Digital Transformation (DX) is now a necessity ― and sometimes a struggle ― for companies in any industry. Boston Consulting Group (BCG) estimates that “a mere 22 % of telecom companies have successfully executed a digital transformation initiative”, quotes IT Channel, below the cross-industry average of 35%.
However, telcos face specific challenges of digitalization, some of them aggravated by the Covid-19 pandemic. Despite their optimal response at that time, connecting everyone in the world, telcos created less value for shareholders than nearly every other sector.
According to an article by Bain & Company consulters, “the financial rewards appear to accrue to others”, in spite of telcos’ investments in infrastructure and services “aimed at realizing the vision of a digital economy”. At the same time, telcos dealt with old problems, while the pandemic was setting a new worldwide standard for connectivity.
Besides every technical investment in infrastructure, we know now that a new business model for telcos comes with the digital. And because there is much more to do besides digital processes and archives, you should be aware of these 8 risks and mistakes that telcos must avoid during this process.
Top 8 Digital Transformation risks and mistakes for Telcos
- Yes, it is a process: it is a mistake stop being up to date after a few changes, and not only because technology is constantly evolving. Digital Transformation is not a one-time change, nor it is about hardware or software implementation. It is rather an ongoing journey of modernization of your company’s structure, in which you will need to replace some legacy systems; but not necessarily all of them. Above all, it is a path of adaptation, continuous analysis and investment.
- Your company is not flexible. The starting point for digital transformation of telcos is “a tougher one”, says Patrick Forth, from BCG. Due to the investment made in networks, telcos tend to adopt inflexible business models, “creating fixed-line products for which they could often expect 70% market share”. Also “network engineers tend to be risk averse, with network outages their biggest concern”. The future is about flexibility and customization: you need to leave legacy business models behind.
- You stick with being a basic provider of connectivity. Virtualization of network and connectivity are certainly here to stay, and this is a structural reshaping of the business. Although, infrastructure investment is not excluded due to forecasted changes like 5G and fiber-network expansion. “One of the big questions”, says Bain & Company, “is how to fund these investments. We believe the most feasible capex funding source over the next decade will be reductions in operating costs.”
- You don’t have an integrated strategy ― and if you don’t have it, you probably don’t know where you’re going. DX must always be adapted to your own company, experience, and needs. Digital Transformation must never be a problem: it has to work for your goals. Technology implementation must follow a wider growth strategy, so you must learn how to leverage your own core strengths and assets. Top-quartile telcos perform most strongly in having integrated strategies with clear transformation goals, says BCG research.
- You don’t have partners. Partners in the digital ecosystem “could play a role in sparking innovation among telecom firms and boosting their market position”. Potential ecosystem partners are cloud platform providers, device manufacturers (in fields such as IoT and augmented reality) and application providers in smart manufacturing and smart agriculture, according to BCG.
- You fail to use data and you don’t have metrics on your evolution. Successful data-driven companies do more than collect large amounts of data. Having the data without knowing how to use it is a waste. To know how to use data, we suggest you this article on Data-Driven Decision Making: The Most Powerful Tool on Driving Revenue in 2023.
- You fail to prepare your HR. Some changes that come with DX will totally reshape the way your company works. Redefining roles and positions is necessary: the emergence of some new positions like CMO and CIO arise from a new structure of the business rather than being imposed. Not everyone will like it in the beginning, but DX is also about making your people’s work easier, too. An often overlooked factor: leaders must be committed.
- You (can’t) have information silos. DX is meant to be cross-sectional: the whole company needs to be involved. It is your goal to make your company more flexible and competitive, with streamlined processes and running information, and not otherwise. And all your organization has to be aligned with these goals brought by DX.