Everyone's Heard of Digital Transformation. But What Does It Look Like?

Everyone's Heard of Digital Transformation. But What Does It Look Like?

    Key takeaways:

  • No definitive measurement exists for the digital maturity of a telco.
  • Assessment should be based on three areas: strategic, qualitative, and quantitative.
  • The qualitative layer focuses on pinpointing the impact of ROADS on system requirements (ROADS: Real-time, On-demand, All-Online, DIY Social).

With consumer expectations on a constant upwards trajectory, all verticals know they must go digital. In this time of digital Darwinism, companies that invest intelligently in digitalization will start pulling out ahead. But, what exactly will a digital telco or service provider look like? It’s not all that clear – the benchmarks and definitions are still germinating.

As yet, no definitive standards for charting the digital maturity of a telco exist. But, Huawei is working with other ICT industry players to pin down the best route and how to measure it. 

What do customers want?

Infrastructure no longer dominates the design of software and user interfaces. Instead, a more customer-centric approach has spawned new forms of infrastructure to satisfy the explosion in demand for computing resources by digital businesses.  

Digital Darwinism 

With fast movers gaining significant advantages, businesses are competing and evolving through SMAC: social, mobile, analytics, and cloud. In their report The Digital Advantage: How digital leaders outperform their peers in every industry, Capgemini Consulting and MIT Sloan Management School show that digital maturity corresponds to financial performance. 

Telecommunications is one of the industries that digital transformation affects most. Knowing this, some CSPs have already made impressive strides forward. According to its FY2015 Analyst Meeting Material, DOCOMO’s Smart Life business generates about 11 percent of the company’s total revenue. Equally, M-Pesa is a successful mobile money service provided by Vodafone subsidiaries in several regions. Kenya’s central bank, for example, reports that 87 percent of the country’s US$55-billion GDP passed through M-Pesa in 2014. 

Taking it on the chin

Many failed transformation projects can unfortunately be found behind the success stories. The main reason? Digital transformation is basically uncharted territory and poorly understood. 

One solution is to guide digital transformation through a digital maturity model that provides a unified standard for measuring achievement levels and boosting performance. The following dimensions for digital maturity have already become clear: strategy and culture, experience, services, operations, and platforms. 

Excellent customer experience 

Huawei brings the digital customer experience together as five uniquely digital characteristics under ROADS (Real-time, On-demand, All-online, DIY, and Social).

Using ROADS as experience criteria, Huawei believes that a digital maturity model for a CSP comprises three layers of assessments: strategic, qualitative, and quantitative. 

Strategic layer

The strategic layer focuses on enterprise strategy, transformation goals, and organizational structure. CSPs can build the right strategy for examining their current business and set a clear vision for digital transformation. Because CSPs’ starting points and goals vary, different combinations of maturity metrics can be used to meet specific goals. For example, an efficient broadband provider will concentrate on reliability and reducing cost, while a digital service provider will aim to build a digital ecosystem that provides services and content to customers. 

Qualitative layer

The qualitative layer focuses on pinpointing the impact of ROADS on system requirements, aligning digital capabilities with business objectives, identifying where digital capabilities fall short, and determining digital transformation priorities. Huawei defines a qualitative metric framework with a ROADS experience at the core. 

Real time: The goal here is for the consumer to receive a service with no perceivable delay and in the fewest number of steps. A good example is real-time transactions where vendors communicate with customers during a purchase. For vendors, it ensures that customers don’t lose interest mid-transaction because responses are immediate. However, different services have different thresholds for what people are willing to accept. In its April 2016 article How latency is killing online gaming, venturebeat.com reports that gamers will accept a delay of up to 100 ms for online shooters like Call of Duty. In contrast, even a 4 second delay for loading a webpage will retain 75 percent of users according to hobo-web.co.uk, though page abandonment increases with each second.

A real-time experience requires bimodal architecture to separate an agile front-end from a stable back-end, while real-time analytics provide a just-in-time understanding of user needs. Finally, automating as many processes as possible delivers services on a high-speed low-latency network. 

On-demand: Users can request and receive services from an unlimited selection, with personalized services based on predictive preferences yielded by data analytics – an essential step to stop users having to sift through mountains of content. Third-party product ecosystems are powerful boosters for satisfying diverse user demands, while open APIs enable data exchange and secondary development. 

On-demand provisioning, charging, and scaling require the orchestration of different domains, running from business operations to network infrastructure. Underpinning on-demand are flexible business models such as pay-as-you-go and freemium, a cloud infrastructure, and next-gen networks.

All-online: The consumer shift to online channels reduces expenditure for vendors on staff and physical stores. CSPs need a consistent and continuous presence on all major online channels, enabling consumers to switch smoothly from app to web store to offline store. As network infrastructure providers, CSPs should be building ubiquitous connections for users. 

DIY: Putting control in the hands of consumers, DIY or DIWO (Do it With Others) where consumers help design or improve services increase satisfaction levels. There are two key takeaways from DIY: one, personalization must be proactive based on big data analytics to create markets of one; and two, services and products should be flexible and easy to configure so users can adjust services as needed.

Social: The fact that people like sharing on social media should be reflected on the customer journey. CSPs should use multiple and targeted social media platforms to promote, engage, and serve customers. Building communities around services and products allow users to communicate and support each other, and to listen to feedback on social media from users and potential users to analyze sentiment. Engaging with consumers will maintain relationships and encourage them to spread the word as advocates, especially if they have the tools do so.

Quantitative layer

The quantitative layer uses monitoring tools to measure performance in digital systems and transformation domains. These give a number rating and detailed recommendations for improvement. 

Specially designed granular objective metrics and tools can measure the systems in one domain and recommend how to optimize that domain. Huawei’s U-vMOS solution, for example, uses metrics to measure the experience and performance of video services and give suggestions on improvements. Other such solutions can be designed for other domains.

A digital maturity model should be a comprehensive system that covers organizational strategy and operations. The industry as a whole can come together and enrich the maturity model beyond the capabilities and insights of any single company.