Tag: Vision

The state of telco transformation

There are two possible interpretations of the phrase “the state of transformation”:

  1. How is transformation going at telcos, i.e. where are telcos on the path to transformation
  2. The condition of transformation, i.e. what does it mean to be in the process of transforming.

Over the summer of 2022, STL Partners carried out nine in-depth interviews with telco employees that were involved in influencing, coordinating, or implementing large change projects at their organisations. These change makers came from various disciplines: Strategy, HR, Transformation project management, Networks, Technology, as well as Research. Our first intention was to illuminate the first interpretation (where are telcos on the path to
transformation), but our findings suggest that transformation paths (and indeed end states) are unique to each operator, making it difficult to compare progress between telcos.

No one path – overlapping changes in multiple areas

Source: STL Partners

We have mainly come away with findings on the latter point – identifying the types of change initiatives underway and the challenges that change-makers are encountering on their journeys.

This report brings together insights from our interviews, contextualised with further information from secondary sources and ongoing conversations with operators, to give a sense of what telcos mean when they talk about transformation and what their challenges are in becoming more adaptable as organisations to find growth.

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Why is Transformation important to telcos

Far from being an irrelevant or out-dated concept, telcos continue to transform internally. Transformation is understood as a deep change initiative that might involve a shift in foundational technology or a broad-based change in the way an organisation does things, i.e. the culture, processes and the people required – or both.

Most commonly, transformation involves the integration of digital technologies/tools (e.g. cloud, automation, data analytics) into organisational processes to improve business outcomes – with an impact on ways of working (“digital transformation”).

Some telcos talk about transformation in terms of functional initiatives (e.g. IT modernisation), ostensibly affecting a subset of the business, while others talk about transformation from an organisation-wide perspective (e.g. a change in culture like Lean Six Sigma).

The common feature between telco narratives about transformation is that they are motivated by
trying to improve the organisation’s ability to achieve their future vision. This could involve:

  • Making the business more efficient,
  • Creating new value/finding new revenues,
  • Improving outcomes for customers.

Transformations are also undertaken when the vision changes (e.g. when a new leader takes the helm). STL observes that interview respondents described technology-led transformations as aligned to efficiency benefits in the first instance, while organisation-led change was more aligned to responsiveness, particularly in relation to customer needs (improving outcomes). Respondents tended to describe combined technology- and organisation-led change initiatives when there was an ambition to do new things/create new value for customers.

The meaning of transformation – activities cited in interviews

Source: STL Partners

Respondents also mentioned:

  • Transformation in the context of the industry, particularly the possibility that new technologies may change the shape of an industry (e.g. tech companies may find it easier to enter telecoms with their technology capabilities, while telcos may find it difficult to extend services up the technology value chain).
  • The enterprise opportunity represented by digital transformation services.

These were not topics for further exploration in our interviews. Industry transformation is a topic for STL’s Executive Briefing Service – however the threat of industry disruption can and should be an inspiration for corporate transformation. Digital transformation services are covered in our Enterprise stream.

Table of contents

  • Executive Summary
  • Introduction
  • Why is Transformation important to telcos
    • Different change trajectories
  • The condition of transformation – being in the process of it
    • Where do telcos have transformation efforts underway
    • How are transformation projects approached at telcos?
    • Who is responsible for transformation?
  • Barriers to transformation
    • Change leadership issues
    • People challenges
    • Execution difficulties
  • What is holding telcos back from being future-ready organisations?
    • Out with the old…
    • …In with the new
  • Conclusion
    • Recommendations

Related Research

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Vision stories: Getting the most for transformation

Developing a vision

STL Partners began this investigation with the hypothesis that a vision (some statement of a desired future end state) is imperative to secure stakeholder buy-in for a successful business transformation. As we researched this hypothesis, it became clear that having a vision statement is not enough. Increasingly, transforming telcos do have a vision-like statement of some kind, but they continue to struggle with buy-in and the movement towards new ways of doing things.

