Communications service providers (CSPs) are increasingly engaging in digital transformation initiatives and companies across the business landscape transforming for the digital era. This means new services, new business models and new technological platforms. It’s a brave, new world but, crucially, one that offers CSPs the opportunity to transform themselves from providers of commoditised connectivity into high value enablers of new industries, societies and lifestyles. Here Ben Zhou, the CEO International of ZTEsoft, tells George Malim, the managing editor of VanillaPlus, how the company is working to help CSPs in their digital transformations
George Malim: What do you see as CSPs’ key role in digital transformation? Is their own digital transformation playing a leading role in wider digital transformation?
Ben Zhou: Today’s world of pervasive computing and communications has opened up a new landscape for human innovation and value creation in a manner that was never possible before. Together with other powerful technologies, these have defined a rich and global environment formed from the interconnection and interoperability of people, organisations, computers, networks and things which now comprises the digital economy.
Digital transformation is essential for any non-native digital players to survive in the digital economy. Whether this transformation is achieved or not, the disruption to or even removal of those players is just a matter of time. Those that manage to develop sustainable value and innovation in the digital economy will be successful and those that don’t will swiftly be replaced by others that can.
Succeeding in digital economy is about four key areas of value: enabling systematic innovation, providing outstanding experience, delivering the sharing economy and using the power of the ecosystem for value creation. Native digital players’ business models and technologies address these categories for massive value creation. However, the challenge for the telecoms industry is to re-think its role and value proposition around the very same categories. To do this, they need to adopt the prevailing platformbased business models for service creation and delivery, adapt their business processes and offerings accordingly and build their business and operational enablement platforms using cloud native architectures, real-time analytics and artificial intelligence.
Communications service providers (CSPs) managing to achieve this transformation will have a fundamental role in the development of the digital economy but also in enabling the digital transformation of business and industrial players. Communications, interconnection and interoperability play an essential role for the development of the digital economy. In addition, the transformation of complete segments of industrial and professional activities into the digital arena, requires end-to-end service level agreements (SLAs) encapsulating advanced connectivity services and applications in high value digital services with specific levels of security, reliability and scalability that are suitable for the support of professional and mission critical business processes.
GM: What do you see as the main opportunities for CSPs in digital transformation? Will they be able to harness digital capabilities to transform their businesses?
BZ: Digital transformation for the telecoms industry is not an optional activity and it is happening now. The urgency of this transformation can be assessed using three reference levels, which are: the current level of suffered disruption, the potential value of the sector and the risk of future disruption. We see that digital transformation is a very urgent matter for the telecoms industry as very significant value has been shifted from CSPs to over-the-top (OTT) providers, because of the high value potential of the Internet of Things/Internet of Everything (IoT/IoE) opportunity for CSPs which is valued in billions of dollars. Added to this is the fierce competition to get most of the value from the IoT/IoE opportunity from different players.
The main strengths CSPs have for them to harness the IoT/IoE opportunity, re-engage with growth and have a more relevant role in the digital ecosystem are: their local implantation, including service delivery licences and air spectrum ownership, as well as their workforce and local assets supporting business and operations; their capability to deliver advanced network services and high value digital services; and the experience delivering these services under rigorous SLAs assuring the proper delivery of services from end-to-end including the connectivity, applications and even the management of terminals.
The most important element for CSPs to succeed in their digital transformations is to define precisely their target role and value proposition around the key areas of value and enabled by their own specific strengths. Once this part is achieved the transformation strategies, plans and governance procedures should assure the development and adoption of the different required digital capabilities, but most importantly to operate the organisation and mindset transformation that is needed to allow the implementation of new business and operational models.
Transformation of complex organisations such as CSPs is always a challenging process, but we have learned that if the organisation is aligned and the process is driven by business and in a controlled manner there are chances to succeed. On the contrary, organisations that have not yet defined their own vision of digital transformation are late movers and risk strong disruption for which they are not prepared. These organisations have limited options and time to transform because they have lost first-mover advantage, increasing their risk of failure.
GM: Internet of Things is one opportunity that CSPs can contribute to. What role do you see them having here?
BZ: With its huge economic potential, we know that IoT/IoE is the future of the industry. We also know that the IoT/IoE will definitely develop through platform-based business models. The IoT ecosystem will not be a fixed market place, but rather it will have exponential capabilities to expand demand and shift the market place value through innovation powered by the ecosystem itself.
IoT and notably Industrial IoT (IIoT) represents a clear opportunity for the CSPs to recover a more relevant place in the digital ecosystem, because to reach its full potential IoT needs the kind of services and capabilities that CSPs are good at delivering. These include high value digital services governed by end-to-end SLAs encompassing network services, applications and even the management of the terminals and devices.
As part of digital transformation CSPs have the opportunity to transform their customer bases into active communities of consumers and producers innovating and creating value by using high value services as well as using their wealth of information and connectivity to create the valuable integration and interoperability opportunities required for the development of the IoT business.
The telecoms platform should be used by CSPs to open their networks and capabilities and to deliver high value digital services allowing them to develop their own ecosystems of IoT consumers and producers around service categories including connectivity, applications monetisation and operational support.
