Kathy Gibson reports from Huawei MEA Service Summit in Cape Town – Business today is about transforming what we do daily, and organisations in every industry have to undergo digital transformation if they want to thrive in the future.
Telecommunications operators, however, still have a long road to travel to embrace transformation, says Paul Black, director of telecoms, media and IoT at IDC.
But why is transformation important? “The people in a business, every customer, CIO and CEO, is concerned about getting the most out of digital business,” says Black.
“At IDC we talk about the four pillars being mobile, social, cloud and analytics, and these are leading to new technologies like IoT, augmented reality and others.”
As the move to new digital services grows, companies are looking to partner with telcos as the organisations they trust,” Black says. But telcos are not necessarily ready to offer customers the services they want.
Over the last 15 years, telcos were concerned mainly about “bums on seats”, getting as many subscribers as possible on board, he says.
Over the top (OTT) services started taking off a couple of years ago, and led to a decline in voice revenues. “Telcos felt they were turning into just carriers.”
But the telcos have realised they have to change, he adds, and that the network is their strength. “But they need to transform.”
Telcos find that, although the capital expenditure remains fairly static year after year, they are experiencing consistent declines in revenues. “No matter how much they invest in their networks, revenue comes down,” says Black. “So they need to become more efficient, and more agile.”
Telcos should also be looking to the adjacent opportunities, and these are new digital services as well as data centre and security services.
“By transforming the networks to be agile and efficient, and adding new series, telcos can grow and position themselves as service providers for the future.”
In addition, customers are becoming more demanding, Black says. They want access, and they won’t accept a bad experience.
“Plus, competition is getting tighter and tighter. Telecommunications is a very difficult market and telcos need to focus on the customer experience.”
Telcos are also looking to move into other industries – and other industries are moving into the telco space.
“The telcos have got the advantages – but they have to change. They can tend to be slow and change can take a long time But they need to re-invent themselves quicker.”
Importantly, the conversation is no longer about the technology but rather about the process, Black says. “You can have the best technology but you will still be overtaken if you haven’t aligned it with your business needs.”
The key challenge, he says, is to bridge the silos within the organisation. Networking, IT, customer care and marketing are all important when it comes to transformation.
“The fact that people aren’t talking to each other across disciplines is counter-productive. We need to break down those siloes and look at the business in 360 degrees.”
The outside in approach to ICT is important for ICT transformation, says Black. Customer experiences are driven by big data, social business, mobility and cloud. Companies need to deploy these with their infrastructure, operations and partnerships.
The network is important in all of this, he adds. The network actually becomes more complex as it needs to provide new and more reliable services. And telcos cannot design or test the network using the same processes it used in the past.
“The network is not just the transportation layer anymore, it is providing the services that the business offers its customers.”
The number of devices I people’s hands is set to double by 2018, and IoT is adding more devices than ever to the network.
“Everyone is mobile, everyone wants access, and it’s just growing.” IDC expects there to be 3,8-billion people connected on mobile devices by 2018, a 50% growth from today.
Data is also exploding, expected to see four-times growth by 2018 to reach 24 zetabytes and 6,75Tbps per person per day. Ad we want this data to be inexpensive, Black adds.
This means that new and bigger data centres are going to be needed, and their number will double by 2018, with 77-billion data centre cores – or a staggering 10 per person.
Against this backdrop, yesterday’s networks simply won’t cope.
In future, networks will have to be more agile, says Black. “AS we try to deliver things faster, we have gone into virtualisation and now into converged infrastructures and soon to software-defined everything.”
SDN and NFV in the telco environment are about delivering services to customers – optimising the network for customer satisfaction, Black stresses.
The lCT domain and IT domains are still largely legacy in telcos, and usually operate completely seperately,
They need to converge, in a single ICT domain, Black says.
This involve partner ecosystem management – delivering he best of breed; ensuring support for third party services; and ensuing end to end delivery of services.
Telcos should all be taking 5G into account, Black says. “If you’re not thinking about it now, you really need to start. It may seem a long way off, but you need to start thinking out, especially for IoT.”
Black is passionate about partnerships, and he believes the method of selling and partnering is changing. “You need to have trust. So the third platform is about relationships, about a long-term outlook, about trust. This is what a partnership is.”
Vendors can help with industry experience, professional and consulting services, easy system integration, thought leadership, being able to orchestrate other vendors, and providing an evolution path to new standards.
Telcos can start to offer managed services as a revenue generator. “Your customers want to partner with you, they already trust you,” says Black. “But if you haven’t got your own internal systems aligned, you will fail to roll out external systems. If you’ve broken down the silos, you can deliver services internally.”
Customers want a predictable cost structure, reduced complexity, end to end management of ICT operations, agility to cope with change.
IDC recommends that telcos match investment to strategy and user needs. “It’s about what can I do to make this system work better, deliver better results. If you could optimise to improve uptime and information flow, you will automatically increase revenue.”
Telcos should look at radio access, core and IP network, IT environment, and the customers facing systems and processes.
They should also aim to get the best from their vendors. “You want someone who is aligned to you, thinks like you and is in it for the long term. It should be about the relationship – it’s all about working together on the network.”
“ICT transformation is happening and its happening today. I don’t think it’s happening fast enough, there’s still more that can be done and everyone needs to get involved.
Investment should focus on where it brings the best ROI; improving network performance is vital; and addressing the customer experience is essential – we need to get better at it.”