Chief digital officers in the telecom industry: A study in change

February 17, 2015

Executive summary

As telecom operators move ever more rapidly into the age of digitization, a growing number of them are appointing high-level executives to lead the charge. The task of the executives, who are often designated “chief digital officers,” or CDOs, is to gather the cross-functional expertise and capabilities needed to take advantage of their companies’ privileged position as enablers of the digital revolution. In 2014, Strategy& conducted a study of more than 100 telecom operators around the world, to better understand who these new CDOs are and how they view their efforts to move their companies forward.

Overall, 22 percent of the telecom operators we examined have already appointed a CDO or equivalent, many of them in just the past year or so. European telecoms are somewhat ahead of the curve: More than a quarter have such executives in place. Most CDOs come from backgrounds in business strategy or marketing, rather than technology, but just less than a third have been appointed at the C-suite level. All of them are male.

In order to get the perspective of a working CDO, we spoke at length to Timo Sillober, the director of transformation and digital at Vodafone Germany. He is especially bullish on how digitization can transform the ways his company’s consumer and business customers interact with Vodafone, and his efforts are already showing results. But he also remains realistic about the goals of the company’s efforts to digitize. “Digital, to me, doesn’t mean 100 percent digital,” he says. “Digital, to me, means that the customer can seamlessly interact with us any way he wants to. It’s super simple, it’s convenient, and it works all the time. I believe that eventually most customers will prefer to interact with us digitally.”

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The digital mandate

The telecom industry occupies a special place in the ongoing move to fully digitize how businesses operate internally and how they connect with and interact with customers, both consumers and other businesses. The broadband and wireless networks they have built, and the technologies that make them run, have enabled the Internet to become the hugely influential utility it is now, and have led to the rise of the nearly ubiquitous smartphone.

Ironically, telecom operators themselves have long struggled to benefit from digitization. Indeed, many are at risk of becoming the commoditized “dumb pipes” through which so much critical data is carried — unable to profit from all the activity, yet forced to continue to invest in their networks in order to keep up with the explosion in traffic.

In their efforts to turn this situation around, a growing number of operators, like companies in other industries, have created a new position, usually called chief digital officer, or CDO (although the actual titles may vary). The CDO’s task is to boost the company’s efforts to take full advantage of digitization, both internally and in its interactions with retail and business customers.

CDOs differ not only in their backgrounds and levels of responsibility, but also in their missions. Some have been brought in to transform their companies’ digital presence with sleek online channels seamlessly integrated across all customer touch points. Others are expected to leverage digital tools and technologies to transform their companies’ internal efficiency and create new low-cost business models. Still others are grappling with how to bring new digital products and services to market, either through costly in-house development or through partnerships with so-called over-the-top leaders.

Regardless of the brief, it’s a lot to ask. In hopes of gaining a better idea of who these CDOs are, where they came from, and the extent of their responsibilities, Strategy& recently conducted a study of CDOs at telecoms around the world. The picture that emerges shows that although CDOs have a relatively wide range of backgrounds and responsibilities, their overarching goal is essentially the same: to build their companies’ capabilities — the tools, techniques, technologies, and talent — to restore them to their rightful position as leaders of the digital revolution.

Although CDOs have a wide range of responsibilities, their overarching goal is essentially the same.

Conclusion

Timo Sillober may have more authority than most CDOs to transform his company into a fully digital business. Still, his experience suggests both how CDOs in the telecom industry should be thinking about their roles and what operators must do to make a full digital transformation. For many companies and their CDOs, the task will be arduous: outdated organizational design, solidified business processes, and legacy IT systems will remain serious obstacles to real change. However, companies must undertake the effort — with the understanding that, given the difficulties, their CDOs must have the full support of top management to complete the top-to-bottom transformation required. Telecom operators cannot expect to move successfully into the digital age until they focus on the experiences, technologies, and platforms that will best enable all of their customers — retail and enterprise alike — to get what they want from their telecom provider.

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Chief digital officers in the telecom industry: A study in change