Digital Transformation Essential in Increasingly Complex Telecom Sector
Telecommunications service providers have long faced a challenging industry climate. Historically, the major players in the sector relied on building expensive, large-scale infrastructure projects to establish a path to long-term revenue health. In essence, the infrastructure side of the business set a foundation for valuable services over time. However, traditional telecom service models are being disrupted by external players, forcing organizations to adapt or risk falling behind.
Forrester found that the shifting telecom environment is pushing service providers to implement digital transformation initiatives focused at creating omnichannel experiences for customers. Increased access to digital technologies has caused a shift in customer expectations, and many telcos are currently struggling to adapt to this new environment. Digital transformation is necessary to engage customers in today’s market landscape.
Unpacking the Modern Telecom Ecosystem
Telecoms often operated similarly to utilities in the past. The model was fairly straightforward:
- Build infrastructure to gain a competitive edge in the market: The rush to deliver fiber-to-the-home networks in the early-to-mid 2000s or even more recent push to LTE connectivity come to mind here.
- Use those projects to advance services and increase profitability by onboarding new customers and keeping existing clients satisfied.
- Bundle less-desirable options with popular solutions to ensure consistent profit margins from older services.
- Lease legacy infrastructure to smaller telcos that will generally serve a different demographic and not provide much direct competition.
Telecom providers remain heavily dependent on their physical, or wireless, infrastructure capabilities, but the competitive climate has shifted. We’ve all seen the commercials advertising how mobile network coverage among major providers is often a difference of just a percentage point or two. Major telecom players now have such similar network capabilities that it is difficult to achieve a competitive advantage by building bigger connectivity systems.
The telecom sector is facing disruption from non-traditional segments.
What’s more, the telecom sector is facing disruption from non-traditional segments, such as over-the-top video, leading to shrinking margins. The result is an extremely challenging operational environment that demands change from the status quo.
A survey from EY asked telecom leaders to identify the three most significant challenges in the sector. Approximately 74 percent of those polled pointed to disruptive competition. Another 47 percent cited lack of organizational agility. Rounding out the top five were lack of return on investment (37 percent), changing customer needs and attitudes (32 percent) and an uncertain regulatory environment (32 percent). These problems point to a telecom industry climate in which:
- Telecommunications providers need to broaden and refine their services because they aren’t just competing with each other, but with specialized solution providers.
- Organizations need to become more flexible and adaptable in their operational models to not only adapt to market conditions, but also keep up with customer expectations.
- Businesses can no longer rely on their infrastructure projects to deliver the revenues they need. Instead, more effort must be put into the services surrounding those initiatives.
The telecom industry is facing sweeping disruption, a trend that is making customer experiences essential. The EY study found that:
- Approximately 68 percent of telecom operators in developed markets believe customer experience issues will be a top priority between now and 2020.
- Just 39 percent of telcos in developed markets strongly agree that innovation will grow as a strategic priority relative to cost control over the next five years.
In other words, telecom companies don’t think they are going to be gaining a major advantage by innovating on a technical level. Instead, they anticipate that success will come by creating stronger customer experiences while maintaining cost controls.
Big infrastructure projects aren’t the path to unlocking the next wave of telecom growth. Better business processes, stronger customer relationships and initiatives focused on operational efficiency are necessary. Simply put, digital transformation is essential.
3 Steps to Digital Transformation in Telecom
In many ways, telecoms are facing similar challenges to financial services companies. Both industries are longstanding pillars in nations with developed economies. Both need to maintain a degree of conservatism in terms of enterprise technology investments: They can’t afford to innovate at a pace that leaves them facing regulatory risk. Despite this barrier, both sectors have been going through a large-scale digital transformation journey, and telecoms that feel they are falling behind can still catch up.
These three steps can create a basis for a digital transformation project:
1. Break Down Business Silos
Many telecoms have largely entrenched divisions breaking the business up and forcing customers to jump through hoops when they need help. What’s more, employees working to deliver modern services must be able to manage accounts and permissions effectively across operational divisions.
Many telecoms have largely entrenched divisions breaking the business up.
Telecoms need to integrate data and optimize processes across lines of the business. Neglecting this key task will undermine efforts to embrace digital technologies, as isolated solutions won’t drive the cohesion needed to keep up with changing industry demands.
2. Use Automation to Drive Compliance
Regulatory pressures don’t have to put a halt on innovation. Instead, organizations that script key processes, automate policy enforcement within their technology platforms and create processes with regulatory checkpoints in place can set a base for compliance.
Complex, tedious and manual processes create regulatory nightmares. Scripting those tasks and automating them, on the other hand, drives efficiency and reduces costs.
3. Empower Employees to Achieve
Between legacy service models, entrenched enterprise software and regulatory challenges, telecom employees can easily find themselves stifled in trying to keep up with everyday operational demands. Creating good customer relationships begins with strong employee experiences.
If your workers can access the data they need easily, collaborate conveniently and leverage modern apps, they can they focus more the customer service tasks before them and create better interactions in a cost-efficient way.
Application development platforms can set telecoms up for many of these advances. Appian, the digital transformation platform, is designed from the ground up to accelerate service delivery, simplify data integration and help businesses coordinate their processes. There isn’t a single silver bullet for digital transformation, but app platforms can house the breadth of solutions companies need to get ahead.