In order to avert IT projects that end in frustration or failure, CEOs need to embrace a holistic digital strategy, according to the TM Forum's Robert Walker.
A holistic digital transformation strategy becomes actionable with industry benchmarks that individual carriers can use to set role-specific goals to progress from one level of maturity to another. Walker, senior director of customer centricity and analytics, talks about the digital maturity models for digital transformations in this Telco Transformation Q&A.
On a related note, Walker's TM Forum colleague, Barry Graham, recently spoke to Telco Transformation about blueprints for telco's digital transformations. (See TM Forum's Graham Discusses Blueprints for Digital Telcos.)
Telco Transformation: The absence of an industry roadmap is perceived to be a major barrier to digital transformation. TM Forum is trying to overcome it with its digital maturity model (DMM). What are the advantages of using the DMM in order to achieve rapid digital transformation?
Robert Walker: The TM Forum DMM was crowdsourced by Deloitte, Detecon, Huawei, Orange and Tata Consultancy Services to form a best-of-breed, robust industry standard that organizations could use as a benchmark. Some of the members of TM Forum, Deloitte -- such as Ericsson and Tata Communications -- have their own digital maturity models but they still seek an industry benchmark from us.
Digital maturity models of individual companies are typically based on the subjective opinions expressed in response to 20 to 30 questions. Our model categorizes the questionnaire responses into ranks indicative of precisely defined levels of digital maturity.
The TM Forum models are actionable. Telcos know exactly what they need to do to move from one level of maturity to a higher one. They tailor programs that help to achieve progress in digital transformation for individual functional roles. A program delivery director leading the transformation, for example, receives big picture "user story" statements that the design function utilizes to deliver the required systems and processes for transformation.
The maturity model describes what "good" looks like across organizational activities. The more widely-used models can have a limited scope, for example, to IT or operations. TM Forum’s holistic model for transformation includes customers, strategy and culture. In addition, it is a browser-based tool that is able to survey a large team to determine the current baseline as well as the intended future target much faster than in standard consulting approaches.
We are currently in the pilot stage -- with Orange, British Telecom and Deloitte -- using TM Forum’s digital maturity model and we have already sold some early adopter licenses and training programs. We are learning that telcos are very strong in IT operations, but they tend to be weak in the strategic and the cultural elements of a holistic change program. The culture of IT operations in telcos is not effective for digital transformation across an entire entity.
TT: How do these user stories and the design functions help define the overall strategy?
RW: The organizations’ own design function can and should have their own innovation function and or program -- new technology reach out, university liaison and incubators -- within the constraints of investment affordability. Moreover, it should be, in the main, cognizant and associated with overall strategy. There is a small risk that real innovation is lost in conforming to a larger strategy. Often, however, a great many of the individual activities and resources expended on them add to significant costs without gaining any business advantage. I recall an example in a major UK telco where £125 million worth of projects were not in line with an articulated strategy. Unsurprisingly, they did not appear to have any commercial value in terms of actual or expected outputs.
TT: According to the TM Forum’s recent Digital Transformation Tracker Report , 60% of CSP respondents reported that they are actively implementing digital programs despite the fact that a large percentage of them fail. Have there been any lessons learned that would suggest the outcomes will be better in the future?
RW: Digital transformation, as described below, drives a much-improved customer experience often in shorter cycle times and at reduced cost. ‘Do nothing' is not a choice. To survive, the telcos must implement digital transformation processes. The lesson learned is to do this holistically; not piecemeal. IT initiatives alone are not enough, strategy and culture play a big part.
The age profiles of many traditional incumbent operators are an obstacle to embracing the new digital behaviors and innovative business processes. Operators need to consider how to educate and accelerate the learning of their employees to keep pace with the change in the industry and to advance their organizations. This can be challenging for older organizations, but easier for new ones who may have created their platform in the digital landscape already with minimal legacy of non-digital processes and systems.
TT: Are the current digital programs incorporating strategy and culture aspects to improve outcomes? Do you have some examples?
RW: We are seeing a better recognition of the importance of strategy and culture in conversations but there is a ways to go. I came across a good example last week where one operator, a member of TM Forum, who built a digital platform but the product and services managers were stalling the retirement of the legacy software despite the prospect of savings in hundreds of millions of pounds. This is so typical of IT led projects which end in frustration. With 40% digital transformation efforts commanded by CEOs (according to the Digital Transformation Tracker Report), this should get better and more reliant on a broader vision with a collective momentum.
TT: Customer experience, agility and operational efficiencies are strong drivers of digital transformation while product and service innovation come below them. How do communications service providers monetize the former when much of the profit is in innovation?
RW: Monetizing customer service can be as much about expanding new revenues as about cost reduction. Customers expect and demand greater levels of service than ever before. In the world of Amazon Prime customers can have their physical product need satisfied by the next day or download an app instantly.
Driving lead-to-cash and trouble-to-repair cycle times down, reducing the number of recalls of products and early failures and faults in the product life cycle can increase the returns from existing investments and from customer acquisitions. The root cause analysis of costs incurred, as a result of inefficient business processes, is readily achieved with digitalization. This is a strategic differentiator and critical to keeping market share.
Many digital transformation programs have a business case, but their project teams do not pursue them long enough to realize the full financial benefits. It is worthwhile having an embedded team -- committed to reducing costs of customer experience and operations -- deployed long enough to exhaust the full potential for cost reduction.
— Kishore Jethanandani, Contributing Writer, Telco Transformation