How Digital Transformation is Maximizing Capabilities for the Telecom Industry

By Chitraparna Sinha

Bain Research

Human life is getting a digital makeover. Digital transformation has become the emerging driver of change and in many aspects, it has propelled global economy towards a new industrial revolution, completely virtual in nature, albeit mammoth in scale.

The telecommunications industry is at the forefront of this transition. The past decade has seen telecommunication companies invest heavily in digital technology, which has allowed them to tap into entirely new business models across industries.

Access to a globally connected network allows availability of real-time information, customer support, marketplaces and social programs that in totality enhance the entire experience.

According to McKinsey, there is a strong correlation between profit margin and the following five areas of IT for telecommunication companies:

  • Robust Consumer analytics
  • Digitization of order management
  • Self-service CRM
  • Simplified IT interfaces
  • Business Automation

One can trace back telecom investments to these five broad benchmarks. Companies with digital capabilities in these areas can record a staggering profit margin of 43% compared to the average 21%.

The digital transformation of telecom is helping companies touch newer B2B horizons.

The focus is shifting towards B2B growth markets where potential looms at maximum. According to recent statistics from Bain, growth in business services will be greater than the same in consumer markets for telecoms. The consumer market is set to grow at approximately 0.6% annually while the B2B market can grow at 2.6%. The primary cause of this surge is an increased demand for Mobile Data & Addressable IT services.

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The challenge for telecom managers lies in identifying opportunities that are beyond the scope of historical profit models and reshape their organizations to tap into the same.

This is a key roadblock as consumer revenues generate the lion’s share of profits and B2B services are automatically placed as a second priority. Due to this many bottlenecks arise, including:

  • Allocation of insufficient resources and responsibilities.
  • Failure to recognize the opportunity in core businesses across small/home offices, Medium enterprises and corporate customers.

However, the process, albeit long, is not challenging to propagate. The opportunities lie in reducing efforts, increasing revenue potentials and maximizing account profitability and migrating to newer IOT models of the future.

Other issues which block realization of potential in B2B opportunities include:

  • Lower profits than B2C verticals
  • Highly sophisticated buyers with custom concerns
  • Lower margins, given the scalability in B2B sectors.

Managers need to understand that B2B revenues will have longer payback timelines. Therefore, patience and long-term approach will garner benefits for Telecoms when it comes to B2B.

The introduction of in-house full-service smartphone apps for billing, data monitoring and a host of other customer end services is another step companies are taking towards the digital transformation of the telecommunication industry.

The key imperative is to embrace the digital and chalk your landscape in the IoT.

Decisions regarding retaining, upgrading or replacing institutional IT frameworks can be tricky given the scale and size of change involved. However, it has been seen that top telecom companies have streamlined their IT landscapes to effect faster and highly automated business processes. Key steps include removing redundant platforms, automating core processes and smoothening overlapping Go to the full article.

Source:: Business 2 Community

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