Communication services providers have assets that they can leverage to succeed in a world of digital transformation if they are able to collaborate in dynamic ecosystems, according to TM Forum's Craig Bachmann.
In this Telco Transformation Q&A, Bachmann, senior director and advisor of Internet of Everything, digital business and applied innovation program, TM Forum talks about the lessons learned from early experiments with connected digital services in regards to business strategies and tactics for digital transformations. This Q&A completes a trifecta of digital transformation-related stories with the TM Forum. (See TM Forum's Walker on Making Digital Strategies Successful and TM Forum's Graham Discusses Blueprints for Digital Telcos.)
The TM Forum is playing a catalytic role in the acceleration of digital transformations by creating open digital ecosystems with the core assets of its Frameworx, proof-of-concept Catalyst projects, open APIs, modeling tools, and blueprints for digital business scenarios. The business scenarios help define the frame of reference for digital services development.
Telco Transformation: How do you decide which business scenarios to prioritize?
Craig Bachmann: Our members initiate and drive our work. We collectively prioritize the business scenarios that are very much aligned with the real opportunities CSPs are exploring today. Our work involves understanding what it will take for CSPs to succeed in this emerging digital world. CSPs have assets they can leverage to build new offers as BT did with its cloud-of-cloud service (Personalized Compute Management System), which is a platform that integrates multiple cloud services. It proved to be useful for enabling ecosystems as demonstrated in the Milton Keynes smart city project.
In the context of digital transformation, there is no "end state" or a killer app. The opportunities appear constantly as the digital markets evolve through innovations in business models, technology, and connecting ecosystems. There are hundreds and thousands of long-tail use cases that surface in ways that no one expects.
The TM Forum has evolved into an innovation-focused organization as we realized the need to support our members' requirements to explore, innovate and execute simultaneously. We explore emerging trends, "connect the dots" to innovate and execute to solve specific problems and collaboratively deliver new breakthroughs -- such as open APIs -- to achieve the agility that is critical to building value in the connected world.
TT: Can you give us an example of how the TM Forum is creating these ecosystems across different verticals?
CB: As an example of the constant innovation, many of the use cases are a "mash-ups" of several verticals. The connected car, for example, is a mix of electronics, content and artificial intelligence that can also drive new innovations in health care and insurance. They are part of dynamic ecosystems such as traffic management and smart cities.
While this seems to be futuristic and overwhelming at times, it is happening. The teams are focused on simplification, automation and intelligence as the teams increasingly think in terms of common reusable components that are reassembled for new business models.
For our Catalyst projects, we make progress incrementally as we learn more about the use cases, the monetization possibilities, management challenges, and trust issues. We started working on smart cities five years back and evolved as more information was brought to bear on the initial concepts.
We believe that digital transformation is best achieved in a collaborative environment. It is incredibly risky and expensive for carriers to build products on their own in a fluid environment. When they collaborate, they benefit from the accrued investments in new ideas made by partners, which can be tested before more capital is committed. At TM Forum, we have two cycles each year, each of them with a portfolio of projects and companies can decide to participate as they see fit.
TT: What are the business scenarios currently under consideration and the challenges of monetization, management and trust?
CB: The evolving Internet of Everything preoccupies us these days. The connected world is more complex, by an order of magnitude, with heterogeneity of business models and methods for managing, monetizing and trust. New digital services benefit from a host of partnerships and real-time interaction with customers whether businesses or retail customers. There is a need to rethink monetization, management and trust in the world of digital services because digital transformation is coming to fruition through ecosystems.
The key challenge is how do you manage risk and reward in an ecosystem model of business? A connected car, for example, has an autonomous car piece served by one vendor, and analytics from another vendor. Each of them has likely introduced a distinct business model, for the first time, which needs to be in harmony with its ecosystem.
TT: How do you ensure that the concepts for ecosystem management have a proven practical value?
CB: We conduct proof-of-concepts called “Catalyst projects," and we have done 21 of them for the Internet of Everything across 13 vertical ecosystems or industry scenarios. That has helped us to think through the complexity of interactions in individual ecosystems, whether connected health, connected cars or others, where several hundred partners interact. We learned how to manage ecosystems from a monetization, management, and trust standpoint.
Now we can model business-to-business to anything; customer, government or machine for example. From there, we have created an automated approach for modeling ecosystems. We call that application CurateFx, which helps us to model an ecosystem to determine the monetization and management agreements as well as the open APIs that enable the expected value and performance.
TT: How do you ensure that partners are working towards a common purpose in a dynamic digital ecosystem?
CB: TM Forum has a very long history of specing out best practices for business processes including revenue management. We have come to realize that we need to understand service level agreements (SLA) better. In an ecosystem, how do you ensure that each partner delivers on its part of the service? This drives a new vision of digital ecosystems and business assurance.
This also drives new ideas for leveraging blockchains for smart contracts where each partner has a SLA contract consistent with the overall goal of the ecology. The distributed ledger helps to track all the service level of agreements with partners for each of the microservices. The level of maturity can vary, and each service provider can adapt it to its situation. Data management plays a role in successful execution.
TT: How does the management of trust and security change in an ecosystem environment?
CB: Reputation and cybersecurity are intertwined in an ecosystem environment. Lax security on the premises of one partner has a ripple effect on the entire ecosystem and other partners.
TT: Similarly, do you see strains between groups of partners in the larger ecology on issues of value and monetization?
CB: Analytics and data contribute significantly to the premiums over the sum of the value in a ecosystem-driven digital service as individual organizations and the "end customer" participate. Ecosystems have large and small companies participating with the latter increasingly responsible for some of the most valuable components. Ecosystem participants have to negotiate value in a new and unfamiliar ways.
TT: Are there uncharted territories in the management of ecosystems?
CB: In the past, an alpha brand was dominant and had the ability to steer a traditional linear supply chain. In the digital world, even a solution like a connected elevator has hundreds of partners. No one company has complete authority over the ecosystem in terms of monetization, management, and trust. There are a few "digital natives" that have an overarching brand but as time goes on even the "digital natives" are being challenged unexpectedly by other companies and new ecosystems.
CSPs have a critical role in the connected world and many opportunities to explore, innovate, and execute as their digital transformation continues.
— Kishore Jethanandani, Contributing Writer, Telco Transformation