Digital Transformation and Opportunities for Operators

-- Today, the environment in which enterprises operate has totally changed. Along with uncertainties due to the current global turmoil, customer behaviours and expectations are also rapidly changing. As this situation is likely to persist for some time, all enterprises should seek to become more agile, efficient and innovative if they wish to adapt rapidly to these ever-changing circumstances.

This article looks at the impact of these changes on operators, and in particular the many opportunities that are now open to them. With digitalization at the fore-front of many enterprises' strategies, network operators are well placed to support the resulting high demand for industry wide digital transformation. This can benefit both themselves and society as a whole. However, to capitalize on these opportunities, operators must be prepared to make their own investment in digital transformation, increasing speed to value and accelerating innovation.

How have recent events accelerated change and what lies ahead in 2023?

Plato, the Greek philosopher, once remarked that "Necessity is the mother of invention", and a look back in history reveals the many ways that crises have brought about unexpected benefits for societies and countries. The Covid-19 pandemic has also spurred the world to seize opportunities for growth and positive change, leading to rapid advances in technology and new ways of working globally.

Operators are in a prime position to benefit from this current trend, having all the core capabilities necessary to support the rising demand for digital transformation across industries. However, this will not come easily; operators will need to take urgent action to seize these opportunities. Let's begin by considering the immediate outlook for operators.

The next wave of 5G launches will be in the lower-middle income markets of Africa, Southern Asia and Latin America. By the end of 2023, an additional 22 markets are expected to have launched 5G, bringing the total to 135 markets. The high cost of deploying new technologies such as fiber and 5G should fuel the trend of consolidation in the sector as operators seek to achieve sustainable growth.

The global economic forecast is likely to be challenging for the next few years, although telecom services, being seen as somewhat essential, will be shielded from some of the impact. While the International Monetary Fund (IMF) forecasts a slowdown in world economic growth from 6.1% in 2021 down to 2.9% in 2023, global mobile service revenue is expected to grow by 2.54% in 2023, slightly slower than 3.78% in 2021. Nevertheless, operators will need to sharpen their focus and dispose of operations that are less successful or no longer a strategic fit. Selling assets to reduce debt or generate funds for investment will allow many to expand in new business sectors such as the digital services where they see growth opportunities.

How have Operators been transforming to address these changing priorities?

Across all markets, Omdia has observed varying degrees of transformation ranging from operators introducing advanced innovations in network technology and digital enablement, including 5G deployment and digital service development, to others more focused on a limited range of digital services with the key objective of achieving cost savings, service assurance and revenue growth.

At the Operations Transformation Forum October 2022, some leading operators shared insights into their transformation journeys, be it services and solutions, platforms and technology or customer experience.

Services and Solutions-led – Building new innovative digital services and businesses

• AIS leveraged its data as a cognitive telco to transform threats and disruptions into opportunities. To advance Thailand's enterprises, AIS established its 5G digital transformation strategy to focus on creating 5G ecosystems and partnerships. By building digital infrastructure and platforms, and supported by an intelligent network and improving staff capabilities it is moving to become a fully data-driven business. With 5G as an enabler, AIS demonstrated creativity and innovation in the consumer space through the creation of a virtual retail platform and other VR/ AR consumer experiences.
• Turkcell's 1440 strategy saw Turkcell develop OTT digital services to increase the interactions Turkcell had with its customers to 1440 minutes in a day, thereby becoming their go-to digital companion. Turkcell has also taken additional steps to encourage growth, with a continuing emphasis on expanding digital and fintech services, as well as the establishment of a digital business services company providing end-to-end ICT solutions to support the digital transformation of both private and public enterprise customers.

Platforms and Technology-led – Building digital platforms to enable success

• MTN has embarked on Ambition 2025, a deep digital transformation strategy to manage and monetize services across the 5 growth platforms of fintech, digital products and services, enterprise services, network as a service (NaaS) and an API marketplace. In addition, the digitalization of operations to enable network analytics, AI and automation, and customer experience management has allowed MTN to enhance customer experience, deploy new business services, accelerate broadband coverage, and drive revenue growth.

