Digital transformation: What’s the new ‘new’?
Digital transformation has been a key driver in the telecoms business for the last two years or so, though as with so many trends and shifts in our industry, it’s open to a number of takes and interpretations. Sean Casey, the director of Convergent Solutions at CSG International, discusses how the digital transformation journey is progressing
VanillaPlus: CSG went public in 2015 with what looked like your keynote digital proposition, Ascendon. Twelve months on, how do you see the impact and progress of digital transformation and what does the term mean to you?
Sean Casey: I guess our view hasn’t changed so much. For us, digital transformation in cable and telco business is really about two changes. The first is the transformation of the telco itself into an entity that exploits advances in IT and communications to make itself a more efficient, agile V and innovative business – becoming a digital telco or a digital cableco. This transformation is happening within the communications industry just as it’s happening within just about any business you can point to, and we can see the effect in everything from network functions virtualisation (NFV) and software defined networks (SDN) at the networks end to e-commerce and online selfservice at the customer interface – exploiting digital technology to become smarter, more agile and more cost-effective.
Second is the move – the diversification, really – into digital services that run alongside traditional network services, in some cases replacing network services, over the top of the fast communications links that communications service providers (CSPs) provide. An obvious but very important example is the provision of video services and streamed TV alongside voice, messaging and broadband, but we’re seeing many of our customers breaking into all kinds of other areas, from mobile ticketing to in-car services to home security and an awful lot more.
VP: Is that so different from the digital transformation that we see other businesses having to grapple with?
SC: I guess a big challenge for many CSPs is that they have to deal with both these kinds of changes at once. For many industries, digitalisation offers a smarter way of selling and delivering relatively stable and familiar services – books, say, or airline seats, or electric power. CSPs are having to revamp how they operate to compete with digitally native competitors, extend their portfolios into new digital propositions and convert existing services – including voice and messaging – to digital alternatives such as VoLTE and rich communication services (RCS). It’s a pretty tough challenge, not least because legacy networks and services will need to run in parallel and often in conjunction with new, digital services for the foreseeable future.
VP: So what are you seeing emerge as common strategies for CSPs as they engage with this transformation?
SC: Whether through consciously adopted strategy or just because it’s a natural way for things to fall out, we’re seeing a lot of CSPs adopt a dual business strategy which allows them to sustain and defend margins in their traditional business – which we shouldn’t forget will be with us for a number of years – while opening up more innovative propositions over their new digital networks.
Of course they don’t want these to be completely separate businesses – the customer base and addressable market for communications and digital services is broadly similar, and CSPs want their customers for any service to get an experience that is as consistent, smart and efficient as possible, and to feel that they are dealing with a single, advanced organisation. So the customer interface needs to be common across all services. Within the legacy and digital businesses, however, priorities are likely to differ, with cost and efficiency most important on the legacy side, to sustain margins as long as possible, and agility being more important on the digital side to support market responsiveness and get new services to market as fast as possible.
VP: And are they able to pursue these strategies with their existing IT and systems?
SC: That varies, depending in very large part on the maturity of the service provider and its business support systems. For many, their systems have been heavily adapted over the years to deal with new services and demands, and the push into new digital services and more particularly into the kinds of new business models that are emerging around the nascent IoT is a step too far. So we see many CSPs evaluating their future IT strategy with some urgency – to help them shorten time to market, to deal more efficiently with partners, to interact more effectively with customers and so on. These requirements are now pretty well understood.
VP: I guess you’ve needed to adjust your approach too, as we’ve started to develop a better understanding of just how CSPs are transforming?
SC: We have, although in fairness the size and distribution of our customer base means that we’ve had plenty of warning. The Ascendon platform that you mentioned earlier is part of that response – it’s a digital commerce platform that recognises the need for new in developing and rolling out digital services, but also in meeting changing customer expectations – the customer for today’s digital content and services is very different from the customer for 1996’s mobile or 2006’s smartphone, but some systems go back that far. Few CSPs want to wholesale rip-and-replace those legacy systems though, so Ascendon is designed as an accessible, quickly deployed cloud proposition to overlay legacy systems as well as providing the flexibility needed to support new offerings.
VP: So smarter software is still the key?
SC: Actually it’s more than that – software does need to be more flexible to support greater agility in uncertain and evolving markets, and to compete effectively with digital providers that are unencumbered by legacy and are typically offering much simpler propositions. But digital transformation includes a measure of business transformation too, and we see a lot of CSPs thinking hard about their underlying business model, driven by the need to cut significant cost out of their legacy business and significant risk out of their future ventures. Both of these concerns lead in the direction of managed services and here we’ve been fortunate in being able to bring to bear our many years’ experience of billing and providing customer care services for large cable operators in the US and CSPs elsewhere.