A 2021 ETIS study (TeBIT 2021) leveraged BCG’s Digital Acceleration Index (DAI) to evaluate the digital maturity (i.e. extent of transformation) of European telco participants. While typically lagged telco digital maturity levels worldwide, both telcos at a worldwide and European level were rated generally more progressed in terms of their digital purpose, vision and ambition than in any other DAI category (see top line “Purpose and strategy” in figure below): Telcos are putting transformation visions in place. However this does not translate into higher maturity elsewhere (i.e. Technology Enablers or Human Enablers).

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Telcos are putting transformation visions in place

telcos-putting-transformation-visions-in-place-stl-partners

Source: ETIS/BCG TeBIT Benchmarking Report 2021

Further to this, in a survey of 56 telco employees (between March and July 2022), STL Partners found that executive visions could do more to drive transformations (figure below). The sample was limited to telcos from the APAC region, however this message has been echoed across STL Partners’ client interactions.

The quality of an executive vision facilitates transformation

telco-steps-to-better-facilitate-transformation

Source: Survey conducted by STL Partners, n = 56

This begged the question: if telcos potentially have some kind of “vision” in place, why are these visions not driving transformation?

In this report we examine their vision practices to understand how these may be impacting transformation buy-in and action among stakeholders (particularly those most impacted by the change – employees), as determined by progress of transformation to date. We want to identify how telcos can leverage a vision to guide and unite stakeholders to drive the transformation forward.

What is a vision?

For the purposes of this report, a vision is regarded as a picture of a future that outlines where the company is headed in achieving its goals.
Vision can be provided through a transforming entity’s statements of “purpose”, “ambition”, “mission” or indeed “vision”. Nomenclature varies by organisation, and some may describe their desired future through a combination of the above. We believe that what is important in driving transformation is not the designated labels, but the fact that a picture of the future exists, and that the telco is driving towards it.
One of the biggest proponents of vision as essential for driving change is Dr John P. Kotter, who originally published his seminal work “Leading Change” in 1996. He defines a vision as “a picture of the future with some explicit or implicit commentary on why people should strive to create that future”.

Why does a vision matter?

Organisations need a vision to act as a guiding light or beacon for stakeholders to unite behind and strive towards to realise the transformation. The existence of a vision helps to demonstrate the gap between the organisation’s current status and where it wants to be, making the need for change evident.

A vision reveals the need for change

Vision-stories-STL-Partners-need-for-change

Source: STL Partners

Kotter says a good vision serves three important purposes:

  1. It clarifies the direction of change: An effective vision will eliminate confusion or disagreements on direction or doubts on the necessity for change. Asking a simple question – is this in line with the vision? – can eliminate discussion and speed up decision making.
  2. It motivates people to take action in the right direction: Change may be painful for people in the short term and not in their best interest. A vision helps to overcome reluctance to change.
  3. It helps co-ordinate the actions of thousands of different people in a fast and efficient way: The alternative may be endless meetings or detailed directives, which is slower and costlier. A good vision enables people to take action without having to constantly check with their boss.

Table of contents

  • Executive Summary
    • Five recommendations for the “vision story”
    • The scope of transformation and the need for a story
    • Comparison of approaches
    • Next Steps
  • Introduction
  • What is a vision?
    • Why does a vision matter?
  • Spark New Zealand
    • The need for change at Spark
    • The scope of Spark’s transformation
    • How Spark communicated its vision for transformation
    • Leaders invested time in communication
    • Summary of Spark’s practices and results
  • BT Digital, UK
    • The need for change at BT Digital
    • The scope of BT Digital’s transformation
    • How BT Digital communicated its vision for transformation
    • Summary of BT Digital’s practices and results
  • M1, Singapore
    • The need for change at M1
    • The scope of M1’s transformation
    • How M1 communicated its vision for transformation
    • Driving the vision home
    • Summary of M1’s practices and results
  • Conclusions and recommendations
    • What to communicate
    • How to communicate
    • The role of leaders
    • Recommendations

Related Research

Previous STL Partners reports aligned to this topic include:

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Culture, leadership and purpose in telcos: Four key actions

Understanding culture, leadership and purpose

STL Partners has surveyed 168 telco execs about leadership, culture and purpose in the telecoms industry.

