The 2015 telecom digital maturity survey: Preliminary results
The telecommunications industry has long been at the forefront of the digital age, supplying the ever-growing wired and wireless broadband networks that now span the globe. The benefits have been enormous. Billions of people now enjoy always-on connectivity and access to every kind of information imaginable. Businesses in virtually every industry now live through those networks, connecting with customers and suppliers while transforming their internal operations.
Ironically, the same telecommunications companies that have done the most to advance the dawn of the digital age have yet to build on the digitization they have championed. In fact, they continue to lag behind more digitally native companies in driving the digital transformation of their own businesses. However, they are now starting to take advantage of their position at the heart of digitization by offering a variety of products — including advanced data packages and cloud and machine-tomachine services — to consumers and businesses alike.
How fast is this transition taking place? To find out, Strategy& is currently conducting a survey of executives at telecom companies around the world, asking them to assess their digital ambitions as well as their firms’ maturity in several performance factors, including their product portfolios, internal operations, readiness for business-tobusiness (B2B) and business-to-consumer (B2C) digital commerce, and culture. The early results suggest that although fully 82 percent of respondents expect their companies to become digital leaders, 52 percent aspire to become digital leaders within the telecom industry, while 30 percent aim to be on par with leading players in any industry. But most operators have a long way to go to reach any of these points.
Are we there yet?
The digital payoff for telecom operators is large, but, unfortunately, that promise is still a considerable way off, judging from the early results of our current survey. A closer look at just one issue — the customer relationship — highlights the underlying problem.
On the one hand, operators’ digital marketing efforts have been a strong point. Fully 73 percent of respondents maintain that their efforts are either already best in class or at an advanced stage — thanks largely to social media, as well as massive traditional advertising campaigns. But when it comes to digital commerce and monetizing these marketing efforts by digitizing sales through an omnichannel combination of stores, e-commerce, and social media, respondents admit that they’re still lagging. Just 30 percent say they’re either best in class or advanced, while 35 percent admit they’re still at the beginner stage (see Exhibit 1).
Exhibit 1: Discrepancies between digital marketing and commerce readiness
We see this discrepancy in practice frequently. Online sales at many telecoms are poor. Most are unable to generate a single view of the customer because they can’t integrate the customer data they do have across all sales channels, and that in turn affects their ability to upsell new offerings, since they don’t really understand who their customers are or what they want. This is in sharp contrast to the customer experience consumers now find in other industries — including over-the-top firms, telecom’s fierce rivals — where a seamless digital commerce experience has become the norm.
The situation on the B2B side is even more dire. Almost 80 percent of respondents concede that the mobile salespeople they send out to their business customers have limited access to the real-time data needed to give them a full picture of those customers’ accounts and activities. The same holds true for operators’ B2B self-service options: Most customer portals offer some usage data and bill payment but few advanced functions, such as usage analytics and management and automated self-service.
The wide gap between operators’ marketing and sales efforts demonstrates that they are not as advanced digitally as they might hope. Yet their assessment of their companies’ cultural readiness for digitization, for example, is as optimistic as their digital ambitions. Asked about the influence of their company’s culture on their digital efforts, almost half of the respondents say it is a positive asset and critical to the company’s success, and another 25 percent say it is a relatively positive force. In our experience, however, very few telecoms have yet instilled the qualities that characterize truly digital enterprises — or, indeed, the willingness to move in this direction at all.
The digital goal
So what should a digitally mature telecom operator look like? First, these companies will need to redefine their traditional business models to determine how they can actually make money through new digital products and services (see Exhibit 2).
Exhibit 2: Redesign for the digital telecom
That means not just relying on voice, mobile, broadband, and TV services, but branching out into data-centered pricing, unlimited voice and texts, VoIP, and even services through the Internet of Things (IoT) such as the smart home and smart grid. For businesses, that also means additional IoT services such as connected cars and connected industrial machines, as well as offerings for specific industries, such as smart hospitals in healthcare and cloud and hosting offerings for financial-services companies. At the same time, operators must reimagine the customer journey from marketing to sales to customer care, offering personalized communications, true omnichannel sales, and fully self-generated support.
Executing on the new, fully digital business model will require a major transformation of how telecoms deliver their products and services. All operations must be redirected toward the consumer — whether individual customers or business clients — with the goal of simplifying and streamlining those products and services. At the same time, the underlying infrastructure needs to be converted to platforms based entirely on Internet Protocol in order to promote real-time data integration and enable network operations to be run at significantly lower cost. These efforts will allow telecoms to develop new, leaner digital processes, and the money they save can be reinvested in designing and selling new products and services.
None of this will come to pass without also dramatically changing the typical telecom’s culture, and spreading the digital word by example. Right now, most operators function under a traditional multilevel system, in which authority resides high in the hierarchy, slowing down the decision-making process and encouraging siloed behavior. Changing the culture means flattening these hierarchies and redesigning how people work, which will speed up decision making, boost agility, and get new products to market faster. Cross-functional collaboration will be a must, but teams will need the right skills and digital tools to make that work, with the goal being the instillation of a digital mantra throughout the company.
The divide that still exists between cultural aspirations and reality suggests, once again, just how far telecom operators have to go on their digital journeys. Becoming digital means transforming all aspects of your operations, not just marketing. It means creating a consistent, compelling online model for all your customers, and the ability to deliver on that model. It means encouraging a pervasive digital mind-set, which for most requires a major change-management effort if operators are to succeed in transforming their cultures. How close is your company?
The survey results outlined here are preliminary. We encourage you to participate to find out how your company compares with your industry peers in your goals and how far you’ve come on your digital journey. We plan to refine the results and share our insights into telecom maturity and how to get there as the survey progresses. You can find the survey at http://www.strategyand.pwc.com/digitalmaturitysurvey.