Some telcos just don’t want to change – Hrvatski Telekom

It is an interesting statement to make at a telecoms conference, but it is one which is pretty evident if you look back through the years.

Telco executives around the world will disagree with the statement made by Goran Car of Hrvatski Telekom, but we are tempted to side with him.

“Not everyone wants to change,” Car said at the 5G Core conference in Madrid during his presentation which assessed the challenges of creating a software-defined telco.

“The question you have to ask is how much you want to change.”

This is quite a broad statement to make, though it is perhaps true on two levels. Firstly, many telcos struggle through virtualisation because they bite off too much at once. And secondly, culturally, change is a very difficult process to manage and ensure the new status-quo remains in place.

The internet companies are dominating the world for a very simple reason; these are organizations which are not afraid to look at the evolving environment and create a new business which is more suited. Let’s not forget, Netflix didn’t start out as a streaming business.

Another factor which you also have to consider is the ability to change. The ones which have adapted and evolved are generally not tied to legacy systems and processes, and usually designed a business which is capable of disrupting itself.

These are elements which hold telcos back when it comes to creating a business which is fir-for-purpose in the digital economy. Very few telcos can afford to operate in a completely greenfield environment, while there are still obligations to serve customers who are still reliant on aging technology, services and products.

That said, we seem to have been talking about the evolution of the telco for years. New business models, a new approach to making money, new ways to engage the consumer and new technology to underpin the organization and networks were supposed to be solutions to facilitate digital transformation.

But how much progress is actually being made?

The cloud companies who have created so much disruption are still the envy of the world, while telcos are still talking about future-proofing the business and networks. Progress is being made, though the divide between the digital haves and have nots is still pretty notable.

Although we are discussing the cultural element of transition, Car has been focusing on the technological as well. Virtualisation is a very difficult task to undertake, and perhaps explains why there are few telcos which can genuinely describe themselves as ‘software-defined’.

One of the biggest challenges which many are likely to face is an understanding of the problem. Car pointed to virtualisation strategies and questioned whether too much is being done at once. What is the business case to cloudifying some aspects of the business? Are extra elements being bolted onto the project for the sake of it? What impact will this have on the success metrics?

Another element to consider is the sought-after benefits. Car described a ‘magic number’ at Hrvatski Telekom which is 40. If a project cannot deliver cost savings of 40% at the very minimum, it is denied. There is no point in virtualising something just so it can have a flashy sticker, it is supposed to serve a business purpose. Being selective in the drive towards being a software-defined telco is just as important as being innovative, creative and aggressive.

Being a bit more strategic with digital transformation strategies is a must, though the skeptic in us perhaps believes there are too many people who want to maintain the status quo.