Digital transformation amongst CSPs is not going too well: survey

Written by on October 24, 2017 in Opinion with 2 Comments

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It will come as no, or little, surprise that digital transformation programmes among Communications Service Providers (CSPs) are not going as well, or as fast as we would like. The reason, as usual, is not about things technical, it is about things cultural and about communications (or the lack of communications).

This is the main finding of the TM Forum’s first Digital Transformation Tracker (DTT). The survey was carried out amongst 93 CSPs, across 64 countries, and included their suppliers.

Although over 60% of respondents said that they were implementing or planning to implement digital transformation projects (and the same number agreed that revenues will be flat for the next two to three years), it seems the barriers to success are only too familiar.

The other point to remember is that while 60% plus are implementing or planning transformations, that simply highlights the 30% plus that have not started yet.

The survey also highlights some interesting points such as the fact that when group CSPs were surveyed, the answers differed between one operating company and another, in some cases significantly (one respondent at group level happy with the transformation progress, one in an opco was unaware of any plans or progress). And the barriers: ‘CSPs cited a lack of vision and goals (62%), cultural and organization issues (62%) and a lack of support from top management (58%).

This is no surprise but also frustrating. We know, and we have known for a long time that transformations – whether they be Billing, IT or corporate – generally only succeed with complete support from the top, first class communication and a very clear vision.

Perhaps most damning is that when the suppliers were surveyed they did not share the confidence of their customers in how well things were going. Only 5% of suppliers agreed with the CSPs’ views.

Culture is still The Big Problem, without doubt. CSPs have goals and targets that demand incremental growth, increasing EBITDA and lean cost structures.

True digital players have disruption in their DNA. They are also ‘cool’. The game plan for the large digital giants depends upon being the largest in the room. Profit is not a priority. And the cost of capital is ridiculously cheap. Amazon’s shareholders funded the takeover of Whole Foods for $13 billion by throwing money at the company such that its increased share price covered the cost of the transaction.

And it is, of course, eye watering that hundreds of cities have bid for the pleasure (and profit) of housing Amazon’s new HQ. Amazon is so big and will create so many jobs that it has become its own galaxy, its own black hole, into which entire cities will disappear. The irony is complete, that the biggest company on the planet is being offered tax breaks in exchange for locating within their tax jurisdiction. If Amazon were regulated like a telco, the story would be very different.

The thing is that disruption simply is not part of a CSP’s DNA. It probably never will be, but then again, if their role is not disruption, maybe they should concentrate on being the infrastructure on which disruption happens and with which they partner.

The TM Forum will conduct this DDT twice a year and the next one is expected in February 2018. Let us see how digital a CSP can (or needs to) become.

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Alex Leslie

About the Author

About the Author: Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet. He is publisher of DisruptiveViews and previously BillingViews. .

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  1. Bob Machin says:

    For me, the underlying problem is that there has never been any clear definition of what ‘digital transformation’ means for the CSP business, and for that reason if for no other, its success and progress are pretty hard to measure.

    Over many years, I’ve seen ‘digital’ used as largely as a shorthand for ‘new’ – what we used to habitually call ‘next generation’ – and for ‘anything to do with IP and the internet’, ranging from most kinds of premium services to online customer support, to outsourcing and SaaS. When we talk about digital transformation, there seems to be little consensus on what the end state of that transformation might look like.

    It’s interesting that there is no such confusion or ambiguity in the many industries through which ‘digital transformation’ has torn like wildfire, delivering efficiency, cost savings and a significant change to the customer experience, and tearing down long-standing institutions that were too slow to get on board – obvious examples being music and film distribution, taxi-hailing, banking and ticketing. This is very clear and real disruption, and far from what we talk about in the CSP business, where we’ve barely moved forward from trying to agree what we’re talking about when we talk about digital transformation.

    ‘Real’ digital transformation – if not disruption – in the telecoms business seems to me to exist mostly at the network level, where what were once very physical, inflexible and expensive functions are moving from hardware to software and from physical to virtual – delivering benefits similar to those experienced by other industries traditionally rooted in the physical and the analogue. At the business level however, although significant change is ongoing, it’s in areas such as outsourcing, the move to SaaS in the back office, incremental improvements in the customer interface. All vital change, but disruptive ‘digital transformation’? I’m not really seeing it.

    Maybe it’s time to stop talking about ‘digital transformation as a thing’, in particular as a thing which will restore the profitability and cultural impact of telecoms, and simply get on with using the best available technology to improve the the experience of the customer and the efficiency of what is already a highly ‘digitised’ business.

  2. Rob Rich says:

    Just saw this (just back from a long trip). As one of the early drivers of the Digital Transformation research and program formation at the Forum, I would say these results are not surprising at all. If you go back to the early research, the surveys were more hopeful (typical with new initiatives) but recognized that there were very significant barriers to success. Now that we’re a few years on, the difficulty of surmounting those barriers is more apparent.

    Bob, the Forum (and others) did try to set a few guidelines for areas in which the CSPs could focus, including digitization of infrastructure and operations, digitization of the customer
    interface/experience and supply chain (assuming some sort of participation in a digital ecosystem) , and finally digital products and services. Of course, we recognized that focus areas and priorities would be different for each service provider, given that this should be driven by individual providers’ business goals and strategies, and environmental concerns, but we felt these were the areas. where progress could be made.

    And I believe you’re right about focusing on the business. The initial idea was to provide awareness to the capabilities and tools that many other players have used to ‘transform’ and ‘disrupt’ their industries. But that of course is not nearly enough. The truth is the telecoms industry already has been disrupted- there are many examples; Skype, WhatsApp, Google, and MVNOs among others. But while technology may have enabled these disrupters, it was vision, strategy and business acumen that drove their success. While many companies have struggled with digital disruption, it is high time that CSP leadership showed the vision and acumen necessary for sustained success in the digital economy, and recognized that digital technology and transformation are a means, and not an end goal.

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