Four goals for the data-driven telco

Becoming a data-driven telco

There have been many case studies over the last five years demonstrating the disruption caused by “data-driven businesses”, i.e. those using insights to understand customers, automate processes, change their business models and drive new revenues. In the future, this concept will become an integral part of what it takes to compete successfully, allowing organisations to understand and run all parts of their operations, work with their customers and partners and take part in external activities in new ecosystems. This applies to telecoms operators as much as any other industry.

This research builds on a range of reports STL Partners has previously published on strategic topics related to telcos’ use of data, including:

This research turns to the practical topics of delivering on these strategic goals. The diagram below offers an overview of the drivers and barriers affecting delivery areas such as telco data management and machine learning (ML) in the short and longer term.

Drivers and barriers to being a data-driven telco

Source: STL Partners

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What capabilities should telcos develop?

Telcos are reasonably sophisticated users of data, but their particularly complex web of legacy systems requires a good deal of work around data management and governance to enable the extraction of data sets to give 360-degree view of the customer – and increasingly to provide training data for algorithms.

In the mid-term, telcos that are successful in selling IoT and becoming ecosystem players will require new A3 to deal with the increasing number of services, devices, price points and parties involved in providing service to a customer. Our research suggests that there is a range of new A3 technologies that can provide the automation and intelligence for this, as well as for the underlying data management processes.

In the longer-term, A3 will speed up decision making, impacting company strategy, new product and service creation, and customer experience. Humans will increasingly be supported by AI-, ML- and automation-powered tools in their decision-making. A similar progression will occur among competitors in telecoms, and in adjacent markets, increasing the complexity and speed of doing business. Besides integrating A3 into human workflows, working at increasing speed will depend on getting richer insights out of the available data with techniques such as small data and creation of synthetic data.

Capabilities for a data-driven telco

Source: STL Partners

 

Table of contents

  • Executive Summary
    • Capabilities telcos should develop over the medium term
    • What will telcos focus on in the mid-term?
    • Next steps
  • Becoming a data-driven telco
    • Short term drivers
    • Barriers in the short term
    • Long term drivers
    • Barriers in the long term
  • Availability of data
    • Use of data fabrics
    • Better data labelling
    • Rise of synthetic data
    • More intelligent data selection
    • Telco strategies for cloud usage
  • Equipping people
    • Augmented analytics and business intelligence
    • Decision intelligence
  • Work on governance
    • Governance across the telco
    • Agility in governance
    • Governance for AI and machine learning
    • Ethical governance
    • Improved measurement of governance
    • Governance in ecosystems
  • Index

Prioritising automation: Creating a successful building block strategy

Automation, AI and data analytics are driving telco strategy

STL Partners has been at the forefront of identifying network and service automation opportunities for telcos since 2016. Our report Network AI: The state of the art outlined the telco automation journey as a continuum of four stages: from business intelligence, to fixed-policy and ML-supported (or augmented intelligence) automation, and finally to fully autonomous systems. In Telcos and AI: What it will take to create an AI-driven telecoms industry, we discussed the state of AI in the telecoms industry and took a deep dive into the specific technologies available.

The telecoms industry can no longer rely on manual operations. Automation is a necessity for operators to manage business and technological complexities in creating new digital services and B2B2X business models. Operators are expected to provision best-in-class connectivity services, while managing underlying network complexities with quality, resiliency, and speed.

In this report, we focus specifically on automation within network and service operations (See image below). While rules-based automation has been around for decades and is well embedded into network processes, AI is at a more nascent stage where most implementations are in small pockets or proofs of concept (POC). For the purpose of this report, we have regarded “automation” as an umbrella term encapsulating rules-based automation and AI and ML assisted automation.

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Key automation use cases in network and service operations

key telco automation use cases

Source: STL Partners

The report discusses findings from a research programme conducted by STL Partners between December 2020 and February 2021, consisting of an online survey of 100 individuals working at telecoms operators and an in-depth interview programme with 15 leading operators. Drawing on insights from this research, we will discuss the current state of the industry and operators’ future ambitions for automation in network and service operations, and highlight regional nuances between operators from the Americas, APAC, Europe, and Middle East & Africa.

