As operators continue to see a decline in traditional revenue streams, particularly voice and data, and reach the point of market saturation, leading to price wars and stiff competition, those wanting to remain profitable have little choice – diversification is essential for survival. This notion will not come as a surprise to operators and evidence of market consolidation and movement by operators outside of the traditional telco space is already emerging as different players look to boost revenues. The opportunity to transform from siloed services like data and voice to a unified platform that fosters a set of digital services certainly exists – but how can operators best take advantage of this and ensure not only a return on their investment but also profitability? It is this question which was explored in a Total Telecom webinar titled “The Digital Transformation Imperative,” with a number of key themes and recommendations emerging.
Pockets of value
According to Michael Sullivan-Trainor
, an executive telecoms analyst at Technology Business Research and Emmanuel Amamoo-Otchere
, Huawei’s Chief Marketing Officer for Software Business Unit, the good news for operators is that there are a number of areas into which they can put their capital and resources, allowing them to play the roles of digital partners in the markets they exist in. These areas include Over-the-Top (OTT) services, cloud services and the Internet of Things (IoT). The former is perhaps the most developed with the clearest defined role for an operator to play and the most potential for additional revenue. Cloud is also a proven capability, which provides opportunities for the operator to act as either a partner or provider, while the IoT is gaining traction and gives operators the ability to address a multitude of vertical markets, such as industrial IoT.
When focusing on revenue, operators should not expect any of these business areas to become a substitute for the revenue produced from large streams of data services. Instead, they should see them as providing pockets of value which, when stacked, will make up the profitability required.
So far, so good – but can the network cope with this shift? In order to deliver new services, operators must complete a full digital transformation of software stacks across a significant number of platforms, including their Business Support System (BSS) and the data management platform. Utilising cloud infrastructure to whet the growing appetite for different types of services, for example, software-as-a-service, unified applications for enterprises, video services, or network services, will also offer operators an advantage.
This transformation that the network requires creates a number of challenges when it comes to Digital Transformation. With operators increasingly deploying Software Defined Networking (SDN) and a greater level of automation across their infrastructure, expertise and competency in pure software defined architecture and software capabilities are required – something which the majority of operators do not have in-house today. New platforms will be required to deliver significant amount of visibility in regards to the performance of different services which is not the case in traditional networks. Again, operators will have to spend time and money getting to grips with this new requirement.
Sharing the burden
Fortunately for cash-strapped operators which are unable to invest heavily in-house, another option is available. Digital Transformation professional services companies are rapidly emerging as being an operator’s secret weapon in the fight against decreasing profit margins, helping to fill in the skills gaps that exist and becoming a single point of contact for the multivendor environment Digital Transformation creates. These companies bring system integration and IT capabilities, as well as the required experience in network integration and management, and added skills across multi-faceted solution to fold ICT software into the operator environment.
According to Sullivan-Trainor, the leading companies in this space include Huawei, Nokia, and Ericsson. Amamoo-Otchere iterated how in 2016 Huawei helped carriers manage more than $560million worth of revenue every day and handled up to $20.4 billion billing transactions through Carrier Software Professional Services and Managed Service offerings. Leveraging a stepwise framework for digital transformation, Huawei’s Carrier Software service offers a life-cycle based engagement from IT strategy development and planning, solutions design and implementation, and managed services. Under the life-cycle engagement, Huawei offers business process re-engineering, as part of its business operation consulting, prime systems integration and solution implementation, to de-risk enterprise architecture implementations across multi-vendor engagements, acting as the glue between itself, partners such as Accenture and others to helpoperators realise new digital architectures. Through Huawei, operators can also address opportunities with cloudifying existing domains, such as CRM, complete BSS using the Huawei BES framework or implement capabilities for IoT-related services.
Operators looking to take advantages of Digital Transformation to change their current business and overcome the challenges associated with their current operations should consider the three steps highlighted in the Total Telecom webinar.
The first is to build a transformation vision, but start small, targeting pockets of profitability through incremental service plays that allow for learning and fast results. Secondly, they should engage a partner that understands the new operating model and work with the partner to execute the transformation vision. Such partners must have the muscle and capability across a scale of ICT services, solutions and products, as well as experience of IT and telecom. Finally, sharing the risk is key to maintaining commitment; service providers will benefit most from partnerships where suppliers share the risk of new service deployments through results-based incentives.
This approach and collaboration towards a single goal will enable the delivery of Digital Transformation aspirations, as well as enable diversification of business models for operators to thrive in the new digital landscape.
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