This research is part of our overall programme to help understand and develop how telcos can optimise their performance and reinvigorate growth and innovation. Respondents were asked to think about the telco they knew best, and answer a series of questions relating to different drivers of success:

  • Culture: Values and behaviours and the telco’s employees
  • Leadership: The way in which leaders drive the organisation
  • Purpose: The reason that the telco exists and operates
  • Digital: The telco’s ‘digital’ goals, skills and capabilities

Respondents were a mix of senior executives from telecoms operators worldwide, across a variety of functions and geographies.

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Findings include:

  • Half of respondents believe that it is harder to get things done in telecoms operators than elsewhere
  • Leadership vision, alignment and delivery are seen to be a significant enabler to success by 43% of respondents
  • There are mixed views of the impact of company culture on success: seen as a barrier by 57% and a significant enabler by 33%
  • Some telcos are outperforming others. For example, Elisa’s culture is perceived as significantly more effective than others
  • … and more.

We also explore correlation between answers to different questions to suggest four key actions to driving greater success.

Table of contents

  • Executive Summary
  • Introduction & methodology
  • Analysis of results
  • Full survey results
    • Culture
    • Leadership
    • Purpose
    • Digital
    • Correlation analysis
  • About STL Partners

 

Seven Tough CEO Questions – Telco 2.0 Update

Seven Tough Questions

In the process of refreshing our 2016-2017 research agenda, STL Partners has identified seven ‘meta’ themes in our recent research that can be thought of as part of a contemporary checklist for telecoms strategy.

These are some of the questions that we believe boards and executives should be asking themselves as they assess their own strategies and decide what further actions and initiatives to investigate and initiate. In the following brief article, we point our customers to our latest findings in these areas. [NB If you’re not a customer, you’ll be able to see some, but not all of the analysis.]

We do not claim that this is a full and exclusive list, and indeed we’d welcome your input via contact@stlpartners.com to set up a call with our research team or share your thoughts and questions directly.

1. Do you have a compelling vision based on an evolving, competitive digital customer experience?

There are a number of scenarios facing telecoms operators in which any compelling vision must apply. Our initial scenario analysis was directed to European operators, and we have subsequently also conducted workshops and seminars with operators in other parts of the world that identified and developed similar relevant groupings in their markets.

Figure 1 – Four Illustrative Telecoms Market Scenarios

We then identified the fundamental problems with telecoms transformations in Problem: Telecoms technology inhibits operator business model change, and subsequently proposed a vision and solution to this in Transforming to the Telco Cloud Service Provider.

Much of our other analysis integrates with these ideas, exploring the themes in more specific domains, such as how to transform, relevant strategies in adjacent and disrupted/disrupting industries, developments in advanced enterprise cloud and ICT, and the future of the network, and we outline some of this analysis in summary below.

A critical foundation stone of any future strategy is how competitive the digital experience that your company delivers to its clients. In this regard, we have published the first iteration of MobiNEX: The Mobile Network Customer Experience Index which looked at 27 operators in seven markets, and compared the relative performance of operators’ mobile data networks in terms of how they deliver customer app-use experience. We are also working on further a global analysis in this domain which will be published soon.

Another foundation stone for telcos is that becoming a truly digital business is not just about technology, IT, marketing, or even HR for that matter. It is an approach that requires the engagement, re-thinking and adaptation / evolution of the whole business.

Looking at other aspects of operators’ digital competence, and following on from our research into operator agility, we are also now working on research into how well operators are transforming their customer-facing digital activities in marketing and sales, and also into other areas of digital maturity and transformation.

In addition, we continue to frame and update the strategic picture in the context of industry analyses such as Brexit: Telecoms Strategy Implications and US Wireless Market: Early Warning Signs of Change, and identify leading case studies of telco innovation in reports such as this one on Dialog’s surprisingly successful API programme, and this on Telstra’s ambitious healthcare investment programme.

 

  • Seven Questions (and pointers to our answers)
  • 1. Do you have a compelling vision based on an evolving, competitive digital customer experience?
  • 2. NFV/SDN: tools of business transformation or toys of the technology department?
  • 3. IoT/5G/Cloud: the Holy Trinity of Hope – or Hype?
  • 4. Can/does your business work well with others in new ways to deliver?
  • 5. Are you tuned into innovation in Communications, Commerce and Content?
  • 6. Is your Enterprise/SMB strategy keeping pace with the market?
  • 7. Is your network holding you back or taking you forward?
  • What’s next?

