Can Telcos Embrace Bimodal IT?

Bimodal (aka 2 Speed) IT is the practice of managing two separate modes of IT delivery, one focused on maintaining the legacy status-quo and the other on agility and time-to-market for new digital services and channels. The basic concept put forth by the likes of Gartner and McKinsey is that existing IT infrastructure and processes are not able to transform to support changing customer expectations and to compete against new digital companies. By establishing a second mode of IT, older companies can quickly build new digital capabilities for product development, customer experience, business process automation and ultimately build new revenue streams.

Telcos seem like the ideal candidate for 2 speed IT. They are notoriously encumbered by legacy IT infrastructure – heavyweight product development processes and a culture born from regulation and risk aversion. Telco IT infrastructure was built out in silos, highly customized to selling connectivity and capacity, and built to be network centric versus customer centric. It was built this way for a reason, as protecting the network was crucial to providing reliable telephony service. But with that core business commoditized, Telcos are experiencing major disruption and a need to reinvigorate their offerings and respond to the multitude of competitive threats that continue to erode revenues and margin.

While Bimodal IT sounds like a great potential path for Telcos to establish digital competencies, we must remember that Telcos still run the networks. This means any 2nd mode of IT must still be Telco grade, highly scalable and secure. So if Telcos aim to bring up a new digital IT stack, it must not only be more agile, flexible and customer centric – it must also be just as bulletproof as their existing IT infrastructure. This makes bimodal IT inherently more difficult for Telcos than most industries.

Despite Telcos being notoriously labeled as ‘old school’ there are a number of things Telcos do very well versus other industries that can be leveraged when creating a second mode of IT. Telcos can apply some of the same concepts that are inherent in running an ‘always-on network’ that supports hundreds of millions of customers to a new digital mode of IT, specifically:

• Real-time – telcos understand real-time network delivery – they just haven’t parlayed that across to customer service, billing and product provisioning. Real-time customer experience is one of the primary goals of a second mode of IT. While Telcos don’t do this today – they do understand real-time in a way that most industries don’t
• Zero downtime – telcos are inherently better at this than almost any other industry. Again, this has always been table stakes within the network, so they can leverage their expertise in a second mode of IT and extend that to customer-facing systems. Social networks and e-commerce sites are never ‘down’. The customer must always have access to use services and buy new products
• Scalability – very few industries support the level of customer traffic seen in Telco. Once a service is deemed successful, Telcos understand how to successfully scale it
• Security – telcos have always dealt with sensitive data, threats to their networks, and other cyber security concerns so they are more adept at being able to open up interfaces and services to developers, suppliers and partners while maintaining security and reliability.

So a very important question emerges – who is designing solutions for Telcos that meet all of these needs? Where can telcos go to find solutions that are both cloud-based, flexible, customer-centric and cost-effective, while also being highly scalable, reliable and secure? In reality, there is little in the way of COTS solutions even available to Telcos. Most of the IT solutions delivered are highly customized systems that clearly fit into the first mode of IT.   Telcos are going to have to look elsewhere to find innovation, and to find companies that can deliver into a second mode of IT.

I think this is why Telcos have a renewed interest in start-up incubation, venture investment and a new found interest in Silicon Valley technology companies. As the first wave of Telcos face digital transformation head on, the need to establish a new digital IT software stack is driving them to look at new players. With multi-year IT transformation projects no longer viable, Telcos who are embarking on a 2 speed IT strategy recognize that the opportunity and investment in new companies that will better serve their future needs is a crucial piece of the journey.