A Holistic Approach to Digital Transformation

Release Date:2017-05-16  Author:Liu Yang  Click:

 

Nik Willetts Deputy CEO at TM Forum

 

 

Digital transformation is becoming a hot topic today for a wide range of industries. TM Forum is the global industry association for digital business. In a recent interview with ZTE Technologies, Nik Willetts, Deputy CEO at TM Forum, talked about key factors for a successful transformation and trends in digital services and business models. He emphasized that digital transformation needs a holistic approach. It is not only about technologies but also about business models.

 

What is the most important mission of TM Forum now? Has it evolved over time?

 

Our mission has evolved. We have been in the business for 28 years. At that time, we always focused on driving collaboration in the industry. But our mission today is to help the telecommunications industry transform itself as quickly as possible. We think there’s been a radical digital business transformation. What that means is to transform every aspect of the digital business that exists today. We think about the operators’ operations, culture, talents, the way that the operators innovate, the underlying technology and how that all needs to evolve. Just evolving any one of those is not enough to see the growth opportunities of the digital world. So our mission is to help companies transform to see those opportunities existing in the digital business.

 

How do you drive collaboration within the organization?

 

We have proven methods of driving collaboration. That starts with indentifying the problems we are going to solve. We do that by working very closely with leading operators to understand their challenges and problems. We take those into sprints where we work with collaborative teams made up of companies like ZTE, trying to solve those problems. We have a very successful program called Catalyst Program, which is a rapid proof-of-concept program. That program takes those ideas, and says not just how we understand the problems better but in three months how we stand up a real working proof-of-concept. We run 15 such projects a year with hundreds of companies involved. So we’ve got a very effective, efficient methodology. 

 

What have been TM Forum’s latest achievements?

 

One of the biggest achievements in the last few months is the success of our Open API program. This program is designed to set out an industry agree on open API for digital service management. We launched that about a year ago. We now have 33 open APIs, which are now being used by many of the world’s largest operators. We have a broad range of vendors supporting that program as well. The goal of that activity is to provide a standard suit of APIs that the whole industry can use. This will ease the speed of building initial services, reduce the cost of creating those new services and make operators play a bigger role in the digital ecosystem. The other big success for us in the last few months is the focus on digital transformation. We are approaching an industry agree on digital maturity model, which will launch this year. Of course, our Catalyst Program, one of our most successful programs, doubled in size last year. It’s growing very aggressively this year and that’s the rapid proof-of-concept program that allows us to very quickly take things from problems to solutions.

 

What is the current status of operator digital transformation?

 

If we compare the pace which the telecom industry is transforming with the speed of internet companies like Google, Alibaba or Amazon, telecom operators are not transforming quickly enough. At the same time, there is a huge range of opportunities in the Internet of Things and in new types of business models. But they need to go through a transformation of their business, not their technology.

 

The industry is not able to grow as it should be and is not able to take its right role in the broad digital ecosystem because the business is unable to innovate quickly enough or get the agility they need to deliver the services quickly. That is the problem for the operators. It’s also been the problem for the supply chain—unable to move at the pace of digital.

 

What kind of company is in a better position to transform itself?

 

All companies are in a position where they can transform. But you need a number of the right ingredients. You need a very strong leadership. You need a management team that can execute on that transformation. You need to recognize that transformation requires changing of the culture, bringing new talents, re-training people and changing the way the company actually thinks and operates. It is like moving away from a culture where failure is not acceptable to an understanding that failing fast can give you a learning that you can then take to a better outcome. Those kinds of culture changes are very big changes. 

 

You can look across many industries and see companies who are taking brave moves in that transformation. Microsoft takes the brave decision to switch software licensing. It is painful financially in the short term but is the right bet for the long term. Nike, the shoe company, takes a big bet on the digital and is building the digital services. GE has embraced an outcome-based approach to sell products and services. This is a big change for a massive engineering company. None of these transformations have been easy. It’s not a case that telcos will find it simple. We believe that the industry needs to come together now to work together to see some opportunities and to understand that they need to transform themselves.

 

What are the key factors to a successful digital transformation?

 

You’ve got to think about the transformation holistically and all the different layers involved. At the top is the strategic layer. You look at how you innovate—moving from the innovation being something you do in total privacy to something you do in a more open sense. You understand that you are switching from a strategic approach, which used to be 3-5 year or even longer strategic plan horizon to an adaptive strategy where you are constantly changing.

 

The next layer down is the customer-centric culture, including understanding the customers, listening to the customers, looking how you create digital channels to engage with customers differently and allowing the customers to self-serve.

Then we can think about operations, the way that the company operates and builds new services and how it orchestrates its people. It is one of the most crucial pieces that need to be changed because we are going from a telecom operator that traditionally delivered small services to a lot of people to the one that delivers much more dynamic and flexible services that need to be adjusted for different customers.

 

The fourth area would be the people—the culture and talents of the organization. This is one of the most challenging questions. The technology transformation we can follow through with logic but people are not always logical and you have to think about how you transform the culture of the business. It is very difficult to do. 

