Three Steps Across the Digital Divide

Many Telcos know that they’re losing revenue to internet competitors and sense that change is urgently needed if they’re to keep pace, but lack a clear vision of what digital transformation would mean for their business.

The success factors of companies like Amazon, eBay and Uber offer some clues. These companies are ‘digital leaders’ not because their offering is so extraordinary (they mostly deal in products that would have been recognizable in the 1990s), but because of how they offer, sell and fulfill their propositions and how they engage with their customers.

In essence, the business model adopted by these and other successful internet companies can often be reduced to three key elements, which could form a digital template for the future Telco:

1. They deliver a digital experience, using smart technology to create the frictionless ‘journeys’ that customers are coming to expect. Most manage very well without a main street presence or even call centers. Queries and disputes are resolved on the spot, through messaging and chat — services which will almost certainly be replaced by AI technology over time. Customer service is treated as a differentiator, not just a cost.
2. They’re fully committed to digital commerce, making transactions across multiple sales channels easy and effortless. Customers have real-time visibility of their accounts and transactions. Products, services and orders are self-configured. Payments are immediate, and bills are rare. Fulfillment is triggered directly from the order and is either immediate (for virtual products) or as fast as courier services can operate.
3. They have digital ‘attitude’ which fosters new opportunities and initiatives. Products and services are typically software-based and can be created and deployed quickly, with comparatively few development resources. They’re socially-aware too, using peer-to-peer interactions to create a sense of community and to build reputation and confidence. Facebook was built around social interaction. Customers valued Amazon in large part for its customer reviews and recommendations. eBay and Uber used their customers to validate their business model and create trust.

In summary, leading digital businesses have exploited new technology to make themselves agile, market-responsive and profitable. Their explosive business growth over recent years suggests that customers like this approach too, or at least regard any accompanying shortcomings as an acceptable trade-off for lower prices and greater convenience.

Admittedly, things aren’t so easy for the Telco industry, which operates under unique pressures and historical disadvantages. Digital leaders don’t typically carry legacy infrastructure, are rarely dependent on physical assets outside of data centers, aren’t subject to burdensome regulation or heavy taxation, and are not required to be interoperable with their competitors. Their list of advantages is long, while the telecoms industry remains tethered to a legacy which is now hobbling its attempts to move forward at pace.

The opportunity to change is increasingly clear, however. Virtualized network functionality is making new services much easier to bring to market, and it is becoming evident that legacy IT is something from which Telcos can break free through a strategic transition to lighter, more agile digital platforms. Selective digital deployments to support a subset of customers or services are proving much more effective than long and costly digital transformations, often creating new digital businesses within the organization. Such initiatives tend to be quicker, with faster and clearer payback. Impact on the overall business is less and risk is lower.

Many Telcos are looking across a significant divide between them and the digital ‘high ground’ occupied by today’s internet pacesetters. The good news is that the gap is far from unbridgeable and that a prudent, tactical approach may provide quicker, better and more cost-effective returns than a lengthy and high-risk overhaul.

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Ready to dive deeper?

What are additional strategies that Telcos can formulate to bring tactical digital transformation to their business? Read the discussion paper, Crossing the Digital Divide.

For more ideas on digital strategy, see MATRIXX and 451 Research’s paper Fast Tracking Telcos to Digital Transformation.

Want more information about how leading digital service providers such as Telstra, Vodafone and Yoodo are using MATRIXX solutions to underpin their digital transformation? Visit https://www.matrixx.com/customers/.