When you look at business transformation projects the objectives are always the same: blending strategic re-direction, step-change operating efficiency, new revenue accelerate, each with sustainability, agility and scale-ability at its core. Whether it is re-shaping the operating or capital budgeting, technology migrations, or introducing a new product portfolio, a business transformation exercise is about moving faster and reducing costs.
The challenge for most of these projects is around truly making ‘transformation’ a reality and the execution risk that goes in tandem. In the communications industry, we’ve been talking about Telco 2.0 for nearly a decade and I think we’ve reached a point where service providers are looking for some incremental step changes with more definable and quantifiable results.
Transformation is being driven by both traditional and emerging competitive threats. Some of these threats are around technology and others are market driven. The development of cloud services and over-the-top platforms addressing both consumer and enterprise environments are forcing service providers to reevaluate their approach and look at new flexible business models.
Service providers recognise the need to transform their businesses and re-position themselves to be successful in the long-term yet they are still being challenged by legacy assets, operating systems and a cost base that is no longer fit for purpose or this competitive dynamic. Service providers need a new way to compete and leverage significant assets that continue to hold value with paramount value given to CRM, and brand management as a trusted advisor to their customers.
When the talk is replaced by action, how are service providers going to make transformation a reality? I think it begins with a new look at strategic outsourcing. Service providers are faced with a complex set of challenges that needs to simplified with the help of partners. Some outsourcing models have provided functional and effective in the first wave (e.g. managed services from the major network vendors) but appear lacking in vision when you consider the loss of control on technology refreshes, change management cost controls, and ability to deploy new service offerings.
After three to four years of operator outsourcing reaching a plateau, I think a renewed emphasis and restructuring of the transformation model is overdue. Outsourcing can be a way to remove costs from the business and enable capital or operational resources and skills sets to be redeployed elsewhere. However, for service providers, outsourcing solely to cut costs is no longer a viable solution. Indeed, the next generation of transformation deals should be structured to allow greater control over operations, the flexibility to change business models when needed and the ability to bring new products and services to market quickly.
In my next post, I’ll be discussing what to outsource and how to evaluate solutions and partnership opportunities. Look for Part 2 in the coming weeks.
How do you think outsourcing can change the way businesses approach Telco? Let us know in the comments below.