Driving transformation in the telco sector

The telecoms industry is in a period of significant transition. Disrupted by digital native companies from across the media, internet and communications sphere, telecoms firms’ voice, data and messaging services are under threat. Also they must transform their operations and business models to keep up with fast-changing customer expectations.

Challenges facing the industry have driven consolidation and convergence of services, but when mobile telcos scoop up fixed telecoms operators or vice versa, it only adds to the silos and complexities in their legacy IT systems that inhibit them from innovating at speed.

The business side of telcos is eager to create a more seamless customer experience, but this requires a firm strategy for transforming not just all IT applications, but also people, processes and ways of working.

Transformation, however, is not easy. It’s something that by definition must involve most of the company’s workforce, which in a telco means impacting the day-to-day work of thousands of people over several years.

Some companies take a piecemeal approach, upgrading bit by bit over a longer journey, while others do a full replacement of all the core IT and customer-facing systems in a shorter, but more disruptive, time period. Either way, the odds are against any transformation programme from the beginning.

“Doing any big BSS [business support system], OSS [operations support system] or digital transformation is incredibly hard,” says Peter McMenemy, managing partner at Analysys Mason Germany and formerly managing director of Allolio&Konrad, a telecoms consultancy recently acquired by Analysys Mason.

“The vast majority of them go wrong, significantly over budget, take years longer than initially envisaged and most don’t even deliver the benefits expected. Thankfully, there is also a lot you can do to really help these programmes along and get them back on track.”

Analysys Mason has been working with telecoms companies since 1985, supporting them through every phase of innovation. In the last decade, it has supported many of its telco customers to define the right strategy for their transformation, before assisting them to set themselves up to run a successful programme from the outset.

Crucially, Analysys Mason helps its customers negotiate outcomes-based contracts with the large external software vendors and system integration partners, rather than allowing them to bill based on a traditional time and materials and software licensing basis, which often leaves them all pulling in different directions.

Software vendors, naturally, want to sell as much software and development days as possible, while systems integrators aren’t motivated to get the job done on time when they are getting paid by the day.

“Guiding customers through the journey of working with software vendors and systems integrators is what we have proven to be very successful at,” says McMenemy. “Because we’ve been supporting transformation programmes for so long, we see where the mistakes are made and we understand the levers the telco operators have to pull to make this successful. When going into any transformation of this complexity, cost and duration, you really need to line up everyone behind the same outcome.”

Once everybody is aligned and pushing in the same direction, it’s then important to ensure people are at the heart of the transformation. Replacing IT systems in itself does not transform a business and overlooking the people element is a common error. Another familiar mistake that Analysys Mason often finds is the habit of constantly building new applications, albeit of great value to the business, but failing to simplify.

“Sometimes we see operators with 1,000 applications in their daily business-as-usual operations. That’s a phenomenal number,” says McMenemy. “We’ll often ask how many applications have you taken out? And the answer is normally zero.

“It’s important we get telcos to think about their simplification agenda. Imagine the capacity you can free up to focus on innovation when you only have to support 100, rather than 1,000, applications. Simplification allows you to go faster. Speed of execution and time to market are critical to telcos, and simplification is key to driving those goals.”

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