The following is a guest article from Stephan Gatien, general manager of the telecommunications industry business at SAP.
The digital revolution is accelerating, causing massive disruption across all industries. Historic market leadership is no guarantee of future survival.
Enterprises of all types are looking to differentiate their businesses by providing new services for the new digital economy. Fortunately, communications service providers (CSPs) have unique advantages that can give them the ability to thrive in this new world.
Telcos — by massively expanding the capacity of their networks — have helped shape the connected, content-driven generation we live in. Increased network capacity made a digital revolution possible, and it shows no sign of slowing.
At the same time, companies like Google, Skype and WhatsApp are offering services that compete with telcos while leveraging infrastructure largely built by CSPs. The emergence of artificial intelligence (AI), machine learning (ML) and Internet of Things (IoT) expand the possibilities of the digital economy and raise the stakes for everyone involved.
Many telcos are at risk of being pushed aside in the new digital economy, relegated to the role of an infrastructure provider. In order to thrive, they must learn to utilize new technologies to provide new services and build deeper relationships with their customers.
New competitors are emerging at a time when customer expectations are rising. More than 90% of CEOs and CIOs realize this digital transformation will have an impact on their industry, but less than 15% of companies have a strategy for doing so, according to research by MIT and CapGemini.
By embracing this opportunity, telcos can utilize a digital shift to future-proof their business and enjoy:
- Ubiquitous connectivity for billions of new devices
- Innovation through data-driven insights
- Enhanced customer experience
- Superior information security
- Streamlined operations and logistics
Ubiquitous connectivity
With 95% of the world’s population living in an area covered by a mobile network, and more than 99% of the world owning a mobile subscription, ubiquitous mobile connectivity continues to revolutionize every industry.
As end user markets become saturated, telcos need to look to new revenue streams and new business models enabled by a connected world.
End users expect a frictionless buying and customer service process where technology enhances the user experience. Some operators are looking to enable smart cities and smart homes. Innovative carriers like NTT are partnering to deliver Connected Transportation Safety solutions in key markets.
Data-driven innovation
The data produced by smartphones, sensors and other mobile devices globally is expected to double every two years. That data has rapidly become a telco’s most valuable resource, and represents a raw material key to the future success of business.
CSPs are learning to use this data effectively in order to personalize a user’s experience, target appropriate customers, manage profitability and create new data-driven businesses.
Enhanced customer experience
Customers expect a new type of digital experience from their CSPs. Navigation and interactivity are critical components of an Omni channel user experience – users expect an intuitive interface, regardless of platform.
Digital solutions like chatbots, voice-recognition through AI, account dashboards, and in-app payment processes allow customers to interface with CSPs and DSPs in ways they never could before, and provide real-time feedback.
Superior information security
While digital transformation has allowed for significant advancements, this explosion in digital platforms and systems has also provided new windows of opportunity for cybercriminals.
In 2014, Experian estimated almost half of all companies experienced a data breach at some point during the year, and the cost of each breach was an average of approximately $6.5 million per incident.
CSPs and DSPs remain a prime target for cybercriminals, as they hold valuable customer information, and, in many cases, feature outdated security infrastructure – leaving ample opportunity for a breach. Email phishing scams, weaponized botnets, and ransomware attacks can cripple digital systems almost instantaneously.
Many security companies are now using AI and ML to proactively prevent attacks, rather than react to them. Telcos can learn from this strategy to better secure their own networks and data banks. Making cybersecurity a priority will save CSPs and DSPs money and protect from breaches in the long run.
Streamlined operations
Through the use of cloud technology, re-imagined commerce solutions, and predictive software like ML, telcos can seize this opportunity to update their systems and logistics to be digital-first, ultimately leading to more efficient operations.
A cloud-based digital core can enhance financial operations, such as convergent billing/invoicing, and also allows for the ability to examine Margin-per-User - enabling enterprises to ascertain which customers and/or customer plans are most profitable.
Similarly, by supercharging a digital core with the self-learning characteristics of AI and ML, new telco business models can improve the efficiency and accuracy of vital tasks like customer support, profitability analysis, and asset maintenance to become more proficient over time.
Looking ahead
Our world is now more connected than ever before, and we largely owe this digital fabric to the telecommunications industry.
While telcos helped initiate and facilitate this shift, the time has come for these enterprises to adopt emerging digital strategies, technology, and business models that they helped create. CEOs and CIOs are well-aware that in today’s digital world, change is not only inevitable, it’s accelerating. The technology and strategies currently working for many telcos won’t be effective in the future, so it is imperative to plan ahead for what’s coming next.
By shifting to a digital core, telcos can future-proof their business models and offer ubiquitous connectivity, data-driven innovation, enhanced customer experience, superior information security, and streamlined logistics and operations.