Digital commerce is evolving fast, moving out of the home and the office and onto the street and into the store. The advent of mass-market smartphones with touchscreens, full Internet browsers and an array of feature-rich apps, is turning out to be a game changer that profoundly impacts the way in which people and businesses buy and sell. As they move around, many consumers are now using smartphones to access social, local and mobile (SoLoMo) digital services and make smarter purchase decisions. For most telcos, the best approach is to start with digital commerce, where they have the strongest strategic position, and then use the resulting data, customer relationships and trusted brand to expand into personal cloud services, which will require high levels of investment. This is essentially NTT DOCOMO’s current strategy.
Communications service providers have a number of attributes that give them a potential marketplace advantage in the Digital world of commerce and comms : 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. In May, 2014 Norway’s Telenor announced a new Group strategy and Digital Unit in order to boost its responsiveness to customer needs. But there is one Telco that has taken the notion of Digital imperative to stratospheric levels : TELEFONICA.. my favourite Telco Titan !!
Telefónica has been rapidly transforming into a Digital Telco par excellence. They aim to provide the digital products and services which will help to improve the lives of our customers by leveraging the power of technology. This ranges from developing new technologies for consumers to communicate with friends and family through to helping businesses and governments address new opportunities, improve operations and increase efficiencies.As of February 2014, Telefónica implemented a new organizational structure, one that is completely focused on clients and incorporates this digital offering as the main focus for commercial policies. The structure gives greater visibility to local operations, bringing them closer to the corporate decision-making centre, simplifying the global structure and strengthening the transverse areas to improve flexibility and agility in decision makings.
So that’s a global operational revamp and a challenging new networks strategy — a lot of change within a large global organization (about 130,000 staff and 323 million revenue-generating connections). Within this framework, Telefónica has created the role of the Chief Commercial Digital Officer (CCDO), who is responsible for fostering revenue growth. On the cost side, the Company has strengthened the role of the Chief Global Resources Officer. Both Officers will report directly to the Chief Operating Officer (COO), as will the local business CEOs for Spain, Brazil, Germany and the United Kingdom, in addition to the Hispanic-America Unit. The reorganization comes at a critical juncture for Telefónica, as the operator is also embarking on a radical evolution of its network infrastructure with the introduction of NFV and, ultimately, SDN capabilities. “capture gross savings of up to €1.5 billion “in the next year”, as well as having responsibility for “the synergies plan in Germany.Value-added services are the competitive edge, but the strategy – and how deep into the water a Telco goes in placing itself at the centre of the Telco 2.0 environment is very important as well. While other companies take a “defensive stance” focusing just on value-added services, Telefónica has fully embraced the multi-sided business model, acting as a middleman between end customers and other third party companies, according to a study by Telco 2.0 Research.
What are the technologies that will help communications service providers such as Telefonica , SingTel , Telenor etc meet current needs and the challenges of the future? According to Gartner, CSPs are actively considering deployment of a new breed of IT-centric services that involve the use of data, analytics and digital content. CIOs will need to transform business-only, support IT to effectively deliver customer-facing digital services.To transform CSPs into diversified service providers, Gartner said that CIOs must harvest business value from existing networks, IT and information assets, and hunt for new opportunities using digital services.To drive new revenue, CIO offices must acquire new skill sets to align IT to business strategies.The priorities of telecom CIOs are related to business applications, BI ,analytics, customer service support systems, centralizing the billing systems and the convergence of Internet protocol. While CIOs work to deliver applications and innovation, they are also asked to be as cost effective as possible. Looking ahead, IT leaders from communications service providers need to be aware of the shifts brought by new technologies – and they will be requested to provide insights on how carriers should provide strategic plans and new services to be launched based on them. This may involve changes to the infrastructure layer to fit new demands.
You recall ofcourse the seminal IBM Whitepaper Telco 2015 that painted4 future scenarios for Telco players. One of the scenarios is called “ Generative Bazaar “. In this scenario pervasive, affordable, open connectivity is enabled for a person, device or object, unleashing a wave of generative innovation. A co-operative of horizontally integrated network infrastructure providers (Net Co-op) emerges, based on catering to the needs of a multitude of asset-light service providers that package connectivity with completely new services and revenue models.IBM modeling of its four scenarios suggests Generative Bazaar as the most attractive outcome in terms of revenue, profitability and cash flow projections. This is precisely what Telefonica’s Digital dream is all about.Telefonica takes an entrepreneurial approach to identify and accelerate the latest technology trends, incubating new disruptive digital businesses ( Wayra and Amerigo ). They aim to deliver end-to-end digital products and services in B2B, B2C and B2B2C in a number of domains: future communications, machine-to-machine, financial services, media services, cloud computing and information security. They also develop the right partnerships so they can be the single source of the best digital experiences for its customers.
Telefonica believe its strategy is supported by “four pillars in the short term”: growing revenue by extending the commercial offering to new services in the digital world; modernising networks and systems, through accelerating the deployment of the most modern technologies; increasing efficiency through simplification and cost-cutting as well as ongoing financial discipline, prioritising investment in growth projects that generate added value; and strengthening its leadership in the digital ecosystem, “by driving a new public positioning enabling the hypersector to re-establish balance in the value chain”.In essence Telefonica has reorganised itself to create , catalyse and capitalize on opportunities along the following vectors : • Innovation & New Business – focused on discovering and incubating the next generation of digital services. They take an innovative ‘venture capital’-like approach to innovation, as well as identifying the right start-ups to work with, invest in or potentially acquire. Their crowd data offering, Smart Steps, sits within this unit. • Digital Services – delivering high quality, integrated product offerings across a number of more established digital service areas, including Machine-to-Machine, Cloud Computing, eHealth, Financial Services, Advertising and Information Security. It also brings together all of Telefónica’s capabilities in media services ranging from IPTV and satellite TV to over-the-top video, ensuring that Telefonica is a leading video company. • Communications – enabling Telefónica to continue innovating in its core business of communications, leveraging its world-class expertise in IP and video communications.
Customer ownership and distribution power give CSP’s 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. They must establish value proposition for third-party providers, including interfaces to network capabilities, service enablers based on open standards, access to ecosystem of partners, a commercial model and infrastructure support for common business process services, e.g.: self-service, e-commerce, billing Leaner operating models and new leadership roles designed to spearhead digital growth are a critical success factor for Telcos, particularly those with large footprints incorporating markets at different stages of maturity.
Success in the IBM Generative Bazaar scenario is dependent on the provider’s ability to achieve structural industry separation; a pervasive open network access infrastructure; support for third-party application / services innovation; a dynamic business design; and the ability to leverage advanced customer and network analytics.By 2016, the fastest-growing markets will add nearly 1 billion new mobile connections and account for 56 percent of all mobile connections worldwide. While these hypergrowth markets will be the global driver, they also pose challenges that go beyond cross-border execution and cultural conflicts. CSPs will need to transform themselves into leaner, more industrialized digital companies. And Telefonica is the undisputed global leader in the digital endeavour.
Sadiq Malik ( Telco Strategist )