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The telecoms sector is just another vertical when it comes to Digital Transformation

DEC 11, 2019 | Matt Hatton
region: ALL Information & Communication technology: ALL

The telecommunications sector is just another vertical sector whose digital transformation experience is really not so very different from any others. It also wrestles with IT/OT integration (or something like it), the increasingly strategic nature of IT, how it should structure to embrace innovation and how to do effective horizon scanning.

Yesterday I had the pleasure of attending the Great Telco Debate, a thought-provoking, candid and opinionated annual event on the state of the telecoms market, which often delves into the nitty-gritty of how the telcos run their businesses. Naturally there were some interesting discussions around 5G and other new technologies. But the most interesting conversations related to the telecoms industry’s own digital transformation.

One panel, entitled “Where is the telecoms industry on the journey towards cloud?” dealt with a number of interesting areas relating to how telcos are evolving their operations. Many of the challenges relate to going from the old model of “building and operating appliances” as one panellist described it, to a “real cloud architecture”. And several members of the operator panel talked about integrating their own internal IT and network technology. Meanwhile another panellist talked about the need to get automated and introduce standard platforms in the telco operations. These are exactly the same challenges as most non-technology players are facing in the DX process: moving from a model of traditional working practices to one where IT is much more deeply embedded. Just because telecoms is part of “ICT” doesn’t mean it doesn’t have to go through its own equivalent of IT/OT integration and the escalation of traditionally non-core IT to a more strategically critical role.

Another topic that was familiar from speaking with non-ICT companies looking at Digital Transformation related to organisational structure. Specifically, do you set up a dedicated business unit aimed at driving innovation, or should it be organisation-wide. There was some disagreement, with the risk of consolidation being seen by some as too substantial with individuals piling into that unit each with wildly contrasting ideas. This was very similar to numerous conversations I’ve had with large multinationals wondering whether to build an innovation BU or distribute it around the organisation. My answer to that question, incidentally, is to have a central coordinating body responsible for consistency of approach and horizon scanning, and delegate the actual responsibility to the most appropriate business units with a group in each BU responsible for delivering on the vision.

The final topic that came up that also rang a bell was horizon scanning. One speaker (not from KPN) mentioned the example of KPN putting out a profit warning because SMS revenue had evaporated courtesy of Whatsapp. This calls into question, as if we needed it, the track record that the telecoms industry has of understanding competitive threats. Admittedly the ICT sector will tend to be one of the fastest moving sectors, with the greatest risk of disruption, but as a result we would expect it to also set the benchmark for horizon scanning. It’s certainly one of the better ones, but it needs to be exemplary.

The author of this post is, at heart, a telecoms guy. My masters degree is telecommunications, I covered the mobile industry as an analyst for many years, and worked for a mobile operator in the UK. Over the last ten years my focus has shifted quite significantly towards IoT and subsequently to Digital Transformation, but I’ve always kept one eye on the telco world, not least because it’s so critical to IoT. Over the years I’ve also found myself looking much more at vertical issues, dealing with the requirements of specific industries rather than just thinking of the IoT (and other technologies) generically. The discussion yesterday was indicative that telecoms (or possibly ICT more broadly) is just another vertical, with requirements for Digital Transformation the same as any other. Of course it’s also a supplier in the space, but it’s requirements for using AI or Robotic Process Automation or even IoT for its own internal purposes are significant, and it has the same challenges as every other vertical.