Network and service operations are the critical domains for operators to consider automation, as the payoff for being highly automated in these areas will be game-changing. We predict implementing automation technologies in network and service operations can deliver greater financial value than all other domains combined. For an average operator, this is equivalent to 5.7% of its total annual revenues, or $850 million, from revenue uplift, CapEx and OpEx savings.

The current state of automation in network and service operations

Automating network and service operations will deliver the largest financial impact for a telecoms operator

automating telecoms network and service financial impact

Source: STL Partners, Charlotte Patrick Consult

Over the past decade, all operators have made progress in adopting automation within the network and service operations domains. Results from our survey show that operational areas where operators can leverage mature, pre-existing vendor solutions tend to be the most highly automated. For instance, operators report greater degrees of automation for network fault detection and root cause analysis – an area where pretrained models from vendors are widely available – than for network function lifecycle management, where vendor solutions are still nascent.

  • In our survey, less than 10% of operators reported being fully automated in any single network or service domain. The majority of operators indicate they are still in the mid-stages of automation with a mix of automated and manual processes.
  • Our data show that operators on average have achieved around 40% of “intra-process” automation, i.e., automating processes within a single domain, while very few achieved “inter-process” automation linking across different domains.

Despite this, the industry still has a long way to go to achieve “full automation”. Operators are automating individual functional units at different speeds, depending on their geography, network focus, and maturity. In fact, for most operators, the network and service domains are lagging behind, and higher levels of automation are being seen in domains like HR and sales and marketing.

Some flagship automation use cases are gaining maturity, but none are close to being fully automated

level-of-telco-automation-across-domain

Source: STL Partners telecoms survey, March 2021, 100 respondents

Not all telco automation journeys are the same: Ambitions, region and maturity all impact adoption

Impact of changing ambitions

The ongoing conversation about automation within network and service operations will be shaped by operators’ changing attitudes towards how critical network and service domains are to their business. Our data indicates that operators are becoming increasingly divergent in their approach.

  • There are two main camps: those who believe that the network will always be their main differentiator versus those who are increasingly exploring new network agnostic opportunities. These could include platforms, applications and solutions.

Both camps are pursuing automation – this bolsters our claim that automation is not a choice, but a requirement for all operators to remain commercially competitive. However, differing end goals does present different priorities.

Changing ambitions in the telecoms industry bring automation to the fore

changing telco ambitions automation two camps beyond connectivity

Source: STL Partners telecoms survey, March 2021, 100 respondents

Impact of different regions and market position

These aspirations are shaped by market positioning; new entrants will not have to undergo as significant a journey as incumbents who need to reshape their employees, technical capabilities and operating model. For new-entrant operators, automation is often at the core of their business strategy, enabling them to quickly build out, scale, and manage a cloud-native network with a limited workforce. One APAC challenger operator described automation and a DevOps approach as being essential to their ability to roll out a greenfield network and accelerate 4G site commissioning from 3-4 days to 8 minutes.

Operators’ ambitions in Europe are more diverged than in other regions

telco operator ambitions european divergence other regions

Source: STL Partners telecoms survey, March 2021, 100 respondents

Operators must adopt a building block strategy to account for their current state of automation in network and service operations, in order to successfully cross over from “connectivity” to “beyond”. This means taking a pragmatic, incremental approach in designing and implementing intelligent automation initiatives, starting with modernising existing and legacy networks.

Table of Contents

  • Executive Summary
    • Automation: How to get there faster
    • Achieving automation: The building block strategy
  • Automation, AI and data analytics are driving telco strategy
    • Network and service operations: The current state of automation
    • Not all automation journeys are the same: Ambitions, region and maturity all impact adoption
  • Defining, evaluating, prioritising: Creating a successful building block strategy
    • Step one: Defining automation domains
    • Step two: Evaluating the importance of domains
    • Step three: Prioritising automation domains
  • Making automation bitesize: How to innovate
    • Changing people, processes and culture
    • Building trust in automated systems
    • Automation chaining and managing domain interfaces
  • Recommendations for the industry
  • Appendix: Breakdown of telecoms survey respondents

 

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