 

  • Figure 1: Four Illustrative Telecoms Market Scenarios
  • Figure 2: Cloud business practices – key principles
  • Figure 3: Challenges for Telco Digital Services Partnering
  • Figure 4: Six Healthcare Pain Points Telstra Health Aims to Address

SAP Strategy Profile: Enabling Telcos to Operate at ‘Internet Speed’

Summary: Our top-level review of SAP’s vision of how it will enable telcos to ‘operate at internet speed’ against Telco 2.0 principles and the six key opportunity areas identified in our strategy research report, ‘The Roadmap to New Telco 2.0 Business Models’. We also challenged SAP to build a Proof of Concept implementation of a complex multi-sided business model with a leading European mobile operator within one month. How did it go? (February 2012, Foundation 2.0) Six Opportunity Areas within the Telco 2 Platform
  • Below is an extract from this 17 page Telco 2.0 Report. The report can be downloaded in full PDF format by members of the Telco 2.0
    Executive Briefing service here.
  • Additionally, to give an introduction to the principles of Telco 2.0 and
    digital business model innovation, we now offer for download a small selection of
    free Telco 2.0 Briefing reports (including this one) and a growing collection of what we think are
    the best 3rd party ‘white papers’. To access these reports you will need to become a Foundation 2.0 member. To do this, use the promotional code FOUNDATION2 in the box provided on the sign-up page here. Your Foundation 2.0 member details will allow
    you to access the reports shown here only, and once registered, you will be able to download the report here.
  • We’ll also be discussing business model innovation at the Silicon Valley (27-28 March) and London (12-13 June) Executive Brainstorms.
  • To access reports from the
    full Telco 2.0 Executive Briefing service, or to submit whitepapers for review for inclusion in this service, please email contact@telco2.net or call +44 (0) 207 247 5003.

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Executive Summary

SAP’s new vision for telcos –  ‘operating at internet speed’ –  aligns well with certain Telco 2.0 principles and is supported by an interesting new set of tools, processes and pledges. To be more precise ‘operating at internet speed’ means driving change fast enough to match internet disruptors such as Google, Apple and Facebook.

This sounds great (and would truly be a boon for operators) but we have heard this all before and from just about everybody.  Vendors making this claim need to be prepared to prove it. The Telco 2.0 team, together with a leading European Mobile Operator and a team of configuration experts from SAP, got together to build a Proof of Concept implementation of a complex multi-sided business challenge.

The results were impressive and within a period of a month:

  • we defined the challenge and business model impacts in a 2-day workshop;
  • we developed a software implementation through three weekly iterations;
  • we deployed a complete reporting toolkit to measure performance against key metrics; and
  • all without writing a single line of software, just configuring SAP software.

The exercise convinced the Telco 2.0 team that operating at internet speed is not beyond the grasp of mobile operators, but it requires both a change in working practices and approach to partnering with key vendors. The barrier is organisational.

Based upon the success of the exercise, we will shortly be launching “The Telco 2.0 Challenge” to the wider Telecommunications Industry, and we’re now looking for more operators who’d like to set a new Telco 2.0 challenge. To find out more please email us at contact@telco2.net or visit SAP’s stand at the 2012 Mobile World Congress in Barcelona.

Introduction

The Telco 2.0 team was recently invited by the leadership team at SAP’s Telecommunications Industry Group to review its vision of the evolution of Telco business models and the capabilities required to support this vision.

SAP is a world leader in enterprise application software with a turnover in 2010 of €12.5bn serving in excess of 170,000 customers in over 120 countries, including over 1,000 telco customers. SAP software has long been present in telecom operators’ finance and supply chain departments. Recent acquisitions such as Highdeal (real-time rating), Sybase (database, device management and mobile payments) and Business Objects (customer insight) together with in-house product developments such as In-Memory Computing and Cloud Computing position SAP to serve more and more of telco computing needs.

