What’s really happening with digital transformation? (Reader Forum)

To understand what’s really happening with digital transformation across the communications industry it helps to contrast conventional wisdom, or the hype cycle, with actual communications service provider (CSP) activities. Here we examine five domains that inform digital transformation and draw comparisons between conventional wisdom and the most common activities we see CSPs conducting as part of their transformative initiatives. The purpose of this approach is to separate some reality from an abundance of myths and therefore to provide a summary of what’s most commonly happening with digital transformation across the global communications industry.

• Business Strategy: Any digital transformation ought to have its roots in a business strategy that aims to achieve concise business goals. A digital transformation could aim change the way in which a company makes money; to improve profitability; to increase market share; to drive growth; or all or none of the above. 

This may seem obvious, but the conventional wisdom around digital transformation tends to focus more on tactical issues like improving customer experience; accelerating time to market; shifting customer interactions to digital channels; and introducing new services. So it’s important to remember that the roots of a digital transformation effort are not somehow to become digital or suddenly to adopt a range of clever new technologies. In reality, CSP leadership has been examining what the future of its business is.

This raises a standing debate across the industry: is a CSP best suited to be a highly efficient provider of network services, focused on high volume and low costs? Or does a CSP need to become something new, like a lifestyle brand, e-commerce ecosystem or entertainment content provider? The latter option is most common. While some CSPs are focused on the high efficiency, commodity play, most large group operators are focused on business strategies that aim to drive growth through new service introduction and acquisition of competitors or content producers and to increase profitability by reducing costs and creating new ways to generate revenue.

• Technology Strategy: Technology strategy necessarily arises from business strategy; by now, most of the industry has learned the hard lessons of doing technology-led initiatives for technology-centric reasons. So, it is somewhat ironic that the tech-centric term digital transformation is so widely used to describe business initiatives even if they involve substantial technology change.

Once again, however, conventional wisdom tends to focus on tactical matters and buzzwords. Public discourse tends to shift to popular subjects like blockchain adoption; artificial intelligence; robotic process automation; the Internet of Things (IoT); digitalization of process, portals and channels; and the ever elusive 5G.

 This tactical discourse often fails to address CSPs’ technology strategies. It may not make for spirited debate, but IT consolidation – a shift to fully hosted managed services – and a migration of systems to public, private and hybrid cloud environments are far more common to core technology strategies that inform CSP digital transformation efforts than are any of these buzzy terms. 

And this makes sense, because there should be a direct relationship between business strategy goals like cost reduction and growth and the technology strategies employed to achieve them. It makes more sense that a CSP would focus on creating group-wide IT platforms that facilitate cloud migration, leverage cloud economics and utilize fully-hosted managed services from major strategic partners in order to reduce cost, increase profitability and grow in new areas, as opposed to betting the farm on any bleeding-edge technology with a sparse developer pool and no historical track record.

• Customer Experience: Customer experience is absolutely a real focus for digital transformation initiatives in most cases. Making it easier, faster and less expensive to sell to, support and service customers is a nearly universal need across industries. An oversimplified way to sum it up is to say that a company which can’t transact with a customer via a smartphone is in some trouble. Given that, it’s fair to say that CSPs deserve some scorn for not being the first to become mobile-first given they have put most of the world’s mobile devices in users’ hands. 

CSPs have been notoriously slow to implement omnichannel capabilities successfully; have been behind the pace of change in new electronic payments; and have struggled to revamp their in-store, retail experiences with digital tools that help their customers buy and their technology and product partners sell more and faster within their stores. 

Many digital transformation efforts now demonstrate that CSPs recognize these issues. There is substantial effort to revamp portals for customers and partners; to automate product lifecycle and pricing; to accelerate partner product onboarding; and to design mobile-first user experiences. Whether the individual implementations succeed in presenting seamless, smart, omnichannel customer experiences remains to be seen, but the effort to get there is consistently a part of digital transformation initiatives across the world’s largest CSPs and CSP groups.

• Staff: A classic conundrums in any technology transformation is that people are often overlooked. People must use the technologies that are implemented. With so much new tech entering the scene, CSPs commonly must determine whether and how to retrain existing employees and recruit new talent. In the digital tech world, CSPs are rarely if ever ranked among the top places to work, which makes it tougher to compete for already scarce tech resources. Retraining people is becoming more common; after all, good people with knowledge of a CSP’s business may be even harder to find than good technicians.

Agile development is an area where CSP teams are commonly learning new skills. Particularly within the scope of digital transformation initiatives, service providers frequently adopt Agile for project and program delivery. In many cases, strategic partners like Netcracker, who have been using Agile internally for years, are able to transfer that knowledge to their customers as they work as partners. In short, Agile methodology adoption among cross-functional teams is really happening with digital transformation today.

• BSS/OSS Refresh: Another common element across digital transformations is that business support systems (BSS) and operations support systems (OSS) are being refreshed. CSPs are working aggressively in many cases to consolidate disparate systems and to replace outmoded legacy platforms wherever possible; fewer cans are being kicked down the legacy road. This has become necessary to move customer-facing processes to omnichannel and mobile-first modes, for example. A broader set of billing, charging and payment capabilities are necessary to support new consumption models, accelerate time to market, and align with the popularity of many new forms of digital payment. And large operator groups are leveraging cloud and fully-hosted managed service models to create common, reusable BSS and OSS infrastructure so that every operating unit has top shelf capabilities so they can grow, increase market share, and reduce time to market and cost.

This litany fails to mention the growing interest among CSPs to play more pertinent roles in digital identity; to create digital partner ecosystems; and virtualize networks and services in addition to data centers. All of these forces have required a rethink of how OSS and BSS is designed, deployed, evolved and managed over long periods of time. 

As a result, perhaps the thing that is happening most often in digital transformation across the industry is that BSS and OSS environments are being forced to change in order to enable CSPs to achieve the concise business goals that kicked off digital transformation in the first place.