Unleashing the Value of Digital Transformation, Moving Towards Digital Operations 2.0

-- As global digital transformation has deepened, enterprises have increasingly higher requirements on the capacity, quality, and computing power offered by carriers' networks. With the help of our proposed DigiVerse 2.0 solution our new Transformation Value Model Tree, this article will explain how carriers can unleash the value of digital transformation to profitably meet this demand. Firstly, by guiding them on a suitable digital transformation pathway, and secondly by helping them objectively evaluate the business value of each aspect of the transformation.

Strategies to develop the digital economy are currently being made by many nations around the world. As industry digitalization continues and the adoption of intelligent technologies becomes more widespread, the physical and virtual worlds will continue to converge, creating a wave of new digital services. According to a recent third-party survey, the global digital economy is growing by 15.7% year-on-year and the number of companies that have adopted digital transformation strategies has increased by 42%. By 2030, industrial applications of artificial intelligence (AI), and mature immersive digital services are expected to become commonplace, further driving digital transformation. For carriers, this makes digital transformation the biggest opportunity they will see over the next decade.

Digital technologies like 5.5G, AI, cloud computing, and digital twin will enable new applications across different scenarios that can meet the wide variety of industry requirements that are expected to emerge. These technologies will be able to deliver superior customer experiences and support enhanced O&M models, while empowering new business models and services. For example, we will see multi-sensor communication in consumer applications, holographic education and conferencing in the home, and all-AI productivity centers in the enterprise. All of these scenarios will demand ever greater capacity, quality, and computing power from carrier networks.

To address both the opportunities and challenges presented by the digital economy, telecom carriers are now racing to introduce their own digital transformation strategies. From what we've seen so far, these strategies usually focus on three core components:

First, digital service transformation. As data reshapes their value chains, carriers will need to go beyond connectivity services and provide offerings that combine connectivity and digital services, such as FinTech services, Communications Platform as a Service (CPaaS) offerings, and vertical services. We expect these digital services to eventually account for 40–60% of total carrier revenue.

Second, digital operation transformation. New digital operation models will be required if carriers want to make new services more agile and productive. By unlocking the full value of smart data, carriers will be able to shift from network-oriented operation models to customer-oriented models. Up to 80% of future carrier business decisions will likely be driven by data, further promoting value-based operations.

Finally, digital infrastructure transformation. Carriers are currently focusing on transforming their infrastructure to make it smarter, greener, more reliable, and more efficient.

At Huawei's Operations Transformation Forum (OTF 2022), recently held in Bangkok, dozens of carriers shared their digital transformation strategies and the results they have already achieved. AIS Thailand, for example, shared its strategic goal to evolve from a traditional telco into a cognitive telco. During the early stage of its digital transformation journey, AIS Thailand has already made huge progress in data-driven experiences and zero-touch O&M, achieving a 15% increase in its call centers' first contact resolution rate, an 18% drop in its churn rate, a 25% increase in its fault diagnosis rate, and an end-to-end fault diagnosis rate of over 95%. Now, in the current phase of its strategy, AIS is planning to further deepen its digital transformation in the enterprise field. It estimates that 20% of its revenue will eventually come from its enterprise business.

Another interesting case shared during OTF 2022 was from Indonesia, which is known for its very large youth population. The Indonesian government recently launched an aggressive digital transformation strategy which is being complemented by similar strategies from its leading carriers. XL Axiata, for example, has launched its Digital Transformation 2.0 strategy in response to the ongoing pandemic and intensifying market competition. Through its "4 Rights" smart operation model driven by converged data, this strategy has helped XL Axiata achieve precision marketing and improved O&M efficiency. The "4 Rights" model uses data analytics to make the right offer, to the right people, at the right time, and on the right channel. . This model has significantly improved the carrier's Average Revenue Per User (ARPU) and dataflow of usage (DoU). XL Axiata has also been using data analytics to guide investment decisions. By analyzing customer experiences and trends, the carrier has been able to identify the right areas, right schedule, and right solutions for site construction to maximize the network utilization and ROI of its network investments. Within just one year, XL Axiata has achieved a 48% decline in customer complaints and a double-digit improvement in transactional net promoter scores (tNPS).

The three-layer digital transformation strategies we are seeing many carriers adopt often combine CBA (customer, business, and architecture) and ABC (AI, big data, and cloud platforms). Integrating business and technology in this way is allowing digital transformation to make a deeper impact on carriers, allowing them to address increasingly high value scenarios. Of course, measuring the true value delivered by digital transformation remains difficult. At Huawei, we believe the value of digital transformation can be measured at three levels – capability value, service value, and business value. This view is captured in the Transformation Value Model Tree (TVM Tree) which we launched at OTF 2022 to help carriers objectively and comprehensively measure and evaluate the value of digital transformation, considering both short-term benefits and long-term development. In this model, capability value is like the roots of an apple tree, as it reflects carriers' ability to agilely seize future market opportunities. Service value is like the trunk of that apple tree, as it represents business benefits like quality, efficiency, and product competitiveness. Business value is then represented by the fruit of the apple tree, as it is the commercial value brought by digital transformation.

Looking towards the future, Huawei has proposed a DigiVerse 2.0 Solution to further unleash the business value of digital transformation based on carrier’s digital transformation strategies and our three-layer digital transformation value model. DigiVerse 2.0 emphasizes for complementary aspects of digital transformation:

First, it emphasizes a shift from clean data to smart data to further maximize the value of data assets.

Second, it helps build a target network architecture for cloud transformation while prioritizing the security of core assets and the efficiency of application assets.

Third, it helps single-scenario solutions evolve into collaborative cross-scenario solutions. Business-network collaboration, for example, promotes the development of high-quality services, while experience-maintenance-optimization collaboration supports ultimate user experiences and closed-loop O&M.

Fourth, DigiVerse 2.0 focuses on the expansion from consumer and home business to include enterprise business. This will allow carriers to innovate and increase revenue from the large industrial market.

As a long-standing partner of many telecom carriers, Huawei has invested in digital transformation operation centers around the world to ensure their successful digital transformation. To date, Huawei has established regional digital transformation operation centers in seven regions: Asia-Pacific, the Middle East, South Africa, Northern Africa, Latin America, Europe, and China. These centers provide carriers with enablement, adoption, and consulting services to promote digital transformation and continuously unleash its value to ensure carrier business success.