From survive to thrive: Tech transformation for CSPs’ future

In brief

• In a recent Accenture study, 66% of communication service providers (CSPs) were concerned about their tech debt, with rising IT costs and hampered growth.

• Modern IT systems can help CSPs reduce tech debt and achieve greater agility, cost efficiency, and customer differentiation.

• CSPs need to accelerate their technology transformation by embracing cloud, data and AI, open technology architectures, and interoperability.

Rethink your approach to transformation

The average communication service provider’s tech debt (% of legacy IT in total IT costs) in 2023 was 56%. This unresolved tech debt hinders productivity and innovation across the company.

CSPs’ approach to IT transformation over the past decade+ has been through adaptation as the business embraced new models, architectures, and acquisitions. This approach multiplied the complexity of the IT components, compounding tech debt. As a result, initiatives have not always yielded high-value returns and business outcomes.

In Accenture's latest study—a survey of 250+ top CSP executives—less than 7% of respondents were fully satisfied with the return on their IT modernization investments in the past three years.

With generative AI applications on the rise throughout the CSP enterprise, the time to address tech debt is now.

The cost of delayed technology transformation

Tech debt has a negative impact on all elements of CSPs’ business. Failure to monetize assets, competition struggles, operation and maintenance costs, and slow time to market top the list of our global survey. All this indicates that there is a need for a comprehensive review of CSPs’ IT structure through a tech debt lens.

Companies with lower-than-average tech debt have performed better than their peers in revenue growth and expect better performance in the next three years (5.3% vs. 4.4% 2024-2026).

The golden opportunity for growth

By cutting tech debt and building modern IT infrastructure, IT can be a catalyst for innovation rather than a cost center. A modern digital core based on cloud, data and AI, open technology architectures, and interoperability will enable CSPs to:

1. Enable operational excellence and cost efficiency,
2. Provide customers with seamless and personalized engagement and 
3. Reduce time to market for new products and services.

Leaders have started on the road to modern IT

Though most CSPs are aware of the impact of rising tech debt, there is a gap between the vision for the future and the current state. For instance, 93% of CSPs cite Cloud First infrastructure as a significant capability, but only 26% follow advanced practices enabling scalability and agility.  

Over the past three years, companies in the top quartile of technological advancement have been more cost-efficient than their low-maturity peers. They also set their sights higher for agility in the coming years. 

• Lower IT opex: Tech-advanced companies reported only a 0.8% rise in IT costs vs. 3.4% for others
  

• Lower IT total cost to operate: Tech-advanced companies reported only a 1.5% rise in TCO vs. 3.7% for others
  

• Greater agility: Over the next three years, more advanced CSPs foresee a 32% increase in speed to market

The conventional IT function of CSPs has reached its practical limit for fueling further business growth and driving efficiency. Tech debt is now coming to a head, with the market showing that it’s time to evolve or perish. CSPs now have the opportunity to build this transformation towards the new digital core blueprint, centered on data and APIs and enabled by the unprecedented automation opportunity offered by generative AI.