Communications, Media and Technology (CMT) companies are embarking on a digital journey as the industry reinvents its revenue base to meet the needs of a more digitally demanding clientele. Front and center is a pivot from products to services, from insulated, single-company operations and hardware to software and shared platforms. While most incumbents are still too tied to their historical core business, digital disruptors are capitalizing on future value creation—which is why digital disruptors are seeing growth and traditional incumbents are not.

From 2012 to 2016, incumbents have been deeply tied to their core business, fluctuating between -500 to 2500 billion dollars, resulting in incremental dividend optimization.
Digital disruptors have been focusing on future value creation options, from more than 200 billion dollars in 2012, almost 600 billion dollars in 2013, almost 700 billion dollars in 2014, and then rising up to almost 1200 billion dollars in 2015 and a similar top value in 2016.

Pioneering incumbents are seeing some success, becoming disruptors who create new growth. Disney CEO, Bob Iger, talks of its Fox movie and TV business acquisition as positioning Disney to “flip a switch and distribute . . . programs and channels direct to consumer through platforms we’ve created.”i Microsoft once relied on software licensing, but has successfully shifted their focus to the cloud--creating new subscription-based business models like Office 365 and are now placing big bets on AI and IoT.ii And Qualcomm is placing big bets on the IoT, with partnerships like the one using its chips to fuel Google Assistant.iii

The purpose of that pivot is not just staying relevant in a digital world, but also meeting high-velocity and increasingly personalized consumer demands—while offering quality, innovation and speed. Seven of the top 10 largest companies are new economy platform companies that have created $500B in additional market capitalization in the past six months alone.iv A company’s digital journey has now become a strategic imperative to survive and prevail.

Savvy companies will employ the latest digital technologies—from AI and blockchain to analytics and cloud—on three fronts: Talent, Ways of Working and Intelligent Technologies. Using the Power of Three, they will set themselves up for a return to growth.

Power-up #1: Talent makes it happen

The digital shift means humans and machines will renegotiate their relationship as automation takes over rote tasks, freeing humans for more creative innovation.

46%

potential revenue increase if Communication Service Providers (CSPs) fully invest in AI and human-machine collaboration.v

21%

employment boost if CSPs fully invest in AI and human-machine collaboration.v

To adapt, companies will recreate their talent strategy in several ways:

  • Innovation culture reigns. To compete with the digital disrupters that are taking market share, established companies must evolve corporate culture from transactional to innovation-based.
  • Man vs. machine mindset disappears. Nearly three-quarters (73 per cent) of industry CXOs say they expect to automate tasks and processes in the next three years. But, the majority (63 per cent) expect intelligent technologies to create more jobs than they eliminate.vi In a wise digital pivot, it is not man versus machine, but worker and machine as a collaborative team.
  • Reskill. Immediately. Reskilling is a requirement for success in a digital world. While seven out of 10 companies say their workforce will need expertise with new technology, only half of companies say they will reskill their IT workforce. But, with digital talent in high demand and short supply, reskilling is a must. As the focus shifts to digital, software becomes a company’s engine.
  • Sourcing becomes more fluid. From new digital talent marketplaces and job sharing, to pooling talent with ecosystem partners, enterprises now have a multitude of options for expanding their workforce model.
Digital players in the industry have 6X more engineers and 3X the IT workforce, a ratio incumbents cannot ignore as they skill up.

Power-up #2: Ways of working, reinvented

CMT companies must reorganize themselves around customer outcomes – rather than siloed functions – for success in a digital world. To do that, they need to place a heavy emphasis on IT, as it provides the foundation for agile business. Software is now at the heart of products, services and customer experience—so software engineering is now a requisite strategic capability. It’s worth the focus and investment. Expect companies to trend toward the following:

  • A battle ground for software engineers. Half of all companies say they will recruit for new talent. If every company is a software company—regardless of industry—then software engineering skills should be treated as a valuable commodity. As investments in software increase, industry companies must recognize the value in engineering it.
  • Creating the agile enterprise. Companies must now focus on automation and agility, at scale. Agile digital architectures are not just a necessity, but a competitive advantage—bringing flexibility and speed to market. The move to a service orientation requires lightweight, decoupled architectures that change and grow as a communication company’s business evolves. These architectures support capturing innovation, inside and outside company walls. As IT becomes a partner with the business, rather than a potential inhibitor to speed, agility shows its face.
  • Revving up the data/analytics engine. If data is the currency of business, analytics is the engine that unlocks its value. To remain competitive, companies will need to build a business shaped by insights. Investing in predictive intelligence lays the foundation for improved decisions, supports a more agile workforce, and provides scalability across the organization.
  • A “product” mindset sets the agenda. While mindset may sound far removed from technology, a product mindset is necessary to get the technology piece of the business right. A communication company’s products are now outcomes and services, versus physical products. Organizing an organization and its technology to foster the right outcomes stems from a mindset that puts the customer first in an agile delivery model.

Power-up #3: Partnering with intelligent technologies in a platform model

No product or service today survives without a platform. Modern platforms are data-driven, cloud-based, service-oriented. AI and analytics become key capabilities as data is everywhere—but insights require appropriate mining and cultivation.

Modern platforms are characterized by three things. They are:

  1. Intelligent.
  2. Perpetually evolving. Innovation and experimentation are constants.
  3. Trustworthy. Governance and security are at a premium.

For example, Accenture is helping Swisscom to accelerate innovation and launch new digital services to customers more rapidly than ever before. The Accenture Digital Omni Channel Platform (DOCP), an open-architecture, API- and microservice-based digital decoupling layer, leverages data and cognitive computing to increase the relevance, precision and hyper personalization of services to customers. The DOCP will enable Swisscom to accelerate its ability to offer an omnichannel experience across all lines of customer interaction – including online, in-store and via call centers, mobile apps and social channels.

Digital is as digital does

CMT companies’ digital journey is key because they are laying the digital foundation not only for consumers, but also for a multitude of other industries. Digital is as digital does, meaning incumbents have their work cut out for them. Tackling all three legs of the journey is not easy, but it’s essential to prevailing in the new digital reality.

Remaining relevant in a digital world requires traditional industry companies to move more quickly, addressing digital on multiple fronts, from talent, to ways of working, to intelligent platforms. If they can do so, they can pivot revenues to the growth areas a digital world provides. In the end, their digital journey is about returning to growth—a welcome change after years of decline.

Sources:

i Etherington, D. (2017, Dec 14). Disney Details Overarching Direct-To-Consumer Plan Possible Through Fox Deal. TechCruch.

ii Lohr, S. (2018, Apr 26). Microsoft’s Cloud Has Business Booming Again. The New York Times.

iii Gagliordi, N. (2018, Jan 9). CES 2018: Qualcomm Unveils Smart Home Collaboration With Google. ZDNet.

iv Accenture Analysis.

v Accenture. (2018, Feb 23). Communications Service Providers Must Re-Skill Their Workforces In New Technologies To Capture Growth Opportunities, Accenture Research Finds. Accenture News Release.

vi Accenture Future Workforce Research, 2017.

Emma McGuigan

COMMS, MEDIA & TECHNOLOGY GROUP TECHNOLOGY OFFICER


John Crosthwaite

COMMS, MEDIA & TECHNOLOGY GLOBAL & NA TECHNOLOGY CONSULTING LEAD

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