The question for communications service providers (CSPs) that want to embrace digital transformation isn't if to start, but how and where. CSPs can follow this pragmatic blueprint as they shift their role from communications service provider to digital service provider (DSP).
Forces Shaping & Challenging the Industry
Numerous developments are driving dramatic changes within the CSP space — disrupting established value chains and business models. Still, the same trends are opening non-traditional growth prospects and creating new opportunities for industry players.
Disruptive technologies such as OTT video streaming and the Internet of Things (IoT) smart home devices are at the forefront of this change. Indeed, these systems now form the core of every telco’s capabilities. And since they play a major role in driving new customer experiences and engagement models, these capabilities represent a potentially huge new revenue source for carriers.
As digital technologies become more ubiquitous, CSPs find themselves mired in legacy technologies, including business support systems (BSS) and operations support systems (OSS).
The emergence of new technologies, solutions and services has exacerbated this complexity. Business leaders, therefore, must be extremely careful to ensure that their key performance indicators (KPIs) align with changes in their technology strategies and investments. Even so, in our view, many CSPs across Europe still have a long way to go in their digital transformation journey.
Yet this transformation is essential. CSPs rightly want to differentiate their customers’ experiences, but to achieve that objective, they need to increase their reliance on analytics to gain actionable insights, deploy products faster through a digital-ready infrastructure, and create new customer engagement models that lead to deeper, longer-term relationships with consumers and other key stakeholders.
In a global survey of the top 50 communications service providers, CEOs were asked to describe their strategies. The survey found that customer experience management and organizational agility were the number-one and number-two priorities by almost two-thirds (63%) of survey respondents, and among the top-three priorities by as many as 88% of respondents.
The results of this survey can help inform a set of six strategic principles for CSPs:
Drive customer retention with customer experience management (CEM).
Help open the door to digital with organizational agility.
Improve cost control and productivity to enhance existing processes and drive out inefficiencies.
Create a flexible, automated, and programmable network that reduces Cap-Ex and deliver services to market faster to handle growing data traffic.
faster and more efficient deployment of new services with technologies such as
SDN and NFV.
IT investments using digital applications and processes — from systems of
record to systems of intelligence.
How New Delivery Models Accelerate the Launch of Digital Services
The strategies we highlighted are a core part of CSPs’ evolution to digital services providers (DSPs). A digital BSS overlay architecture can facilitate this step forward by allowing DSPs to bring new digital services to the market quickly and efficiently. Figure 1 illustrates this.
Recently, we engaged with a leading tier-1 CSP in Europe to help the company develop a retail in-store experience (external journey) designed with a human lens. Early signs indicate fewer walkout rates and projected 25% incremental revenue over five years.
Our work in this space reveals that true value is created at the points where the DSP’s offerings intersect with human activities — including the experiences of partners (B2B), end customers (B2B2C), direct customers (B2C) and industry verticals (B2V). Combining the collective insight of these entities sets the path for the next technology paradigm, 5G roll-out, which will cater to the needs of industry-specific verticals such as the automotive sector and use cases such as the connected car.
An Optimized Revenue-Generating Marketing Model
Once their new digital services delivery model is in place, DSPs can focus on continuous optimization using a combination of “thick,” or human data, and big data generated by devices, OSS/BSS and network probes. This capability tells companies not only what their customers are doing, but also why. When fed into a “next best action” engine, these powerful insights enable DSPs to deliver precise, timely and contextual offerings and services. Adding journey analytics (sequential customer experiences) to the mix allows for meaningful customer interactions across channels.
Enabling Digital Transformation: Converging Three Clouds
We see the converging of three technology clouds as core enablers of CSPs’ digital transformation:
The Telco (network) cloud: SDN/NFV (private cloud from NEP to the CSP)
The Enterprise (public) cloud: Q2C, O2F and C2A (customer to advocate) processes
The Operator IT cloud: OSS/BSS overlay
Together, these Web-based systems provide the organizational agility that global CSPs cite as key to launching new products and services quickly and offering a superior, omnichannel customer experience.
We recommend that companies tackle digital transformation in phases. The first is to connect network virtualization technologies, such as SDNs, with centralized orchestration (OSS) to support the roll-out of agile, programmable networks in multiple countries, and ensure that the customer experience is human-centred.
The next critical phase involves the addition of customer experience management (CEM) and a radio access network (RAN). The network cloud will grow as it is enriched with OSS/BSS, analytics and radio.
Orchestration will allow the network and enterprise clouds to connect; behavioral engineering will bring big and thick data together in the experience design.
By 2020, the vision is to achieve comprehensive organizational agility — a single, scalable, integrated and cloud-based infrastructure with optimized services.