Posted: 23 Aug. 2019 05 min. read

Surviving & thriving in the world of Digital and ‘Everything as a Service’

Telecom Companies

The Digital Transformation Opportunity

Digital transformation is seen as a key strategic enabler by enterprises globally. Worldwide spending on digital technologies is projected to soar past USD 2 Trillion by 2022. Australia is no exception to this trend, with enterprise CIOs expecting to see their digital investments grow, and analysts predicting an ROI that translates into an AUD 45B addition to the Australian GDP. 

Underpinning these investments are the service providers who will lay down the foundations of our digital future and that is where the role of telecommunications companies (telcos) becomes crucial. Research suggests that telcos are not seen as a natural partner by enterprises in the digital transformation journey, with a preference being expressed for customer-focused technology companies such as Amazon, Google and Salesforce. With their traditional focus on the B2C market and their core offering of network connectivity increasingly being commoditised, telcos have faced the challenge of building both credibility and relevance with enterprise customers. An opportunity may, however, be around the corner.


Enter Flexible Consumption Models

Enterprises, across multiple industries, are undergoing profound shifts in how they sell and deliver their products and services to end customers. Customers are demanding that they be able to consume offerings – from media content (e.g. Netflix, Amazon) to technology infrastructure (e.g. a software defined network) and enterprise software solutions (e.g. Salesforce) – in a flexible, scalable and secure manner. Customers want to be able to choose where, how and how much they consume and pay for. 

This shift is pushing enterprises to adopt Flexible Consumption Models, both in their customer facing front-end delivery engines, as well as back-end operations. For enterprises, having the flexibility to modularise their technology stack and pay on an on-demand or usage basis enables faster decision making, rapid scaling of operations and lowering of capex investments on IT infrastructure. Deloitte’s recent survey of over 1000 executives, from large US companies, confirms that users now view business agility and innovation as being the key benefits of adopting flexible consumption models.


Implications for Telcos

For telcos, this shift provides a two pronged opportunity. Moving away from a legacy cumbersome back-end technology stack to an integrated end-to-end platform of flexible software solutions, allows them to drive the next wave of digitisation in their business operations, thus lowering costs of operations as well as driving an improved customer experience through faster response times and new capabilities. On the front-end, telcos can innovate with new flexible consumption based product offerings that meet the changing needs of their enterprise customers and help them differentiate their services beyond traditional voice and connectivity. 

Across the world, large telcos have started their journeys on this path of reinvention. ATT, Verizon and British Telecom are offering a variety of cloud-based services, ranging from software defined networking, workforce mobility, cloud-based VoIP systems, enterprise grade storage and collaboration, to virtual data centres and emergency recovery services, along with managed services to bring these solutions to life. Within Australia, as a response to its recent business challenges, a leading Australian Telco has ventured into leveraging flexible consumption models for developing new service offerings for its enterprise customers, while conducting a revamp of its existing internal technology stack. 

The business leap to Flexible Consumption

The shift to both front-end and back-end business transformation using flexible consumption comes with a multitude of complications for Telcos. To realise the upside from adoption of Flexible Consumption models and to compete with global technology giants such as Amazon and Google, Telcos need to think beyond just adopting subscription models or unbundling their current offerings and address a more holistic set of questions across the following five dimensions

  • Business Strategy – Articulating how flexible consumption fits into the broader strategy and the speed and timing of transition to these models
  • Business Model – Determining the components of the existing business model that need to be redesigned and the approach for migrating existing products and customers
  • Business Capabilities – Identifying existing capability gaps, addressing them and mapping the customer journey through the flexible consumption lifecycle
  • Operating Model – Defining an optimal model with interactions mapped out across organisational stakeholders
  • Technology – Creating a technology architecture that supports adoption and delivery of flexible consumption offerings

Companies that have achieved this leap successfully have addressed the above dimensions while also taking their customers, partners, investors and employees on the journey through a proactive approach and relentlessly focusing on the value they are driving through business simplification. 

Telcos stand on the cusp of unique opportunity today where through the transformation of their internal operations and building a new technology portfolio, they can create a compelling brand proposition and become trusted enterprise service providers while compensating for the challenges confronting their traditional revenue streams. Along with the advent of 5G, the advance towards digitisation and flexible consumption offers a window of reinvention that telcos have been searching for and holds the promise of fundamentally transforming their brands and businesses. 

 

Sources:

  1. DC, 2018, Worldwide Semiannual Digital Transformation Spending Guide
  2. Microsoft and IDC, 2018, Microsoft Digital Transformation Study
  3. Forrester, 2018, The Future Of Telecoms: Strategies To Transform Telcos Into Digital Services Providers
  4. Deloitte, 2018, Accelerating Agility
  5. ATT, 2019, Cloud solutions
  6. Verizon, 2019, Products and services
  7. British Telecom, 2019, Large Corporate
  8. Raskmedia, 2018, Telstra Corporation Ltd Investor Day: 8,000 Jobs To Be Cut
  9. Telstra, 2019, Connected workplace
  10. CRN, 2018, Telstra is changing how it sells enterprise services, but what’s in it for partners? 
  11. Deloitte, 2019, Flexible Consumption Transformation Framework 
  12. Chart Mogul, 2017, Adobe SaaS Pivot Strategy 
  13. Deloitte, 2016, B2B: Igniting the new telco value engine

Meet our authors

Peter Corbett

Peter Corbett

Partner, Consulting

Peter is the National Telecommunications leader and the Sydney leader of Monitor Deloitte in Deloitte’s Consulting practice. Peter has over 10 years’ experience in the development and execution of corporate/business unit strategy, digital strategy and transformation, channel strategy, strategic due diligence, customer experience/service design and operating model design for leading multinationals. Peter works at the links between strategy, operations, technology, creative design and innovation. His career experiences include successfully implementing complex transformations following a new strategy, as well as developing new businesses that disrupt traditional industries through business model innovation. He has delivered this type of work in US/Canada, Europe, Asia and Australia/New Zealand.

Aftab Khanna

Aftab Khanna

Manager

Aftab Khanna is a Manager with Deloitte’s Strategy and Analytics practice and has worked across the US and Australia geographies. Aftab has been closely involved in development of Deloitte’s Flexible Consumption offering in the US and has led multiple engagements across technology clients to enable them to manage the transition from legacy to as-a-service based business models. Aftab’s experience within the Flexible Consumption space spans across multiple domains such as Product and GTM strategy, Back Office transformation, Customer Experience and Customer Success.