Telcos are hugely responsible for the highly connected, digital world that we live in today. With their networks and services, they form the backbone for: bringing globally dispersed friends and families together; enabling a more productive professional environment with anywhere, anytime working; and keeping everyone up to date with happenings across the globe.
Digital today helps people to augment their live experiences – buy tickets via smartphones, stream events and games live over fast mobile networks, and more. Such real-time collaboration has been possible only because of the technological innovations in the telecommunication sector. In the future, perceived as increasingly more connected by the trade pundits, telcos that understand that digital transformation is crucial to become more responsive and agile, and that include forthcoming innovations like AR on smartphones, IoT, smart connected cities, and 5G in their roadmap are more likely to survive and broaden their revenue base.
While reading an article on HBR, these lines made me remember a discussion that I had last week with an acquaintance in a leading Indian telco: “When faced with a potentially disruptive innovation, the answer for incumbent firms lies in a focus on organizational strategies: new business units and new business models. Firms that want to respond successfully to disruptions need to focus on the organization as a whole and need to be willing to eventually cannibalize their own revenues to compete with disruptions successfully.”
He told about how they were feeling like trapeze artists at one end of the rope with a substantial distance to cover mid-air. They were fighting an existential war in which they had to make a quick jump from their traditional role, being the aggregators of services and content as well as the sellers of low-cost voice and data services to a geographically constrained customer base, to the technological innovators who can cater advanced services like Mobility, 5G, digitalization, and smart, connected IoT devices to a broader audience.
He said that, with most of their investment stuck in a traditional business model, establishing new business units and new business models feels like repairing a fighter plane mid-air. They need to channelize huge investment toward improving their digital customer experience, networks, IT, and most importantly their way of working, including culture and skill set, but at the same time, have to keep their existing systems running in order to prevent the looming crash.
Furthermore, with customers’ data usage increasing without substantially matching ARPU (Average Revenue per User) for operators, the challenges are herculean for most telcos in India and across the globe, especially when global data traffic is expected to increase manifold in the coming years.
Industry ARPUs declined 11 percent in FY17, we expect another 11 percent fall in FY18. – CLSA Report
The best performers are discovering ways and meeting the challenges mentioned above with platform consolidation; B/OSS transformation; partnering with media companies like AT&T’s proposed merger with Time Warner Inc., messaging platforms and OTT operators, to provide enterprise solutions like SD-WAN; and other telcos as well.
Successful telcos in India and across the world work on their two main strengths:
- Customer: By putting digital technologies to use to improve the customer journey, and adding more customer-centric offerings in their product portfolio with product bundling.
- Infrastructure: With millions of subscribers, different products, solutions, and operational support services like subscription billing, inventory, service configuration, order fulfilment, etc., telcos require resources and tools for management, adding to overhead. The successful ones are using the right enablers for steering in the digital transformation.
Customers are now the drivers of telecommunication industry trends, and Microsoft Cloud solutions help telcos step up their value creation game by keeping up with their customer business demands and balancing their revenue streams. From Office 365 to Microsoft Azure to Dynamics 365, Microsoft empowers telcos with the right tools for enhancing their customer communication, collaboration, productivity, management, and more, backed by cloud and advanced technologies like AI and IoT.
Here, a right enabler like RackNap can help telcos further, in taking an informed approach to simplification of business processes that can help them ride the digital transformation wave, without reinventing the wheel. RackNap, a cloud services brokerage platform, helps telcos stop treading water, simplify cloud selling, and manage all business processes from a single pane of glass.
It provides integration with Microsoft Cloud solutions like Azure, Office 365, and Dynamics 365, helping telcos become digital service providers, transform themselves, capture data, and generate insights for better sales and customer support.
With it, telcos can bundle Microsoft cloud solutions with their traditional solutions and automate the delivery of bundled services. See it in action here.
Telcos in the APAC region that offer value added services, including ecommerce services and content offerings have seen an increase in ARPU. “Providers in Japan have been increasing their ARPUs by shifting away from unlimited plans and focusing on content offerings and e-commerce services.” – PwC Report.
Perfection, though considered a rare achievement, cannot be attributed to a single factor. In the case of telecommunication providers, financial revenue is a result of productivity, operations’ management, capital investment, and regulatory strategies, just to name a few inputs.
But one thing that plays a vital role is customer centricity! Successful telcos up their customer experiences by a notch by playing the digital card.
Customer service chatbots, like CenturyLink’s ‘sales assistant,’ voice services for customers where they can explore or buy by speaking, network optimization and orchestration, and predictive network maintenance, like AT&T’s self-healing and self-learning hardware that’s powered by AI, are among some AI applications that are used by the leading players in the telecom industry to provide great digital customer experience.
The uncertainty is surely there with the industry having a good run with the tried and trusted. In order to generate value, things need to be stirred up – the core and beyond! The success formula is not written, it has to be found by each, on his own.
Note: The article first appeared on Microsoft Blog.
Munesh Jadoun – Chairman and Managing Director, RackNap.