GlobalData Plc
  • Critical to the digitization of telco businesses is the transformation of organizational, innovation and revenue models

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The explosive growth in the consumption of digital media, content, applications and storage poses excellent opportunities for telecom services providers. Telco digital transformation is a complex process, however, that entails major changes in three areas: making the internal organization agile and efficient, driving constant innovation and unleashing new revenue streams. Customer-focus and speed-to-market in executing these strategies will be key success factors, according to insight from GlobalData.

The company’s recent report, Telco Digital Transformation: Lessons from the World’s Most Powerful Digital Companies, states that the rise of digital powerhouses such as Google, Amazon, Facebook and Apple (GAFA) has created new paradigms on services delivery and consumption, and unleashed a shift in the value of technology, from provision to enablement. The irreversible value shift sparked by the digital giants stems from their ability to leverage the power of digital computing to invent new and better ways of doing things. These leaders recognize that technologies that empower ecosystem members to play a central role in their own destiny stand to provide the most value for their business in the long-term. Technology, thus becomes a means, not an end, and the focus becomes engaging users in innovative collaboration to monetize investments.

GlobalData asserts that to compete, telecom service providers need to start by transforming their internal operations to become more customer-centric and agile. The report highlights that telcos are increasingly leveraging digital channels from instant messaging apps and blogs to online chat services to improve their customer engagement. They are also becoming more adept at applying big data insights to drive process and product improvements.

Amazon’s success trajectory is characterized by a relentless focus on the customer, matched by a long-term commitment to invest and invent to deliver operational excellence. Amazon is the world’s largest electronic commerce and cloud computing company. With $107bn in revenue at the end of 2015 and a current market capitalization of $347bn, Amazon continued to deliver double digit growth in all of their business units in Q3 2016.

The study’s author, Maritza Morales, an Analyst at Large at GlobalData, says: “Leading telcos are investing to increase the creativity and digital readiness of employees, too. Orange established digital learning platforms in several countries and technical certification programs such as its Digital Academy. AT&T’s Workforce 2020 program is preparing its workforce through state-of-the-art collaborative work spaces, digital tools, training and new talent practices.

“Digital leaders have superior innovation capacity. Telcos should diversify and accelerate their digital innovation efforts, with developing and enabling ecosystem participants, investing in R&D and targeted acquisitions to thrive in the digital economy and capitalize on the emerging opportunities.”

The digital realm offers telcos the opportunity to pursue new revenue streams to monetize their network investments, including mobile payments apps, mobile video and data analytics, leveraging their user data. Telcos are also exploring new business models related to digital media, IoT and cloud services.

Ozgur Aytar, Director of Research, explains: “Big data is experiencing tremendous growth as the fuel for digital advertising strategies of brands and organizations of all sizes. Building analytics capabilities will help telcos monetize the wealth of data generated by mobile and IoT devices, and mobile payments platforms. Investments in digital content platforms should also position them well to access the highly coveted digital advertising business.”

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