GM: Why should CSPs be seen as more than providers of connectivity services both in IoT and the digital ecosystem?
BZ: The innovation capacities and the power of platform-based business models have resulted in massive creation of value for the internet champions and a very significant value shift from CSPs to OTTs as well as the commoditisation of connectivity services.
On the other hand, the success of the OTTs and the massive network utilisation and expectations of consumer and business markets of digital services and content, creates big pressure on CSPs. They’re required to provide faster and more powerful network services while reducing their share of the monetisation of the created digital value while their revenues shrink due to fierce price competition. The current imbalance in this value distribution between OTTs and CSPs is not sustainable in the long run and will be addressed either by the digital transformation of CSPs or by their replacement – total or partial – by other digital players.
The issue is not about being perceived as a connectivity services provider or as a provider of sophisticated digital services, but rather one of how to be able to compete and to create massive value in the digital ecosystem. The answer for CSPs is digital transformation allowing them to deliver their services using the same business models and underlying technologies but also constructing a differentiated value proposition around the four key value areas and according to their strategic vision and strengths.
Being a connectivity service provider delivering services using platform-based business models and optimising monetisation and resource utilisation with fully-automated and scalable processes could be a valid and sustainable option in certain contexts, but it could imply a change in the organisation and a downsizing in operations that may not be compelling for all CSPs. It is because of this that it is important to give the right priority to the digital transformation process as late movers may not have many options to transform as first-movers in digital economy have the advantage to consolidate their market presence.
GM: What attributes aside from connectivity do CSPs bring to these new markets?
BZ: IoT, IoE and the digital economy in general require not only connectivity but also high value digital services for their full development. These need to be orchestrated across the dimensions of applications, monetisation and operational capabilities in a flexible and scalable manner which are delivered according to an end-to-end SLA.
High value services include categories such as network services, cloud services, FAB services, operational support and readiness services (OS&R), application enablement and content. The CSP platform should enable the integration and orchestration of those services coming from different sources and supporting different technologies. On top that, the platform should also allow CSPs and the market in general to get the most of the new network technologies including software defined networks (SDN) and network functions virtualisation (NFV), 5G and even narrowband IoT (NB-IoT). Enabling the delivery and management of the new elastic networks features, including options for bandwidth latency, scalability and management of devices, has the potential to develop innovative IoT/IoE scenarios for industrial producers.
GM: How does ZTEsoft help its CSP customers maximise their opportunities to harness the power of IoT and to realize their transformations?
BZ: ZTEsoft provides the CSP market with the software platform and components to allow CSPs to implement their own platform and to enable their own business vision and digital value proposition.
In terms of business and operational transformation, ZTEsoft has moved from a notion of support to a notion of enablement. Rather than stovepiped passive support systems, ZSmart 9 implements Business and Operational Enablement Systems (BOES ) to assure the successful implementation of on-demand business models, supporting the proactive and intelligent orchestration of network and IT functions, making operations elastic and automated and enabling service delivery and value creation in an agile and open manner. The BOES also extends the operations and business enablement functions to propagate into the digital ecosystem and to use the power of the ecosystems for innovation and value creation.
ZSmart BOES plays a key role enabling platform and hybrid business models and the orchestration and monetisation of high value services composed from different sources and supporting different technologies.
On top of that, the ZSmart 9 Cloud native architecture enables a fail-fast innovation approach with continuous integration, flexible and cost effective operations.
The ZTEsoft platform also brings value based on realtime analytics across all executed transactions including IT applications and network functions, enabling intelligent operations. ZSmart 9 allows CSPs to develop their own digital ecosystems around the aggregation and orchestration of their own services, capabilities and strengths together with services and capacities from other players in the ecosystem. It also allows CSPs value creation and monetisation from the integration of other external ecosystems.
In a nutshell ZTEsoft provides CSPs with the agility and flexibility required to compete in the digital economy, assuring the consistency and alignment between business and operational functions and enabling the service delivery and monetisation of high value services to get the most from the new network technologies.
GM: What is your vision for CSPs in five years’ time?
BZ: In five years most of the CSPs in developed and massive markets will be cloud players, meaning that CSPs will provide different types of digital services including raw connectivity, communication and internet services for residential markets but also high value services and applications for the IoT and IoE market. Those services will be provided over a combination of hybrid networks – both physical and virtual – and business models including product- and platform-based business models.
The specific blend of offered services and the integration model with digital ecosystems, will depend on the context of the operations, this context being defined by the territory, the regulatory environment, the digital development index and the strategic choices of the specific CSP, among others.
In the next five years the IoT/IoE digital ecosystems will be more consolidated and will include champions of IIoT services and major CSPs enabling global offerings as well as providing specific cloud services including applications, services brokering, security, infrastructure – including virtualised network infrastructure, artificial intelligence (AI) and analytics, among others. Local operations within specific territories will be integrated to the global ecosystems either through global operators or by the integration of local CSPs using platform-based business models and standardised interoperability protocols. We believe CSPs have a large, profitable and innovative opportunity to redefine themselves for the digital economy but their transformation must start now if they are to engage to the maximum.