 

Underpinning all of that is the technology layer. We are looking at the transformation of the technology, different approaches to building and looking after the technology, maybe leasing it rather than buying it.

 

These are the five areas key to a successful digital transformation. What drives all that is having the leadership and buying at the top level to go through the transformation and understanding that it’s not going to be easy and it takes time but we have to get on with that journey now as an industry.

 

Could you share with us some recent success cases?

 

 

Yes. We published many case studies recently. We can look at Telefonica’s transformation of its BSS platform in South America, where it used TM Forum’s frameworx standards, and a big transformation of KPN in Europe. KPNs transformation is a really impressive transfomation across many aspects of the digital business. How they transformed? Within that, we can see they are using a lot of strategies from the forum. We can look at companies like Orange and Vodafone who are using open APIs very successfully to transform their business and also leveraging the catalyst program to drive better outcomes. We have many success case studies with operators all around the world. What matters to us is that we can see the way that is exhilarating their business and the way they innovate and help them achieve tangible results.

 

How important is network transformation to the operator digital transformation? How to unlock the potential of technologies like NFV/SDN?

 

I think the network remains the lifeblood of the telecom operators. It’s the enabling platform for them to enable a digital world. It’s something with which they can make a lot of new services and products. I think the transformation of the network to a more elastic network is crucial. It’s what the digital world needs to thrive. A lot of enterprise-grade digital services like automotive, health and industrial applications need a very different quality of service around the network and they expect the network to adjust flexibly. So the elastic network is very important.

 

But the only way you can make money out of that is if you also transform your business model and transform your ability to innovate and create new services and products. For example, you might look at charging for an outcome rather than just a service. So if you deliver a movie on somebody’s mobile handset, rather than charging for the bandwidth used, you charge a fixed fee for having a good quality experience on the handset. So much might be held true for the health application, where somebody may be receiving their health care in their home. You need a very good quality of service, like security, privacy and a lot of other capabilities, and you might charge on the basis of that service for the right outcome rather than just use per megabyte, which is done in the industry traditionally.

 

Therefore, rethinking the business models, rethinking how you innovate and working atop network is just as important as technology transformation.

 

What business models are you focusing on now?

 

The biggest trend is what we call platform-based business models. This is a quite well-documented trend at this point. If we look at some big internet giants like Alibaba, Amazon and Facebook, they’ve all created a platform-based business model. They create an environment where customers come for content or service of some kind, and other people deliver that service. Alibaba is the world’s biggest retailer but it doesn’t own any stock of their own. They purely provide a platform for others yet they are profiting from that. If we think of that in the telco context, the telcos try to control all that. They want to be the retailer, who bought the goods and did everything. So the platform-based business model says, “By growing a bigger platform ecosystem, I’ll have a bigger role and make more money.” The platform-based business model is the major trend shifting today in response to the changing economics. 

 

What can we expect to see in digital transformation in the next few years?

 

We’ll see a big exhilarating transformation in the industry. There would be a big focus on the role of operations software layer. We’ll see more and more operators realizing they are shifting from being a telco to a software business (IT and software at the heart of what they are doing) and recognizing that’s more than just about the network technologies but also about the management and OSS/BSS platform. In parallel with that, we’ll also see a lot of creativity from the industry. This industry is incredibly creative. It has a rich history of technological innovation. That’s going to switch more to business innovation. I think we’ll see a few companies who will lead the pack on that and others will follow.

 

What are the promising digital services to watch for operators?

 

There’s a whole range. There’s a lot of focus right now on the B2C market and on things like virtual reality (VR) and augmented reality (AR). There are a lot of other services that can be attached to that, and we see service providers having a lot of success where they are integrating content services. They are either procuring content or working with companies like Netflix to deliver content. In the B2C space, there is some growth that is just about securing the existing customers and locking them in for longer. There is a range of opportunities around improving customer experience, which can also be monetized. That’s all relatively insignificant growth.

 

The bigger growth we see is in the enterprise space on applications like Internet of Things and things like specialized solutions for certain industries. We look at industrial manufacturing, health care or energy provision. Those industries all need a large amount of technologies and network expertise but also scaling of management technologies and operational capabilities to succeed with those. As an industry, there is a lot of work to do. But there is trillions of dollars potential for operators to seize.

 

What is the future direction of TM Forum?

 

Our direction is all around industrial collaboration. We believe that growth in the future requires a greater level of true collaboration and partnership, not just the traditional value chain where you have a supplier but a true partnership where you are creating business together with certain companies. The forum has a rich history of enabling that collaboration and we will take that much further, enabling the growth of the new ecosystem and new services. That would be a big part that is helping the industry to transform.

 

Tips:Since ZTE joined TM Forum in 2001, it has adhered to the standards and specifications of TM Forum with its product attaining the certifications of TMF Frameworx 10.0 and Frameworx 12.0, becoming the first BSS/OSS product to acquire these international certifications. Due to its continued efforts, ZTE has been awarded the TM Forum Open Digital Award in 2014 and the TM Forum President’s Award in 2015.

 

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