Vodafone’s journey to becoming a modular, agile telco

TM Forum’s Open API Program turned 10 in December, and the Open Digital Architecture (ODA) was announced two and a half years later in July 2016. Dr. Lester Thomas, Head of New Technologies and Innovation at Vodafone Group, was instrumental in developing both, and this work has provided a foundation for Vodafone’s techco transformation and its telco-as-a-service (TaaS) platform. We caught up with Thomas to discuss two recent announcements that demonstrate the ambitions of Vodafone’s platform strategy: a $150 million investment from Accenture to commercialize TaaS and a broader partnership with Microsoft to take AI, cloud and IoT to the next level. Thomas also discussed the impact of Vodafone’s transformation on culture and skills. That will be the focus of the second article in this two-part series.

Commercializing IT services

When Vodafone helped pioneer TM Forum’s Open API and ODA programs, the idea was to prepare the company to participate in platform-based digital ecosystems. “We strongly believe that there’s an ecosystem model we need to adopt,” Thomas said at the time. “So, between operating models we need to have integration based on these Open APIs. And also, we build it in a way that we can expose these services even to external partners.”

Watch this video with Thomas to hear about Vodafone’s early use of Open APIs: https://vimeo.com/203396950

That vision has become reality. In November, for example, Vodafone Group entered a strategic partnership with Accenture to expand and commercialize the operator’s shared services unit, Vodafone Intelligent Solutions (_VOIS). Vodafone “will retain majority interest, management control and sourcing decisions”, according to Accenture, while the consultancy “will invest in the order of €150m for a minority stake in the partnership”.

Today, _VOIS provides IT services including network-as-a-service (NaaS) to Vodafone’s operating companies. Vodafone Group also wants to be able to deliver these services to its joint ventures and eventually other telcos, according to Thomas.

“In our current operating model, we’ve done a lot of insourcing, and we’ve got quite a big services company. How we interact with the IT services company is a close relationship … and often we don’t have formal contracts,” Thomas says. “But now we’re going to have situations where we’re offering services to joint ventures that we don’t own fully, so we need to offer them on a more commercial basis… Accenture will help us make the commercial commitment with fixed SLAs [service level agreements] and those sorts of things.” The consultancy will also augment staff where needed.

“And we’re quite ambitious with this,” Thomas adds. “We think that as well as serving current Vodafone consolidated joint ventures, we will offer this to other telcos. We think we could gain more value from selling it more widely – it’s a whole suite, most of the software we use to run our business… At the moment, these group-wide services are built based on demand from our different markets. Now, we build them in a way which makes them easy to offer at scale.”

A ‘hyperscale’ IoT platform

Vodafone Group’s vision of selling to other telcos extends to its IoT platform, which it will operate as a standalone business as part of an expansive 10-year deal with Microsoft announced in January. In addition to “hyperscaling” Vodafone’s managed IoT connectivity platform, the agreement includes:

• Collaboration to transform Vodafone’s customer experience using Microsoft’s generative AI (GenAI) capabilities
• Expanding M-Pesa to improve financial inclusion across Africa by moving it to Azure
• Accelerating Vodafone’s cloud transformation by moving remaining data centers to Azure.

Vodafone will invest in cloud and customer-focused AI services developed in conjunction with Microsoft, and Microsoft will use Vodafone’s fixed and mobile connectivity services. Microsoft is also investing an undisclosed sum in Vodafone’s managed IoT connectivity platform, which has become a standalone business.

“Vodafone has split out the IoT business as an independent company within Vodafone because we believe in an ecosystem model where we can scale our IoT business even more quickly in partnership with Microsoft. Our goal is for this to become a true hyperscale IoT connectivity platform.”

The power of partnering

Another draw to working with Microsoft is the company’s reach into small and medium enterprises (SMEs). “We’ve got a very strong user base in large, multinational companies, where you can effectively build solutions with them,” Thomas says. “But how do we enable SMEs to innovate and build innovative IoT solutions on top of this platform? This is part of the scaling – we think we can reach far more customers in a partnership, even if we only own part of it. We could scale it by a factor of four and own half of that.”

Vodafone and Microsoft are also expanding their work on GenAI. In 2019 Vodafone entered a partnership with Google to develop a big data analytics platform and custom AI model. That model has been extended with Microsoft.

“The Vodafone AI platform, which we call AI Booster, is now actually a Google and Microsoft platform,” Thomas explains. “So, people can get access in a controlled way to all of the GenAI models: Google, Microsoft and open source.”

Watch this DTW 2023 video to learn about how Vodafone and Microsoft are collaborating on GenAI: https://inform.tmforum.org/videos/ai-driven-telco-unleashing-generative-ai-across-your-business-lester-thomas-and-iain-thornhill

AI is an example of an area where Vodafone initially began building its own platforms but later decided it would be better to partner in order to scale. “We did try to do a whole lot of big data, Hadoop and open source work in-house, but it didn’t really work well,” says Thomas. “We built lots of Hadoop platforms, but we were spending all of our time on building and maintaining the underlying technology and not really getting any value from it.”

After moving to Google Cloud Platform and later adding Microsoft, Vodafone can now focus on making use of the vast amounts of data it collects. “We’ve insourced a lot of AI skills to actually build the use cases, and we are driving far more value from data analytics and AI than we used to because of that,” Thomas says.

Multicloud as a strategy

Vodafone’s multicloud strategy is deliberate and will continue even with the extensive Microsoft partnership, according to Thomas. When Vodafone began implementing a public cloud-first strategy (for IT workloads – Vodafone’s network functions run in private clouds), most new applications were deployed in the Amazon Web Services (AWS) cloud, while the group’s in-house DevOps tooling and office IT were running on Microsoft Azure. Then, Vodafone added Google to the mix for big data and AI.

“For a long time in IT, we have been moving everything new onto the public cloud. The deal with Microsoft includes moving the lump of stuff which hasn't yet been moved to the public cloud,” says Thomas. “We’re migrating all our existing data centers to run in Azure data centers – they will be physically in the same place, but they will become Azure data centers.”

Vodafone’s multivendor approach applies across the business, with the company evaluating on a case-by-case basis whether to buy or build. “There’s an official guideline for our sourcing strategy of do we build this in house, or do we resource it through partners? That’s the first decision,” Thomas explains. “Having a modular, open architecture allows you to make those decisions, and you can drive a lot of innovation.”

In the next article, Thomas talks more about how the procurement model is changing and the impact of digital transformation on culture and skills.

Dr. Lester Thomas will be one of the leaders of a components masterclass at this year's DTW24-Ignite, which takes place 18-20 June in Copenhagen.