Digital transformation: what is it and how can we get some?
Source: Digital Transformation Study: Global Insights, © amdocs
As the ‘digital transformation’ imperative has been around for at least all of this century (probably longer), you might think there’s a good chance that service providers would not only have worked out what it was, but might be well on the way to doing it (whatever it is, exactly).
In a round table discussion held recently in London to mark the publication of a report undertaken for Amdocs by analyst firm, IDC, (Digital Transformation Study) there was broad agreement that most of us present didn’t have a clear definition of the term either. We had a variety of vague definitions that we thought might get us all closer and the best of those (I thought) was ‘Digital transformation occurs when the telco goes from being an environment where computers ‘assist’ people to do the work (as in operational support system), to one where people assist them - where computers are programmed to do the work automatically (as in self-provisioning). But then it became clear that this one, while good, wasn’t sufficient.
Transformation was also ‘a journey’ rather than a destination. It is about people change and corporate collaboration, and a whole lot more.
So it turns out that we around the table aren’t alone. The industry members interviewed for the study were equally vague (more on this in a moment). Even so, analysing the complete questionnaire results Amdocs reckons its study shows that service providers are not transforming fast enough to meet their own transformative goals and are in danger of being further outflanked by alternative network-based service providers who have the bit between their teeth. One example being Netflix which only today has announced that it has already gone beyond the data centre stage (the transformation that service providers are only now considering with NFV) and is opting to put all its infrastructure on Amazon’s public cloud (AWS. (see - Will telcos lodge their business systems on the Amazon cloud?)
Meanwhile, back at the questionnaire
That telecoms service providers are still uncertain about ‘digital transformation’ may be inferred by some of Amdocs’ key findings, where 50 per cent of C-level and other service provider decision-makers predict that it will take their companies more than five years to transform. This is not fast enough according to 64 per cent of respondents who believe that the communications industry will be outpaced by other industries.
What’s in a title?
Quite a lot, says Amdocs. While 46 per cent of service providers still do not have a digital strategy in place, 89 per cent of them highlight the importance of having a chief digital officer (CDO) to lead and drive such a strategy. But only 28 per cent actually have one.
Nearly 80 per cent of the industry is still executing digital transformation projects tactically “as stand-alone initiatives without alignment to a broader technology roadmap or business strategy. A lack of clear strategy, together with low digital channel adoption rates and multi-vendor systems environments, are equally seen as the three biggest obstacles to digital transformation, either in terms of slowing down a project, or completely derailing it.”
The need for the right digital skills
Sixty-nine percent of respondents believe that the communications industry has strong technology capabilities but will find it difficult to implement and bring to market digital transformation projects quickly enough. When asked what factor would most help their companies transform into digital service providers, having the right skills to create and implement digital transformation strategies were ranked first and second; the use of customer experience as a design principle for new products and services was the third most helpful factor. All of these were well ahead of having the necessary financial capital, which ranked sixth, together with need for greater cross-unit functionality and collaboration.
Getting the right partner to help
Collaboration and partnering is key and service providers are looking to share. In the next 12 months, 41 per cent of respondents say they will invest in managed services as part of their transformation. IT services vendors are ranked as the most valuable partners, ahead of specialist digital consultants (second) and systems integrators (fourth). Network equipment vendors and strategy consultants came in a distant eighth and ninth place, respectively.