Frost and Sullivan, Deloitte research show telcos are changingAccording to research from Frost and Sullivan and Deloitte, the telecommunications industry is changing at an exponential rate. As new challenges emerge, customer expectations rise and the competition, new and old, piles on the pressure. Telco operators are looking to build the capabilities required to position themselves as end-to-end ICT and digital service providers. Photo by Echo Grid on Unsplash Typical examples are Vodacom’s procurement of XLink to expand and strengthen its internet of things (IoT) offerings, and Telkom’s acquisition of BCX to bolster its enterprise ICT services portfolio. “Changing market, customer, and technology dynamics are compelling telco operators to become more agile and customer-centric by investing in new products and services aiming to transform their cost base, and simplifying as well as digitalising complex business models, processes and systems,” says Deepti Dhinakaran, digital transformation senior research analyst. Moving forward, telco operators should diversify services, ensure they offer a superior digital customer experience, improve time to market, and form strategic partnerships in order to remain relevant.Digital Transformation of Telecommunications Operators in South Africa, 2016, is part of Frost and Sullivan’s Communication Services Growth Partnership Service. The analysis examines: digital customer engagement, digital entertainment services (like OTT, VOD, and Pay TV), mobile app-based services, converged connectivity, cloud-based services, mobile-driven digital payments, adaptive mobile advertising, and IoT-driven applications. The study also takes a look at strategic and tactical initiatives and trends that operators should be looking to adopt. Case studies of leading operators, like Vodacom, MTN, and Telkom, contain insights on how digitalisation is driving revenue numbers, and the strategic initiatives that have been adopted by these operators over the years in both the B2B and B2C segments. Key telco operator investment areas that show significant growth potential in South Africa include IoT/M2M, fibre, e-commerce, and big data and analytics. During the next three years, telco operators will focus on these areas to expedite their digital transformation journey, while offering innovative and diversified services. Other developments driving digital transformation include:
“Legacy information technology systems (IT), disjoint IT stacks and a lack of integration between business support and operations support systems, on the other hand, are limiting the flexibility of operators which in turn hinders growth,” notes Dhinakaran. “As a result, telecommunications operators are investing in customer relationship management (CRM) systems and leveraging social media channels to provide a well-integrated, innovative, omni-channel customer service experience. Additionally, operators can be seen investing in networks transformation technologies such as software defined networks (SDN) and network functions virtualisation (NFV) in order to enhance their scalability and flexibility to offer new services, while also improving their efficiencies.” Deloitte's possible future scenariosDeloitte has identified four possible future scenarios for the industry, providing telco players with an invaluable guide as they plan their next moves. Arun Babu, Africa telecommunications leader at Deloitte says that when clustering the drivers shaping telcos’ future, Deloitte found that two clusters have the greatest impact. These are ownership of the network technology layer - which is owned either by telcos, vendors or other tech players - and dominance of the customer relationship - which is held either by telcos, providers such as over-the-top content providers (OTTS) or device manufacturers and technology companies. “Based on our scenario methodology, we developed four extreme, yet plausible scenarios,” says Babu. The scenarios are detailed in a report titled To be or not to be: The future of the telco business model.
Neville Hounsom, director –TMT strategy and operations, Deloitte, advises that despite all these questions and uncertainty, there are some “no regret” moves telcos can easily execute that will help to favourably position them for changes to come. These include continuous participation in regulatory discussion by active lobbying, since connectivity will be seen as a low-involvement commodity in future, and developing virtual platforms that are open to external developers and partners as well as implementing new and innovative offerings. Other steps telcos should consider are adapting the latest artificial intelligence-based technology to automate as many tasks as possible, significantly reducing operating costs in the medium to long-term and strengthening their position as appealing employers, while updating the required skillset of their workforce in an ongoing process to attract and retain the best talent in the market. For more, access the Frost and Sullivan study here, and the Deloitte study here. |