May the force be with you – lessons service providers could learn from Star Wars

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Uri Gurevitz, Director of Market Insight & Strategy at Amdocs, looks at the the steps operators need to take in their digital transformation journey.

Service providers, like the protagonists in the Star Wars saga, are getting used to dealing with many unknowns, but they still continue their quest to overcome challenges on their way to capturing digital age opportunities. Now they are facing the next chapter in the story – Digital Transformation.

“Is that possible?” Rey asks Han Solo. “I never ask that question until after we’ve done it,” replies Solo. This is the sort of dilemma one might hear in any service provider’s boardroom across the globe, as competition hots up and businesses are under more pressure than ever to differentiate themselves through their digital offerings.

According to recent public statements, service providers who have invested in their digital services are already seeing the benefits. At the end of 2015, Telefónica Group’s Digital Services revenues stood at 3.7 billion euros – that’s 23.6% higher than a year ago. And SingTel Group’s Digital L!fe unit ended 2015 with 343 million US dollars in revenues, which is a whopping 138.8% increase from a year ago. So the answer is definitely “Yes” – it is possible!

However, service providers and Jedis should beware… there are digital players looming on the horizon who are continuously challenging the universe with new disruptive models. It’s looking more and more like OTT players will play more than just a bit-part in the global saga for telecoms dominance. For example, Google launched Project Fi, its MVNO service, last year (April 2015) and Apple is offering its Apple SIM in more than 90 countries worldwide, allowing them to compete head on with service providers over their customers. Service providers even have to compete with the success of video subscription services such as Netflix, which is now available in more than 130 countries worldwide. As Shmi Skywalker tells a young Anakin Skywalker, “You can’t stop change any more than you can stop the suns from setting”. And that’s as true for service providers as it is for the Skywalker family – part of the move to transform digitally is to understand that change in the industry is happening and the urgency to embrace it.

While the digital transformation age is definitely accelerating, some service providers are yet to change the course of their ship to reach digital galaxies. A recent IDC global survey commissioned by Amdocs revealed that this journey to digital might be a long one; 50 percent of C-level and other service-provider decision-makers predict that it will take their companies more than five years to transform. Moreover, 64% of service providers believe telecoms will be outpaced by other industries if they don’t move fast enough.

This shows that while the majority of service providers today are actively working to deploy digital technologies and clearly see the transformation as vital for improving their businesses, this is happening without a unifying top-level vision and strategy. According to Andy Hicks, research director, Telecoms and Networking, EMEA at IDC, they are also saying that they are “struggling to re-align processes and re-train staff at the same time, further delaying real business outcomes and ultimately stopping transformation in its track”.

“Do. Or do not. There is no try.” In “The Empire Strikes Back”, the always-wise Yoda encourages a young Luke Skywalker to overcome his doubts and believe in his powers. This is good advice for service providers because, despite their strong technology capabilities, 79% of them are still executing digital transformation projects as smaller stand-alone initiatives. As digital transformation has a direct impact on many areas of their business, their transformation approach instead should be more comprehensive and aligned to a broader technology roadmap or a business strategy.

“Always remember,” Qui-Gon Jinn once told a young Anakin Skywalker “Your focus determines your reality.” The digital world opens up great opportunities for service providers – however, asCEO of GE Digital William Ruh pointed out at this year’s Mobile World Congress, if you don’t embrace digitalization, you can’t compete. Service providers not only need to have the right capabilities; they need to focus on determining their business priorities.

In the Amdocs-IDC study, service providers identified ‘business agility’, ‘increase revenue from existing and new sources of revenue’ and ‘improve customer experience’ as important factors in determining their business agenda over the next 12 months. Identifying these priorities is the first step in the journey towards digital transformation.  Having the right skills to create and implement digital transformation strategies is seen as on one of the critical factors that would most help service providers to transform into digital service providers, ahead of having the necessary financial capital.

One approach that service providers are taking is to share the challenge with a partner to help with their digital transformation. In general, IT services vendors are ranked as the most valuable partners for the execution of digital transformation projects, ahead of digital consultants and start-ups. Figures from the Amdocs-IDC study indicate that in next 12 months, 41% of service providers will invest in managed services to enable solutions for new areas. This shows a move towards a more collaborative industry, where businesses team up with the partners who can provide a wide range of expertise to keep up the digital pace.

With each instalment of the saga, the Star Wars characters must “use the Force” to solve the challenges they are presented with. It is time for service provider leaders to do this too and start future-proofing their business to meet the digital age.

As the Director of Amdocs’ Market Insight & Strategy group, Uri Gurevitz is responsible for analyzing market dynamics collected both from new research and directly from service provider senior executives. Uri also has extensive consulting experience working at Accenture in New York, and as part of Amdocs Consulting division, providing solutions to service providers’ customer care and product lifecycle management challenges.