Telco Growth Imperative : Re organise for Digital services !!

Presentation1
Telecommunications companies are facing difficult times these days: their products are commoditised, competition is fierce and pressure on margins is high. Some operators with foresight are trying to set themselves apart through better service. Services, by being less visible and more labor dependent, are much more difficult to imitate, thus becoming a sustainable source of competitive advantage. Reaching out to and understanding the needs of customers, both current ones and those who may consider shifting from competitors in such turbulent and competitive era, is an important element of the service strategy. As such Telcos would do well to learn from other industry best practices to gain a competitive edge in and expand beyond their core markets.

Other industries, such as computer or telecom hardware, have shown that business development based on new services can be a successful road to new growth. In 1993, CEO Louis Gerstner initiated a transformation at IBM. The transformation involved a change from a hardware and software business to a solutions and services business and from a regionally aligned organization to a global organization. IBM committed itself to business and cultural change , invested in talent and the right financial and IT systems to support them and placed strategic bets on IT as a utility service and hosted storage. The transformation created opportunities for cost savings by encouraging development and use of enterprise-wide technology platforms.

Fortunately with the ever evolving technology and more complex products, incumbent operators have a powerful asset to leverage: their technical field service organization and capabilities. In order to capitalise on further strategic growth opportunities, Telcos should consider an option of developing a dedicated service organization which has control of its entire value chain, primarily focusing on multiproduct communications services for mass segments. This means a dedicated unit, focusing on developing the service business, having full control over its entire value chain, freedom and leeway to develop its business, full management attention and support to execute its mandate.

The primary focus of the new service organizations is service innovation excellence and ability to scale customer solutions for rapid growth across well defined customer segments based on their real communications needs. Customer front-end responsibility (marketing and sales) should be placed into new service Org. The consolidation of the service offering under a single division is normally accompanied by a strong initiative to improve the efficiency, quality and delivery time of the services provided, and the creation of additional services to supplement the basic offering. The consolidation of services also comes with the development of a monitoring system to assess the effectiveness and efficiency of the service delivery.

Transitioning from product manufacturer into service provider constitutes some managerial challenges. Services require new organizational principles, structures and processes. Not only are new capabilities, metrics and incentives needed, but also the emphasis of the business model changes from transaction- to relationship-based. Be warned that research has shown it takes a serious effort by senior managment to build the structures, capabilities, processes and systems to seize the service opportunities.Successful service companies do not start from scratch – they are built up on the basis of existing units and businesses with the best suited set of service assets and capabilities such as customer knowledge ; service development, standardization and roll-out capabilities for complete service delivery.

A focus on forward-looking IT investments (funded by reductions in maintenance costs for today’s systems) will be essential to support the service organisation. Social media collaboration platforms support all service operations: enterprise case management, call centers, customer portals, websites, and integration with social media channels. A knowledge base provides answers to your agents and your customers through all your channels, increasing deflection rates and reducing time spent per case, keeping your customers happy and loyal. Cloud based CRM platforms can support the customer service team to improve the way they managed everyday customer interactions.

Communications service providers have a number of attributes that give them a potential marketplace advantage: an extensive customer base, distribution muscle and knowledge of customer preferences through CRM and billing systems. The opportunity is to become an integrated digital services provider across platforms and mobile devices—convincing customers that a communications service provider can effectively serve as the hub to meet their communication and entertainment needs. According to an Accenture survey, the areas that show particular promise include cloud services and location-based offers.

Cloud Customer Portals give customers a true online service experience, ensuring they have the flexibility to manage their interactions with their Telco entirely online if they chose to do so, and enabling customer service questions to be managed, just like an order coming in from a field sales team person. Customers can create orders online for new and replacement products including, phones, accessories, and SIM cards, and then track the status of the order through to shipment. When Sprint acquired Nextel, over 5,000 employees in over 1,100 retail stores and 800 dealer locations got busy collaborating on customer retention and churn avoidance. Tied together via an employee social network, disparate teams across both organizations focused their efforts to retain customers and build new loyalty programs.

Delivering good services as part of a core product offering does not suffice as the sole differentiator in highly competitive telecommunications markets. Investments in new radio access technology bring along radically new network economics leaving mobile operators with the quest to gear their network investments towards a cost optimal access, backhaul and core portfolio. It is critical to cut spending on low-value activities, and redeploy it to investments that generate growth, margins and true differentiation. Being able to accurately identify where value is generated at all levels of the organization – from divisions to specific products or offerings to particular customers – is a critical managerial competence.

Customer ownership and distribution power give communications service providers a strong foundation on which to build to meet consumers’ ongoing communication and entertainment needs. Providers have an opportunity to improve their return on investment by monetizing better connectivity. They can also extend their partnerships across the digital ecosystem to provide a seamless customer experience. This will require deep insight into subscriber behaviors, new forms of collaboration within the industry, new capabilities within the organization and an ability to constantly innovate to keep pace with today’s demanding consumers.

Perhaps one of the most successful new age ” experience ” players to date is SK Planet, which was set up in 2011 by SK Telecom, Korea’s largest wireless operator, to offer multiple add-on experiences for both retail and business subscribers. They include MelOn, already Korea’s largest music portal, with 17 million subscribers, has also been launched in Indonesia; 11st provides an e-commerce platform with related advertising and marketing intelligence services.It is now the country’s second-largest e-commerce platform and largest player in mobile commerce; “T ad” is a mobile ad platform that enables personalized ads on mobile apps running on smartphones and tablets; “T map,” a GPS-based navigation service platform with more than 10 million subscribers, also offers location-based services to businesses.

By consolidating a wide range of services under one roof, on top of its successful core wireless broadband business, SK Planet now offers perhaps one of the most compelling customer experiences of any operator worldwide.To provide customers with exactly the right products and services based on their actions and requests, ” experience ” players such as SK have to become fully responsive to the correct interpretations of their customers’ behavior, often in real time. The ability, for instance, to offer access to medical information services could follow evidence of increased interest in healthcare. So investing in data analytics capabilities to respond to customer data is a must. “Big data” offers much promise in this area, but it will require considerable investment.

According to experts at Booz ” experience play ” Telcos de-emphasize their network activities and in some cases even carving out their entire access network infrastructure—both passive and active. They can share these costly assets with competitors via network-sharing agreements, and then differentiate themselves through innovative products and services. In contrast, some recent mobile and fixed entrants in Europe and the Middle East have focused on deploying their own network infrastructure in order to become connectivity or platform players. Consequently, they have minimized their investments in customer-facing infrastructure, relying on an online presence for sales and deploying only flagship stores to serve as their bricks-and-mortar channel.

Telecom operators should look for opportunities for growth by both assessing their markets (the market-back view) and evaluating their own current strengths (the capabilities-forward view). Both points of view are critical; if the two aren’t considered together, the result will likely be a capabilities system poorly aligned with market opportunities. The capabilities forward view seeks to find distinctive internal capabilities that can be leveraged in any number of ways: to grow into adjacent markets, to build innovative new services, or to increase network speed and capacity.The market-back view turns outward for market opportunities that might arise from new technologies or from opportunities that competitors might be overlooking or are not coherently pursuing.The goal is to become coherent: to strike a balance so that the right product and service portfolio naturally thrives within a capabilities system consciously chosen implemented.

Sadiq Malik ( Telco Strategist )

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