Digital is not a destination, but a journey in Telecom!
By : Jonathon Gordon
Directing Analyst – Expert Market Insight
The Digital Service Provider or DSP is a concept that has been bandied around the Telecoms world for a long time. Some call it an evolution. Others call it a revolution. Still, others just scoff at just another Telco acronym.
For us, the transformation from a Communications Service Provider (CSP) to a DSP is very much an evolutionary fork in the road. It is not a path that all CSPs will choose to take, nor should it necessarily be so. Some CSPs may weather the storm for many years to come with their current approach to networks and subscribers. However, those that ignore the fundamental changes in the service expected from them, will eventually be swept away.
What has changed and why has it happened? The change has actually occurred in places where most CSPs were not particularly focused. It was initiated and is being led by the customers themselves. The very definition of customer experience, customer service and customer expectations have been irrevocably altered by the likes of Google, Amazon, Netflix, Alibaba, Uber and AirBnB, to name just a few.
Online experiences and the level of engagement with service providers and their customers have been transformed. Service Providers that still just count subscribers are oblivious to, or simply in denial of this seismic shift. The customer is in the driver’s seat, well-armed with almost infinite knowledge, tools and choice. Customers are not just subscribers, customers need to be served based on their personal needs with products and services customised on an individual level.
Digital is a mindset and transformation is a continuous journey
DSPs must understand that customers are now empowered and digitally savvy, often more so than operators themselves. DSPs need to adopt digital as a mindset, a cultural shift that will see every employee suffused with the understanding of how “Digital” affects their own specific role – from the CEO to the CSR, from Marketing to Engineering. Management must be committed, but rank and file must be sworn into the brotherhood. In the end, Digital is not a destination, but a journey. The digital journey is one that comprise of stages, agile cycles of improvement and execution and realisation. If DSPs need to learn anything from the online internet giants, it’s that agility is crucial at Internet speed. This is something that most operators have struggled with, but they can no longer afford to ignore it.
In the Philippines Globe and Smart understand the needs and wants of their customers even before they do. Their approach of offering Digital Lifestyle packages with free data for Navigation or Travelling or Fitness and then offering them as opt-in services to choose on a mobile app is an example of digital telco coming into play.
Customer engagement is critical
Omni-channel digital engagement is the crux of the transformation from CSP to DSP. Thanks to their own experiences, customers have changed their expectations. They demand more information at the tip of their fingers and the ability to choose the services independently without having to call customer service or stop by a service center. They want digital online interfaces and preferable on their mobile phone. Customers expect service and engagement to be on their terms; in short, personalised!
A great example of success in this area comes from the UK MVNO Giffgaff. Giffgaff is a low-cost, no-frills, Millennial-friendly Telefonica-owned MVNO that provides support exclusively through its customer community. Customers literally answer each other’s questions in online forums and get rewarded for assisting fellow customers with “payback points”, which are exchanged twice a year for cash via PayPal or account credit. Giffgaff has no customer service phone lines.
T-Mobile USA has taken a very colorful and aggressive approach to engaging with customers through its “Uncarrier campaign”. The campaign has delivered sweeping initiatives such as tearing up long-term contracts, simplifying mobile costs, embracing social media and zero-rating music and video to name a few. T-Mobile’s understanding of customer engagement and its brilliant Uncarrier execution have turned a lingering, acquisition target into the third largest mobile operator in the US and its fastest growing operator.
Mobile and web applications enhance engagement with customers and provide quick access to information and services. DSPs utilise apps to further empower savvy digital customers by providing them with a personalised, self-service tool. These tools enable access to transparent data on services, usage and bills, and the apps give customers the power to browse, purchase and often self-provision new services and products.
Analytics is the engine room
Analytics and data abound throughout telecom operators’ backend and indeed customer-facing systems. The successful DSP will know intrinsically how to collect that data, aggregate it and how to refine it into insights that can be actioned upon in real-time. DSPs leverage big data analytics to continuously expand their knowledge of and responsiveness to customers. DSPs are constantly looking to improve their service, products and engagement based on interactions with customers and on tracking their behavior.
