Evaluating the progress toward digital transformation

  • By Jay Chen, CEO, Huawei India

Digital Transformation

The digital revolution creates both significant opportunities and threats. Impacting every industry, service providers can embrace significant growth opportunities by looking beyond connectivity. At the same time, commoditization and digitalization of connectivity services have created an urgency to dramatically simplify and transform the efficiency of the existing business.

As telecom operators re-think nearly every aspect of their business, they need benchmarks against which to measure progress. How far along have they gotten in the quest to go from being yesterday’s phone company to being a provider of digital services?

To answer that question, the TM Forum and leading ICT companies have created a Digital Maturity Model that helps carriers evaluate their existing capabilities and decide what to aim for next.

The model lists five different levels of maturity:

Basic. Most telcos fall into this category, providing customers with traditional services but no digital ones. This is a “smart pipe” strategy, where the operator supplies fiber and mobile connections to smartphones and the Internet.

Initiators. These operators have taken the first small steps toward digital transformation. They have a strategy for providing digital services and a plan for moving ahead but have made little progress. They might provide limited digital services to industry customers, but their revenue from these new services represents less than 5% of the overall business.

Providers. These operators get 25%  of revenue or more from digital services. Most operators are in the Basic or Initiator categories. Few have made the jump from Initiator to Provider.

Established. These operators have successfully completed their digital transformations and have begun helping customers to do so as well. Some OTT companies have reached this level, but few operators have.

Influencer. These market-leading companies not only act as digital services providers but also exert international influence, affecting entire industries and governments. Google, Amazon, and others are trying to attain this level but are not quite there yet. 

This Digital Maturity Model is a good start, but by itself, it is not enough. Companies must formulate their digital strategy, consider what products and solutions they will provide, prepare the right platforms, and think about how they will give users an optimal experience on the network. A good way to approach these challenges is to focus on five dimensions of the business: strategy, product, operations, platform, and experience.

Digital strategy

Analyzing the priorities a telecom operator needs to identify en route to its digital transformation, there are three strategies from which one can choose: providing smart connectivity; becoming an enabling platform that also allows others to provide digital services; and becoming a comprehensive digital services provider to customers in the enterprise, government, and consumer verticals.

Once those strategies are identified, telcos must make the necessary organizational changes to implement them. This requires deciding where to focus their innovation efforts and clarifying who is responsible for achieving newly defined objectives. It may also require updating business models, and understanding how to deliver and manage new customer experiences.

Digital product/services

Digital Products and Services are the second dimensions of the maturity model. Digital services will be based on data analytics: crunching the numbers to analyze both customers’ requirements and the operator’s ability to meet them, then providing services based on that analysis. Operators should also use analytics to refine their business capabilities and re-focus their strategies as needed.

Change management and automation are key aspects of delivering digital products and services. Customers will expect access to an online interface that lets them change service level agreements, fee rates, and other service elements seamlessly and automatically, reconfiguring network properties to meet the evolving needs of their business.

Product simplicity is another important factor. Operators need a simple process for creating products and solutions, as well as a user interface that makes those products and solutions easy for customers to use.    

Digital operations

Maintenance and operations have long been a time-consuming aspect of operating a network. But soon, automation and software-defined operations (SDO) will define processes according to customer requirements. Increasingly, decision-making will be data-driven, meaning fewer operational decisions will be made by people. Instead, data will be fed into the system, and algorithms will then make optimal decisions — for operators and their customers.

SDO will deliver more flexibility in processes, network configuration, and almost every other operational aspect of the business. It will also create a dynamic process framework that in many cases eliminates human involvement. Network capabilities and processes can be done changed automatically, allowing them to adjust to a variety of operational models. 

Digital platform

To become a digital services provider, operators will need the right platform.  Only a cloud-based infrastructure will allow the resource sharing, automation, and distributed software architecture that enable multiple logical networks to be created on top of a shared physical infrastructure. Open interfaces and APIs are critical to this process, as they allow third-party entities to cooperate and integrate with the system.

These features will ensure that operators are running a network geared toward mobility, big data, and the Internet of Things, one that supports emerging technologies such as 5G and SDN/NFV.

Digital experience

As they become providers of video content and digital services, they will focus more on giving customers a good experience. This means working hard to understand what their customers like, similar to the way high-end hotels find out whether regular guests prefer a soft pillow or a firm one.

Put another way operators will shift from a perspective centered on investment to one centered on value, meaning that they emphasize the innovative services that deliver a better user experience to their customers.

Any new network must support a ROADS experience for the carrier and their customers:

  • Real-time: users get the service they expect with no perceptible delay and minimal operational effort On-demand: users get the service delivered as soon as they request it
  • All online: users who prefer to engage with service providers online can do so easily
  • DIY: consumers contribute to the design and improvement of service. Do it yourself (DIY) and Do It With Others (DIWO) puts the control in the hands of the consumer and improves customer satisfaction
  • Social: The power of social interaction and expression is taken into account at each point in the customer journey.

Digital transformation is about telecoms creating business value while providing a more compelling experience to customers. But operators need a plan in order get there.

The Digital Maturity Model provides a roadmap, offering a set of methods and metrics for navigating the way forward. No matter what the starting point, the model helps operators plan their transformation journey by identifying the required business capabilities. This helps them progress step by step, and eventually achieve transformational improvement.

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