A new approach to communication service provider innovation : The tenacity of silos
It’s a fact that many CSPs are still struggling to define and deliver their digital strategy. As a result of this, many are struggling to stay afloat and revenues are falling, with average revenue per user in the industry continuing to decline year-on-year. In 2006, it was $32 (€25.82) per user in Western Europe; in 2016 it was just $15 (€12.10) (-6% compounded). This downward trend is symptomatic of the predominance of traditional silo-based organisational models within the industry, which in turn hinder the possibility of innovation, says Gabriele Di Piazza, VP Products & Solutions, Telco NFV, VMware.
One step in any strategy to reverse this downward trend is for CTOs and CEOs to start thinking about the inter-dependency between the business strategy. They also need to refresh their approach to innovation, bringing about a complete overhaul of their current strategy.
Unfortunately, this will not happen until CSPs recognise the need to let go of their long-established silos. Many are not only failing to develop a coherent digital strategy, but also struggling to address the crux of their struggle – namely the enduring strength of many long-established silos.
Organisations that still function with silos face difficulty creating and maintaining a clear innovation strategy because digital transformation initiatives are largely still set and measured as standalone projects with no clear vision from senior leadership. According to a 2016 survey, 89% of respondents agreed that a Chief Digital Officer was important to lead and drive their digital transformation, but only 28% said they had one in place.
CSPs must concentrate on improving this statistic. CDOs can be instrumental in working with the CTO to drive the digital transformation agenda throughout the business, collaborating to not only encourage technological innovation, but align the business to a customer-centric strategy.
To move forward, businesses need to break the hold silos have on them, to move away from silos of technology, people, and processes towards dynamic, agile and flexible operations. Creating a more agile organisation will help Telcos have a global vision of where their innovation strategy is going and how it is affecting the business as a whole, not just parts of it. It will enable better communication within the organisation, ultimately bringing about more transparency and more effective management from senior leadership.
For those that still need convincing, I’d like to cite the example of ‘Asynchronous transfer mode’ (ATM) and suggest that its development was perhaps indicative of “old thinking”. ATM was touted as a high speed, efficient solution for connectivity but was rapidly overtaken in most applications. Mobile network RAN backhaul – along with most operator infrastructure – has moved to a packet switch ‘ethernet’ transport. This was one R&D step forward that should instead have been a leap somewhere else.
Moving away from long-established silos will not be an easy process for CSPs, but one that is necessary if they want to reverse falling revenues and be at the forefront of implementing innovative technologies.
The author of this blog is Gabriele Di Piazza, VP Products & Solutions, Telco NFV, VMware