What is Digital Transformation?

In this series of blogs (this is part 1), we’ll look at the issue of Digital Transformation. It’s a hot topic, but even though most of us probably think we know what it means, you’ll get a fair number of variations in response to a request for a definition.

That notwithstanding, most centre around digital transformation being a foundational change in how an organization delivers value to its customers. It’s a generalised statement representing a reality that’s unsurprisingly more complex, but it does the job.

More specifically, though, Digital Transformation has at least two component parts; first, the transformation of networks or systems so that they support digitalised business processes and secondly, the transformation of the processes themselves.

Digital Transformation in telecoms

In the telecoms vertical, digital transformation is more established than in many other domains. Recent generations of network infrastructure (particularly the ongoing rollout of 5G mobile) have focused on delivering a platform on which digital services can be delivered. However, despite the network platform being to a large degree now realised, a challenge remains. That is, the promise of digital services hasn’t caught up with the platform that enables them.

For telcos, that’s a problem. What’s the point of building a formula one car, then using it to drive through rush hour to work?  Many CSPs have may have advanced networks, but they have only partially digitally transformed themselves. They’ve got the technology, but they’re failing to extract its full commercial benefit.

The mechanics of Digital Transformation in telecoms

To conclude this first blog in the series, let’s take a deeper dive into what digital transformation really involves. Leading industry body, the TeleManagement Forum, suggests that it includes the following:

1. A shift from discrete network elements to an independently managed, virtualised communications and cloud infrastructure. The benefit here is a shift from expensive and hard-to-manage discrete network elements to a virtualised environment that’s easily more run at a far lower cost. The first manifestations of this transition were driven by Network Function Virtualisation and Software Defined Networking.
2. The move to uniformly orchestrated security. Digital services have higher security requirements, so security needs to support the full technology stack, the data, the service creation process, the partners, and the physical environment. The increasing importance of IoT adds to this challenge.
3. Changes in data usage, from limited to a uniformly orchestrated, data-driven enterprise. Central to the digitally transformed telco is a consistent approach to the collection, analysis, distribution, security, and monetization of data collected from multiple sources. Digital success is largely dependent on how well data is leveraged, both for internal business optimization and external monetization.
4. The emergence of an Open API platform architecture. Digital transformation means an end to traditional telco closed IT architectures. Open platforms and easily accessible APIs are required to support the development of both internally developed own-brand services, and externally developed third-party services.
5. The service revolution, meaning a diverse portfolio of digital services. Digital transformation means telcos expanding their service portfolios to offer new suites of digital services, addressing new vertical markets, with strong revenue growth potential.
6. Building and supporting a vibrant ecosystem of partners. Transformation means CSPs ceding control of traditional relationships with vendors and partners and replacing it with a more diverse ecosystem in which partner relationships are managed in new ways.
7. Replacing a limited set of business models with multiple, innovating business models across the market. It’s critical for telcos to develop new flexibility in how they create value for both themselves and their partners. This means new operational models and new business processes are table stakes.
8. Culture change. Taking all of the above into account, culture change – the shift from being a traditional, network-centric organisation to partner-driven, diverse service portfolio company requires a totally new mindset, particularly to compete effectively with OTT players.
9. Abandoning tradition and leveraging new ways to market. Digital Transformation revolutionises how telcos sell. Fining new communications and partner channels to drive the CSP’s brand, maximize digital services and products revenues, is critical to success.
10. 360-degree omnichannel customer experience must replace traditional, more limited, relationships. User expectations increase in the digital world and to meet them, seamless, integrated experiences must be supported if the telco is to accrue benefits in increased customer satisfaction and reduced customer churn.

Why digital transformation matters

All of this is important. Ultimately, infrastructure investment to support Digital Transformation is measured in ROI. And just as its pointless owning the formula one car we referred to earlier and then driving it in rush hour isn’t a sensible investment, so the investment in progressive digital network technology falls far short of achieving the impact it should have if it’s not used to drive impactful business process change.

We’ve seen that digital transformation has the power to surprise and delight telecoms end-customers happier so the question is, why are so many telcos who could do that still falling short of this mark, despite increasingly having digital infrastructures in place?

At eCS, we’ve been helping companies identify sales opportunities in the domain of digital transformation for over a decade. If you’d like to discuss our understanding of the market and how we can help you to tap a range of opportunities, please click here. (INSERT LINK)

In the next blog in this series, we’ll look at specific examples of successful digital transformation in action.