Is the Telecommunications Industry Embracing Digital Fast Enough?
Edward Hadley / September 11, 2015
This is the second in a five-part series that looks at how some specific industries are tackling Digital Mastery. In this post, we explore the telecommunications industry.
As we learned through our analysis of the healthcare industry, Digital Mastery is all about embracing change along three main axes—improving business processes, redefining customer engagements, and creating new business models. Unfortunately, like many in the healthcare industry, telecommunications companies are largely failing to transform themselves to meet the demanding needs of today’s consumers. If we look broadly across the industry, we can easily point out those organizations—Verizon, T-Mobile, AT&T— that have embraced some aspect of “being digital.” Perhaps it’s a better customer experience through a web-based portal. Or perhaps it’s an entirely new business model, such as the one created by Free in France:
In early 2012, Free, a player in the ﬁxed-broadband market that received a mobile license in 2010, launched its ﬁrst ultra-simple, fully online mobile oﬀers at half the standard market rates. That forced other market players to follow suit, oﬀering their own purely online mobiles services at lower prices. Within two years, close to half of mobile subscription sales in France had moved online.
But where telecommunications companies have lagged is in transforming the heart of their business, the processes that drive their organization forward. Digital Mastery, as a result, has so-far eluded them. It’s a sentiment captured by Friedrich, Peladeau, and Toumi in their report for PricewaterhouseCoopers, Becoming a Digital Telecom:
The telecommunications industry has been critical to the process of digitization across a range of other sectors. From retailers to ﬁnancial services, ﬁrms depend on telecom networks to provide customers with compelling online and mobile experiences designed to capture their interest and keep them coming back. Yet the industry’s own eﬀorts to transform the way it interacts with consumers to market, sell, and support its products and services, have lagged.
Not entirely “behind the 8-ball” when it comes to digital transformation, the telecommunications industry has made some improvements in the area of customer engagement. But with their investments in digital technologies, they have been a victim of what George Westerman and Didier Bonnet might cite as a “shiny object syndrome.”
Telecom—The Fashionistas of Digital Innovation
In their book Leading Digital, Westerman and Bonnet identify four categories of digital readiness as a quadrant diagram:
- Beginners (lower left)—these companies “are at the beginning of their digital journey, and often adopt a wait-and-see approach, trying to gain certainty before they act.”
- Fashionistas (upper left)—these companies “aren’t waiting to act. They buy every new digital bauble. They flaunt their technological trendiness but don’t change what’s behind the veneer.”
- Conservatives (lower right)—these companies “have a profile opposite of fashionistas. Unconcerned about technology fashion, these companies focus on ensuring that every digital investment is carefully considered and strongly coordinated.”
- Digital Masters (upper right)—these companies have “overcome the difficulties that challenge their competitors. They know how and where to invest, and their leaders are committed to guiding the company powerfully into the digital future.”
The telecom industry, as a fashionista, reflects that they have definitely made progress in transforming their business. But, as pointed out by Westerman and Bonnet, most organizations in this category lack the changes at the business process level, “behind the veneer,” that will truly make them Digital Masters.
Retooling the Inside to Realize Gains on the Outside
The key to telecommunications companies achieving that Digital Mastery, then, will be finding a way to transform their business processes—and consequently their customer experience and business models—through digital technologies. Now that doesn’t mean simply implementing software systems. According to Friedrich, Peladeau and Toumi,
To meet this objective, operators must oﬀer an integrated, omnichannel user experience: on the desktop, on mobile devices, on the phone, and in stores. That, in turn, will enable them to build a portfolio of new products and services designed to match the requirements of each customer. Together, these two elements — an omnichannel experience and better products and services — will allow operators to boost value.
And the telecom industry isn’t blind to the state of things either. They know that in order to reap bottom-line benefits, they must retool themselves. As Friedrich et al point out,
[these telecommunications] companies have come to understand that simply incorporating a few digital elements here and there into their dealings with customers isn’t enough. They must completely reimagine and reinvent how their businesses should operate to connect fully with customers, in every channel — in stores, online, and increasingly through mobile devices.
That omnichannel user experience requires that telecommunication companies make changes not only to how they engage with customers but how their business operates—how services are provisioned, how customers are supported, how products are metered, and how the very network is used. Granite Telecommunications is great example of this. By employing the Mendix platform, they were able to effect needed changes through rapid application development, deploying new software such as a work order management system to ultimately transform the way they do business.
The Future of Telecom is All About the Network
With more and more connected devices coming online, consumers are ever reliant on their telecom services to provide them unmitigated access to the information resources they need. Whether it’s through the Web, an application, or a VPN to a corporate network, people are using their devices 24/7, putting the telecom operator in a very unique position—to potentially have an intimate connection with the consumer. The operator knows when the consumer is at the bus stop, when they are shopping online, and when they are talking on the phone. But more than that, with 17% of mobile connections being machine-to-machine, the telecom operator also knows the information that these devices are requesting and sharing. This kind of intimacy provides unheralded opportunities for telecom companies to offer exciting and powerful services that take advantage of the information flowing through their pipes. It’s possible for the telecom operator to leverage this data to other enterprises, enabling them to offer applications and experiences based on the data. But none of this will happen if the telecom industry doesn’t refashion itself as a digital company and not just a provider of phone services
Don’t Be Afraid to Cross the Chasm to Digital Mastery
In order to push through that last bit of fashionista into the realm of Digital Mastery, telecom companies are going to have to reimagine their business digitally. Although they are rapidly enabling consumers to exert more control over their services, it’s not enough when the way the company operates is still in the 1980s. Think big data. Think data-as-a-service (DaaS). Telecom companies must begin to think “digital first” and look for opportunities to take advantage of the unique and intimate relationship they have with consumers and devices. By retooling their inner workings to better capture and utilize the digital data that is flowing over their networks, they will recognize bottom line results that, today, they can only imagine.