At the heart of SAP’s vision for telecoms operators is that they should be able to operate with more dynamism and flexibility. SAP aims to support telcos both internally and externally: internally  SAP enables marketing, product and pricing teams to deliver a customized experience and quickly rollout and test new services; externally SAP enables enterprise customers and 3rd parties to integrate communications services and telco data services into their own.

Much of the SAP vision is aligned to key aspects of Telco 2.0 thinking. In this report we map the key aspects of the SAP vision to the Telco 2.0 future growth areas for telcos.  SAP also has many years experience of working with many other industries and therefore is well positioned to assist cross-industry collaboration which of course is essential to successful two-sided business models.

This report examines the SAP vision in the context of two-sided business models, and specifically against the Six Telco 2.0 Opportunity Types identified in our recent research report The Roadmap to Telco 2.0 Business Models. It examines the tools and pledges made by SAP to support business model innovation and implantation. Finally, it examines some of the specific features within the SAP software and their applicability to telcos.

Sponsorship and editorial independence

This report has kindly been sponsored by SAP and is freely available. SAP provided input to questions asked by STL Partners’ analysts and were given the opportunity to comment on working drafts. Research, analysis, and the writing and editing of the report itself were carried out independently by STL Partners. The views and conclusions contained herein are those of STL Partners.

Analytical Framework: The Six Strategic Telco 2.0 Opportunity Areas

The most recent of these research reports, ‘The Roadmap to Telco 2.0 Business Models’ – describes the transformational path the telecoms industry needs to take to carve out a more valuable role in the evolving ‘digital economy’, and outlines six key opportunity areas in which telcos can create new value. We have used this framework to analyse SAP’s vision at a top level.

These opportunity areas sit themselves within the context of Telco 2.0’s ‘two-sided’ telecoms business model concept, in which telcos remodel their businesses to serve both traditional ‘downstream’ customers (individual and business end-users consuming traditional telco services) and ‘upstream’ customers, or ‘merchants’ who instead use telco assets in new ways to achieve business goals such as improving business processes or services. This concept and the accompanying opportunities are described in depth in The $125Bn ‘Two-Sided’ Telecoms Market Opportunity report (see also page 14).

Figure 1 – The Six Telco 2.0 Opportunity Types

Six Opportunity Areas within the Telco 2.0 Platform
Source: STL Partners

The six opportunity areas are in summary:

a) Core Services

  • Redefine the customer experience for telecoms via:
    • Improvement of core product portfolio (voice, messaging, connectivity, TV/media), more engaging and ‘smarter’ marketing and DRM, leveraging of online sales channels, enhanced customer interaction and care
    • Engaging differently with existing customers is important, to create loyalty and retain the customer base, and also to build the base for up-selling and providing new services. A key part of the re-engineering required is to improve customer data access, both to enable analytics and internal performance improvements, and to make it possible to enable appropriate external use of this data in the Personal Information Economy.

b) Vertical Industry Solutions

  • Extend from telecoms into IT and networking for corporate clients via ‘verticalised’ solutions.

c) Infrastructure Services

  • Expand and extend wholesale and corporate offerings from network to infrastructure:
  • Provide infrastructure services such as mobile offload, data centre capabilities etc. to other operators and to corporate customers.

d) Embedded Communications

  • Integrate voice, messaging, and connectivity services into those of third parties:
  • Communications-enabled business processes, voice and messaging integrated with games (for example), M2M and embedded mobility connectivity.

e) Third party business enablers

  • Make (latent) telco capabilities available to third-party service providers:
  • Identity & authentication; marketing & advertising; payments; customer care.

f) Own-brand ‘Over-The-Top’ (OTT) services

  • Develop network-independent applications and services:
  • Copy internet players and provide valuable applications and services ‘OTT’ – could be free or paid-for.

The Roadmap also outlines a number of generic principles for success, which at a top level may be summarised as:

  • Unlocking the value and power of telco customer data is essential to both improve the design and delivery of existing services;
  • Telcos need to fundamentally improve their flexibility and operational capabilities to innovate and react;
  • changes enabling horizontal and ‘upstream’ partnerships will be essential to enable new business models;
  • and a list of seventeen principles for disruptive innovation.