Experience-led – Focusing on customer centricity and NPS

• Greater demand for digital services, hybrid working, and FMC have seen XL Axiata strive towards becoming a converged, customer-centric digital provider with the highest NPS. XL has been digitalizing their operations and using data to drive customer profiling, differentiation and improved experience along with key investments in their fiber and tower expansions. With the use of converged data for digital operations they intend to fully automate their network management and operations to attain greater efficiency.
• stc has focused on digitalizing the end-to-end customer journey allowing stc to generate a 360° customer view, generate predictions and insights and drive business decisions with a data driven approach. Through their customer experience management (CEM) platform, stc has established a digital experience rating mechanism, which by monitoring the usage of digital channels and services offers business insights to enhance overall customer experience.
• In the digitalizing of their operations and networks, Telecom Argentina used their CEM platform to measure and establish various customer experience indicators across all their mobile and in-home services with the aim of improving customer experience and establishing a lead in NPS. This digital transformation journey has been strongly supported by a drive to build a corporate culture and operations philosophy centred around providing a positive customer experience, allowing Telecom Argentina to lead the market with its MBB, FBB and TV services.

Opportunities for operators in 2023 and beyond

Operators and their enterprise customers today recognize that digital transformation is critical in ensuring a sustainable business, but where should they begin? What digital maturity gaps should be addressed first and how? The TM Forum's Digital Maturity Model, complemented by the Digital Operations Transformation Framework, provide a good guide for operations transformation activities. In addition, Omdia has identified some initial opportunities for operators to kickstart their enterprise customer's transformation journey.

As mature enterprises seek to innovate faster, their priorities and goals for digitalization will shift. Digitalization of infrastructure and processes is expected to continue with enterprises prioritizing accelerating innovation and increased speed to value when making investments. This means that enterprises are looking to in-source various capabilities to move more quickly, which in turn poses a medium to longer term risk to operators if enterprises do not view them as partners. Let's look at some key opportunities:

Improving profitability through operational excellence will be a critical focus

• An agile IT architecture along with going cloud-native will be critical.
• Maximised automation across business processes will be needed to reduce opex and inefficiencies.

Opportunities:

• Become key partners to unlock digital value through hyper-automation, using a range of technologies such as RPA across processes and IT operations.

Innovating enterprise services using Analytics/ AI/ ML and reducing corporate risk

• Businesses want to be able to extract insights to innovate faster; allowing them to create new services, personalize customer experiences, and create ecosystems with open platforms.
• The integration of AI/ML in security algorithms and financial operations will improve the assessment of risks and customer buying behaviour to support product innovation.

Opportunities:

• Bridge data gaps by implementing proper data governance aligned with business needs.
• Build open APIs to enable these new services and ecosystems.
• Improve security, including cybersecurity through Cloud-based integrated cybersecurity, and Cloud management 3.0.
• Enable a personalized customer experience (CX) with omnichannel powered by advanced analytics and AI including chatbots, and in-app communications.
• Enable business innovation through 5G, IoT, and Edge Computing powered by AI/ ML.

Retaining and acquiring Talent

• Flexible, virtual working will remain over the medium term and be a key factor in attracting talent.
• Building new domain capabilities will be critical for the longer term.
• Next-generation collaboration platforms will be critical to improving employee experience and learning.

Opportunities:

• Help businesses use these tools to create a differentiated workplace.

Closing recommendations for Operators

Understand the dynamics of operating and target markets. Operators should develop digital strategies that consider technical, socioeconomic, regulatory and competitive developments. Monitoring the digital strategies of peers and other sectors will allow better identification of opportunities.

Partner to invest and co-create. When competing against native digital companies and hyperscalers, operators need to ensure differentiation and attain scale. Forming strategic partnerships with like-minded partners will enable funding and innovation.

Step up training in digital skills and promote a digital culture. It is critical for operators to equip staff with the necessary skills and digital DNA. Training and retraining of existing staff for new roles and continually upgrading capabilities is necessary for the success of any digital strategy.

Formulate a clear plan/ digital strategy. Every operator should ensure its digital strategy is clear and coherent, well communicated and understood, and implemented organization wide. The strategy should be compelling and easy for all to remember.