Digital services journey a business imperative for telcos

To derive new revenue from the value of data flowing through their data pipes and that of their competitors, traditional CSPs need to create new digital services rapidly, says Philip Stander, MD of Globetom.


Johannesburg, 27 Jun 2017
Philip Stander, Managing Director of Globetom.
Philip Stander, Managing Director of Globetom.

The need for incumbent communication service providers (CSPs) to transform rapidly to grab a slice of the Over-the-Top market and become Digital Service Providers is no longer an initiative, but an inevitability, says Philip Stander, Managing Director of Globetom.

Several predictions followed the advent of smartphones that exposed the threat to incumbent CSPs of declining to a "thick dumb data pipe" provider with Over-the-Top market players grabbing the attention of consumers. This threat of brand value and revenue devaluation to GSM operators is now imminent for smartphone users using less voice and increasing time off-GSM-net with the pervasiveness of WiFi hotspots and other data networks.

To derive new revenue from the value of data flowing through their thick data pipes and that of their competitors, traditional CSPs need to transform to create new digital services rapidly. This creation will include co-creation with partners, often across industry verticals, which means that change in the CSP market is going to be disruptive if CSPs do not want to be reduced to thick dumb data pipes. On the upside, effective digital service transformation blurs the Telco industry and creates opportunities for CSPs to drive solutions in multiple industry sectors. Digital transformation further blurs geographical borders, allowing CSPs to diversify globally.

Change management a challenge

The change programmes to convert GSM CSPs that have been on a path of success for the past 20 years, by adding subscriber numbers and growing data usage on the back of smartphones, is going to be no easy task. To establish a successful new Digital Service Provider business organically will require cultural change to be at the heart of the transformational programme.

Effective and pervasive digital services, according to Sven Heistermann, Director Telecoms, EMEA Strategic Relationships for Google, adhere to three founding principles:

1. It must be accessible to everyone and therefore drive inclusivity;
2. It must foster collaborative innovation; and
3. It must unlock new partnership ecosystems, often spanning across traditional industry verticals.

These three principles represent fundamental challenges to traditional CSPs. While handset penetration has been instrumental in global communication inclusivity, next-generation digital services must pass the three criteria of a successful digital service proposed by Heistermann. The huge spin-off and future brand value of inclusivity is more pervasive access to information and for Bottom of the Pyramid income earners to access and use digital services for quality of life improvements. This social responsibility underpinning is a pivotal driver for meaningful digital services.

The transformation of incumbent CSPs to next-generation DSPs is paved with obstacles of which the most significant is arguably the cultural transformation required to adopt a totally different service development and implementation culture. With a multitude of OTT market players that are leveraging their own platforms to create, capture and shift markets, the task may feel daunting and almost impossible. However, with inclusive thought processes to tap into eager partners who can leverage the captive markets that CSPs acquired over many years, fast innovation is possible. Even if only one in ten digital services Minimal Viable Product developments leads to new markets, CSPs can transition to disruptive DSPs with shared risk investment.

While a Digital Services strategy is important, the formulation must be mostly emergent using the Mintzberg Strategy Spectrum. CSPs wanting to transform must open their culture to emerging market changes and instil the cultural trait of agile response to disruptive market changes.

The expression "Culture and agility eats strategy for breakfast, lunch and dinner," seems entirely relevant and appropriate for CSPs in their Digital Services transformational journey. These words were quoted by The CEO of the TM Forum, Nik Willetts, at TM Forum Live! in Nice 2017.

While many incumbent CSPs may feel that the task of Digital Services transformation and value creation is overwhelming, a cultural shift to collaborative co-creation with partners that are willing to invest on a risk basis in new ventures can unlock rapid creation of brand new service streams.

For further information on this topic go to http://www.globetom.com/digital-services-journey/.

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Globetom

Globetom helps businesses build, deploy and monetise services in the cloud. Globetom's core areas of competency include loyalty, voucher management, prepaid management and distribution, enterprise middleware, a SOA Application and Internet of things event processing. Globetom's experience in the telecommunications industry includes BSS and OSS products and solutions. Globetom specialises in the area of service fulfilment, assurance and billing solutions and uses service-oriented architecture principles to build future-proof solutions for its customers. Globetom is a member of TM Forum. www.globetom.com

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