Facing fierce competition, primarily from digital giants, communications service providers (CSPs) need to loosen their traditional grip on their business models and become agile digital business transformers to keep their customer base strong and their revenue streams robust.
The traditional operators’ business model is under assault as individuals the world over consider turning to consumer technology companies for broadband, voice and messaging systems as alternatives to CSPs. Yet, the picture being painted is not as bleak as it may seem on first glance.
CSPs have a unique opportunity to transform themselves into Integrated Digital Service Providers (IDSP), and to play a central role in the digital economy not just as enablers of core services, but also as active players in the new ecosystem. IDSPs invest in their infrastructure capabilities, operations and offerings to pursue digital as a business, both internally in terms of their own infrastructures, and externally in terms of what they can offer customers, regardless of whether they are consumers, enterprises or governments.
Much of the strategy to becoming an IDSP can be found right in their own backyard: strong and trusted brands, unique location and proximity to their clients, established billing relationships, robust network infrastructures and a large quantity of customer and usage data.
Once on the transformation path, CSPs typically take a three-pronged approach: digitalization of customer interactions, development of new digital products and services, and digitalization of internal operations and processes.
However, the digital transformation must also include the implementation of the necessary technology enablers, such as an accelerated adoption of multi-speed IT, and be supported by a well-articulated change management program across all the components of the organization.
Typically, the main challenges faced by CSPs are in the execution of digital transformation, rather than in designing it. Identifying the right operating model to govern and implement the transformation while managing the “business as usual” is the most critical and complex success factor. Generally speaking, there is no single recipe in digital transformation guaranteeing it success, especially in terms of being a “right fit.” It depends on the DNA of an organization itself, the company culture and also the partners selected for the digital transformation journey.
A key component of an IDSP is a cutting-edge agile network infrastructure. To respond to the needs of the new digital customer in a cost-effective and efficient manner while reducing time to revenue, high-performing CSPs are moving away from reliance on purpose-built hardware for network functions.
Instead, they are creating a new digital network of the future—underpinned by the cloud, software-defined network (SDN) tools, and network functional virtualization (NFV)—that will be a flexible business enabler, providing an opportunity for CSPs to win against the digital giants and to be a disrupter, rather than the disrupted.
Last but not least, CMOs and CIOs agree that getting marketing IT right is a crucial part of their organization’s customer-focused digital transformation.
As an IDSP, CSPs can provide a superior customer experience and offer a new set of customized and innovative services and solutions.