RESEARCH REPORT
From survive to thrive: Tech transformation for CSPs’ future
5-MINUTE READ
February 26, 2024
RESEARCH REPORT
5-MINUTE READ
February 26, 2024
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.
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).
84%
of CSP executives say that their company will miss future growth opportunities if it fails to accomplish ongoing IT transformation.
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:
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.
Technology transformation led by a clear strategy and a value-led mindset can maximize business impact and returns. Align technology vision with core strategic plays and assess where core technologies can provide unique value.
of CSP executives are satisfied with the return on their IT modernization investments over the past three years
Migrate from legacy systems to the new architecture in a phased manner, prioritizing migration of critical systems first. This minimizes disruption to ongoing operations while also building in KPIs.
difference in IT opex costs between more and less tech advanced CSPs (2021-2023)
A company-wide enterprise-debt program is required to simplify the product catalog, redesign customers’ and partners’ engagement journeys and streamline all operational processes. This requires a long look at both tech and talent capabilities.
faster time to market for new products and services compared to CSPs with lower technological sophistication
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.
Global Communications, Media and Technology Industry Practices Chair
Communications & Media Industry Sector Lead
Managing Director – Communications & Media Lead, EMEA