Telefonica has embraced the digital telco revolution from the direction of Big Data analytics. They use the data they collect on their network to better service their customers, they are helping others give better services to their customers based on their data from their network. Data is being used for Personalisation, analysing data, selling data and finding insights from data.
Digital transformation goes way beyond engagement
Some people make the mistake of thinking digital transformation is just an exercise in improving customer experience. Nothing could be further from the truth. Of course, digital transformation is focused on placing the customer at the center of the DSP business model, but it does not stop there. By undertaking such a transformation, a DSP crosses a chasm that lead to a wealth of new opportunities for new services and revenues. The impact of digital is something that disrupts every facet of the telco, from sales and marketing to Networks, IT and beyond. To successfully bridge the chasm, there can be no weak links in the chain.
AT&T’s approach to IoT (Internet of Things) is a poster-child for telecoms digital transformation. AT&T recognised very early on that the IoT opportunity could be a game changer. While many operators view IoT as a revenue opportunity, mostly to sell more data and connections, AT&T went way beyond this approach to create an entire IoT ecosystem. The end result is they provide much more than simple connectivity and consequently sit much higher up in the value chain. AT&T has developed IoT-as-a service. This has enabled the company to partner directly with developers. Their platform offers developers critical servicing, including customisable schemas, real-time data schemes, triggers and notifications, and a very supportive community. By taking the digital approach to IoT, AT&T has not only opened up new business opportunities and revenues, it has created and engaged with a very loyal group of customers that did not exist before.
The enterprise Opportunity
Another potentially lucrative opportunity for DSPs is the enterprise. Some DSPs have managed to successfully use their digital approach to create new service offerings to enterprise. A great example is Deutsche Telekom in Germany that is leading their transformation by becoming the ultimate connection to the CLOUD. Cloud applications, cloud services, cloud storage, cloud security. DT have identified the transformation in IT technology and have built their strategy to connect to the cloud and offer cloud services and apps. They have expanded their role from CSP to include Cloud IT.
Another DSP leader is Telefónica’s Smart Steps service. Smart Steps provides insights based on the behavior of crowds to help companies make informed business decisions. The service was launched in October 2012 as the first product of Telefónica Dynamic Insights. Telefónica packaged its analytics and data science capabilities into a service offering to address the needs of certain enterprise verticals, such as transport. The value is in assisting enterprise to gain an actionable understanding of their customers’ journey.
The opportunity to translate a DSPs assets and capabilities into new enterprise offerings is literally staggering. However, the opportunity stresses the need to adopt the digital mindset. DSPs need to be very focused on a multi-sided business model so that they will see their internal digital systems partially opened up and sold as part of a service to enterprise customers. Data insights, infrastructure management, identity management and payment services are just some examples of DSPs’ capabilities and process that can be packaged as enterprise services. Many DSPs have also successfully developed enterprise service offerings within vertical markets such as health, transport or finance.
Telstra, the Australian incumbent, has plowed resources into the lucrative e-health opportunity. Telstra offers a range of services to connect and serve patients, healthcare workers, hospitals, pharmacies, government agencies and health funds to build a safer, more convenient way of managing health. The upshot is that it has created new revenue opportunities and a bigger, more loyal customer base.
Think beyond the horizon
Just as customers have learned from their experiences in other fields, so must DSPs. Service providers should not limit their digital focus to customer engagement. While customer experience and engagement are extremely important they are by no means the end of the digital transformation nor do they solely represent the sum-total of the lucrative opportunities that await beyond the horizon. But be warned, Digital Transformation is not a greeting card slogan or a 140-character tweet. For DSPs to derive real value from the digital evolution, they must wholeheartedly embrace digital, both within their systems and most importantly in their psyche too!
This article was originally published in Flytxt print magazine Insightz