SAP’s Telco Vision: ‘Operating at Internet Speed’

Dynamism and Flexibility lies at the heart of SAP’s vision for the Telco of the future. This future telco is a different organization from the one most of us is familiar with today. The Telco2.0 team took away four strands from this vision:

  1. ‘Sensing at internet speed’:  According to SAP, tomorrow’s telco “knows” what its customers are experiencing and is able to make sense of this knowledge.  To be fair, telcos have already made great strides in expanding real-time analytics beyond network management for customer segmentation and applying different rule sets for support and promotions. However, Internet best-practice, particularly in optimizing all aspects of customer experience, is still a distant aspiration.
  2. ‘Thinking at internet speed’:  In SAP’s vision, the telco of the future is able to assimilate, evaluate and act much, much more quickly than is typical today.  Part of this is down to better information, part down to better mechanisms for enacting decisions… and part is down to the decision-making processes and tools that support these.
  3. ‘Acting at internet speed’:  For the major and successful online players, real-time A-B testing of new propositions and continuously evolving these propositions in response to customer behaviour is second nature.  Telcos do this already… for their websites, but not for their services.  Introducing new packages, policies, services, on a targeted basis, several times a day is pure fantasy for operators (particularly where they have market power and may require regulatory approval for any new service).
  4. ‘Collaborating at internet speed’:  Exposing capabilities and assets to third parties for them to integrate into their own services is common on the web (at least common for the likes of Amazon, Google and Facebook).  They have spawned veritable industries around these capabilities.  Here again, we are seeing some isolated successes from telcos, but still so much work to do.

Ultimately, in SAP’s vision, this becomes a continuous process rather than a one-off sequence.

Mapping the SAP vision to Telco2.0 opportunity growth areas

All the Telco 2.0 opportunity growth areas require a step change in the organizations’ ability to adapt and change. Indeed, this is one of the underlying strategic imperatives for change in the digital economy. There is a however a certain degree of applicability for each strand to each growth opportunity as the diagram below highlights.

Figure 2 – Mapping the Internet Speed vision against the Telco 2.0 opportunity

Mapping the Internet Speed Vision Against the Telco 2.0 Opportunity
Source: STL Partners

For instance, the relatively asset intensive infrastructure services are slower moving than own-brand services. Similarly core services require less collaboration than with vertical industry solution and third party enablers.

However, in some instances, high speed sensing, thinking and acting may be required in these asset intensive services. For example, mobile offloading (an infrastructure service) requires real-time sensing and acting in it’s operation.

Equally, for some telcos, collaborating in OTT services may require more dynamism as some partners will need sensing information in near real-time…

To access the rest of this 17 page Telco 2.0 Report in full including…

  • Mapping SAP’s solutions to telcos in practice
  • Support for Multisided business models
  • Configurable by business people, not constrained by IT
  • Tools, processes and Pledges
  • Supporting Vertical Industry Solutions and ‘Embedded Communications’
  • Making Sense of Customer Data
  • Advanced Device Management
  • M-commerce
  • Conclusion
  • STL Partners and the Telco 2.0™ Initiative

…and the following report figures…

  • Figure 1 – The Six Telco 2.0 Opportunity Types
  • Figure 2 – Mapping the Internet Speed vision against the Telco 2.0 opportunity

…members of the Telco 2.0 Executive Briefing service can download it in full PDF format here.

Additionally, to give an introduction to the principles of Telco 2.0 and digital business model innovation, we now offer for download a small selection of free Telco 2.0 Briefing reports (including this one) and a growing collection of what we think are the best 3rd party ‘white papers’. To access these reports you will need to become a Foundation 2.0 member. To do this, use the promotional code FOUNDATION2 in the box provided on the sign-up page here. Your Foundation 2.0 member details will allow you to access the reports shown here only, and once registered, you will be able to download the report here.

We’ll also be discussing digital business model innovation at the Silicon Valley (27-28 March) and London (12-13 June) Executive Brainstorms.

To access reports from the full Telco 2.0 Executive Briefing service, or to submit whitepapers for review for inclusion in this service, please email contact@telco2.net or call +44 (0) 207 247 5003.