereby the operator might have to split new revenue streams in their alliances.
Introducing services beyond their core ICT capabilities. New services could include big data, artificial intelligence, fintech, Blockchain, etc. Such services require a completely new skillset, in-house. Skillsets that are applicable to devising such offerings, from the value proposition and price/bundle perspective, to the go-to-market, enabling channels and direct-sell skills for B2B, B2C or B2B2C.
Enter the cloud, the cloud of everything. Clients, from enterprises to government accounts were embracing the cloud with a varying degrees of enthusiasm, but embracing it nonetheless due to cost efficiencies. SMEs in particular were ahead in the adoption curve due to cost savings. However, when operators tried to compete, they always ran into the big barrier that is it the top three global cloud operators such as Amazon, Microsoft and Google.
In the pre-operators v2.0 era, local operators boasted of strong purchase powers and stronger balance sheets. However, those balances often are negligible when compared with the same of a trillion-dollar company like Amazon or Apple. This, plus a much smaller target and addressable audience for any local or even regional operator, means that the runway to recoup cloud investment is often smaller/shorter and hence the pricing of the cloud services needed to be higher. Operators delivering costlier cloud offerings, based on the mere fact of data locality has not assured operators in their monetization efforts.
Things become more complicated when we turbocharge this race with the onslaught of even newer frontiers like 5G and IoT. The lines are meshed between traditional ICT applications and classic operations requiring connectivity. This uber-connectivity with its billion endpoints and excessive bandwidth coming online will enable video conferencing in an unprecedented way, unlocking new revenue streams potential in healthcare, education, tourism, industrial factories and many other segments. Mixing Big Data analytics with IoT and AI will further accelerate such market transformations. Unless operators make their digital transformation projects lean to introduce newer services faster and with more relevance to more clients, operators will not be able to match the client maturity curve rates.
