How Telcos Stay Relevant In A Digital Revolution

Judy Cubiss and Ginger Shimp

Digital trends are doing more than taking over the telco industry. They are disruptive, changing the way telcos must do business. Companies such as Netflix, WhatsApp, and even Google have completely transformed the customer experience—and customer expectations—through speed and efficiency.

Enter the realm of hyperconnectivity.

Recently, Brian Fanzo and Daniel Newman, co-hosts of the popular S.M.A.C. Talk (social, mobile, analytics, cloud) technology podcast, caught up with Stephan Gatien, global head telecommunications industry business unit SAP, on an episode of an extraordinary series entitled Digital Industries, which examines how digital transformation is affecting 16 different industries.

over the top players are leveraging the hyperconnected society to deliver services that used to be the bread and butter of telcos

With everything involving the Internet of Things (IoT) happening lightning-fast and at the stroke of a few keys, customers of telecommunications companies (telcos) expect the same degree of service. Telcos unable to meet the speed of demand quickly fall out of relevance. And this trend is not going to slow down anytime soon.

Compounding the problem, Gatien points out, “Voice data is almost free, and we take this for granted. And as a result, the competition of these over-the-top players has actually had a massive negative impact on the top line of most telecommunications operators.”

Furthermore, by 2020 there will be an estimated 5.9 billion smartphones in the world. In terms of speed of connectivity, the next generation of 5G wireless connectivity will be 100 times faster than 4G. Anyone who grew up at the advent of the Internet and social media is well aware of the drastic speed of growth in the tech world. This will have an immense impact on the telcos.

Moving beyond communications

Along with the disruption of technologies, telcos must disrupt their own way of doing business. These companies can no longer provide basic communications services, including telephone access and Internet service. They must push beyond the boundaries of what was formerly defined as telco provisions. Gatien said, “The entire challenge of this industry is to stay relevant in this digital era, continue to connect and power everything that we do. But find ways to create sustainable revenue streams with the new domains, like the Internet of Things and faster connections.”

Take Big Data. Telcos are in a prime position to gather data from communications customers, such as data compiled from home security systems. In fact, telcos have been at the forefront of Big Data since its conception. However, being able to store, analyze, and utilize this data is outside of the comfort zone of most telcos. It shouldn’t be. And in order for these companies to continue to remain relevant in the digital area, they need to find an efficient tech approach to dealing with Big Data.

Keeping up the pace

Telcos must also differentiate their service offerings. Look at how T-Mobile has built an alternative image against established companies. Gatien explains, “It’s not because of the inherent services they provide, but because of stances they are taking: no contract, automatic upgrade of phones, making your life easier—and as a result, being able to, or potentially able to, accompany you into your digital lives.”

Fanzo agrees that this flexibility makes a big difference to millennials. In addition, many developed markets are already saturated, so providing friendly connected services, Gatien predicts, will be one of the most important drivers for growth and relevancy.

Telcos may also need to assess a two-tier system: commercial and residential. Telcos preparing for the future may look towards industries for differentiation. Healthcare, financial services, home security, entertainment: Each of these industries requires a personalized approach that reflects the hyperconnectivity of society.

The key to this is understanding customers better so services can be easily personalized to ensure a constant revenue flow for future investment. Then telcos can move from being simple communication providers to become value-added digital service providers, offering everything from digital home automation and smart life services to e-health care and IoT services.

A good example is cybersecurity, which is fast becoming one of the more pertinent areas of telco services. Without safe and secure connections, consumers’ data and personal information, as well as the livelihood and interests of corporations, is at risk. Along these same lines is cloud computing, which has become second nature with the success of cloud sharing services like Dropbox and Google Docs. Telcos must find ways to provide these niche services without degrading the quality of communications technology.

The question of regulation always comes up for telcos as bidding for the different spectrums, and associated regulations is unique for the industry. There are positives, such as loosening of regulations in the UK, which, according to Gatien, has led to an accelerated consolidation, particularly from the traditional incumbents getting into markets that they had previously missed. And then there are negatives, such as the requirements for net neutrality, where telcos invest billions in the network but other companies reap the benefits. How this ultimately will evolve will be another factor in the success of many telcos.

Connecting with a human audience

Amid all the talk about technologies, it’s easy to overlook the end user: the consumer. Connecting with consumers in this hyper-connected culture means the difference between leading the competition and lagging behind. Without customers, after all, the latest tech advances offer little.

So where can telcos make their mark? By personalizing their customer engagement while simultaneously excelling in the retail experience. While telcos once held their presence with little to no user input, the instant access to these companies—thanks to the Internet—has changed the game. The personal touch and visibility of the company is especially important to millennials. Fanzo hailed T-Mobile’s John Leger as a great example of access to executives, which in turn changed millennials’ mindset and subsequent purchasing decisions.

T-Mobile's John Leeger's ability to be social and engaged gave me confidence that they are pushing the envelope

Today’s companies must listen to the real world and the real-time requests of consumers, creating a seamless customer experience. This is vital to staying abreast of a changing culture, which is happening in real time. It is also the keystone for maintaining a digital core that will keep telcos in touch with the rest of the technologies and opportunities thrown their way.

To listen to this episode of Digital Industries for the telecommunications industry, co-produced by SAP and S.M.A.C. Talk Technology Podcast, click here.

Transforming into a truly digital business is so much more than just implementing new technology to meet the demands of a digital age. It’s more than keeping up with the deluge of transformation happening all around us. Digital transformation is about understanding how to harness these changes and incorporate them into your business strategy. It’s about driving agility, connectivity, analytics, and collaboration to run a Live Business. A digital core empowers you with real-time visibility into all mission critical business processes inside your four walls, and in your interactions with customers, suppliers, workforce, Big Data, and the Internet of Things.

For more on how SAP can help you drive your own digital transformation in the telecommunications industry, visit us online.

Judy Cubiss

About Judy Cubiss

Judy Cubiss is Global Marketing Lead for Industrial Machinery and Components and Automotive at SAP. She has worked in the software industry for over 20 years in a variety of roles, including consulting, product management, solution management, and content marketing in both Europe and the United States.

About Ginger Shimp

With more than 20 years’ experience in marketing, Ginger Shimp has been with SAP since 2004. She has won numerous awards and honors at SAP, including being designated “Top Talent” for two consecutive years. Not only is she a Professional Certified Marketer with the American Marketing Association, but she's also earned her Connoisseur's Certificate in California Reds from the Chicago Wine School. She holds a bachelor's degree in journalism from the University of San Francisco, and an MBA in marketing and managerial economics from the Kellogg Graduate School of Management at Northwestern University. Personally, Ginger is the proud mother of a precocious son and happy wife of one of YouTube's 10 EDU Gurus, Ed Shimp.