Taming Digital Transformation and Customer Experience New Normal imperatives: A Strategic Blueprint For Telcos

Souhail HaddajiVice President Product Development at du (Dubai)TM Forum, Nice France June 2015

Acknowledgement

First of all, I would like to thank Mr. Osman Sultan, our CEO and all CXOs at du, for their leadership, digital vision and for inspiring du’smen and women to be on digital front, after building in just few years, a great Telecom success story.

I would like also to thank the respected academics and professionals authors below, whose insightful papers were truly inspirational and helped me grasp, a little bit more, the intricate reality behind digital disruption and its impacts on Telcos.

• Alexander Mogg and Klaus-Ulrich Feiler, from Roland Berger Germany• Darrel K.Rigby, from Bain & Company Boston office• Eric Hazan from McKinsey Paris office• George Westerman, Didier Bonnet and Andrew McAfee for their book: Leading Digital (Harvard Business Review Press)• Ines Guzman and Jean-Marie Pierron from Accenture• Dr. Jeanne W. Ross (MIT Sloan/CISR)• Kim Wagner from The Boston Consulting Group• Marcus Blosch and Ed Thompson from Gartner (my former company, where I had the privilege to work with so many

bright colleagues)• Professor Phillip Anderson, from INSEAD (for inspiring me to embark on this research journey)• Dr. Roman Friedrich from strategy& (former Booz & Company) , Stockholm and Düsseldorf offices• Michael Fitzgerlad (MIT), Nina Kruschwitz (MIT), Didier Bonnet and Patrick Ferraris from Capgemini Consulting(with

whom I had the privilege to work at Capgemini Consulting Paris office)• All my present and former colleagues, with whom I had so many fruitful discussions to mature this work.

Last but not least, I would like to thank TMForum New York office team (Rebecca and Jessica) , who kindly invited me to speak at dd14 (digital disruption) in San Jose, California in December 2014 and again at TMForum Live! in Nice, France in June 2015.

The following presentation is an extract from a larger deck I presented during TMFroum Digital session.Below, is the link to associated paper-interview published by MIT Sloan and TM Forum post event.https://inform.tmforum.org/nfv-it-transformation/2015/06/souhaill-haddaji-du-on-digital-transformation-and-the-new-customer-experience-normal/

Souhail Haddaji15th June 2015, Dubai, UAE

Executive summary

Note 1: “new normal” concept was introduced in 2009 by Mohamed El-Erian , Chief Economic Adviser at Allianz and former CEO and co-Chief Investment Officer at PIMCO.

1. Telcos business model is under tremendous pressure: value chain positioning threatened by OTTs; power shifted

from firms to customers; core services matured leading to slow/negative growth; IT infrastructure is not

adequate for digital age. Thus, Digital transformation is not an option anymore; it has become a matter of

survival for telcos.

2. Digital Transformation is hard and risky, but clear strategy, vibrant communication; clear accountabilities and

employees engagement can triple the odds of success.

3. The first step of digital journey starts with Telco’s ultimate compass…its customers, to build intimacy. The

Second building block is Customer Experience “new normal”1 for digital age: Omni-channel enabled, 3rd party

co-created, real-time personalized and Digically mashups.

4. To build capabilities to support the above, telcos CIOs need to transform IT through a bimodal regime, and

expose internal capabilities to 3rd parties, for customer value co-creation. On the soft side, CIO needs to build

trust by handing over more power to business CXOs, with a special attention to the effectiveness of relationship

within triumvirate CMO-CIO-CDO.

5. Vertical organizational models were very effective during acquisition intensive past decade. But are not adequate

for digital age. They need to evolve into delayered, collaboration oriented horizontal structures.

6. Telcos, like any other organizationally large and complex systems, suffer from entropy which pushes things in the

direction of less order rather than more. Thus, a rigorous yet just enough governance, is key to constantly steer,

this life-saving journey, toward the Digital operator end game.

7. IoT, M2M, Cloud, Smart-cities, location based services offer significant growth potential for Telcos who will

succeed in their digital transformation journey toward a customer value fabric open ecosystem.

Content

1. Digital Disruption: Telcos at crossroads

2. Digital Transformation: A Strategic Blueprint for Telcos

3. Building Customer Intimacy: The first building block

4. Customer Experience New Normal: Omni channel, real-time, Self-service, Digical Mashups

5. From Information Technology to Business technology: CIO’s role in transition

6. Journey to Digital Operator: Organizational Implications

7. Conclusions and Outlook

Telcos traditional business model is under pressure

Telcos Business Model under pressure:

1. Value chain position at risk2. Slow Growth

3. Margin Squeeze

OTTs Value chain

threats

Core services Maturity

Age

of

Dig

ital

C

ust

om

er

Inad

eq

uac

y o

f IT

C

apab

iliti

es

Telcos traditional business model is under pressure from various angles:

1. In the age of customer, power has shifted from firms to their clients.

2. Competition has increased and Core services and products have matured (Voice, SMS…) , leading at best to slow and at worst to negative growth.

3. With Facebook-whatsapp, Microsoft-Skype, Google-MVNOs, Telcos traditional value chain positioning is under attack by innovative and resourceful OTTs pure digital players.

4. Telcos were built as highly effective acquisition machines, powered by specialized but siloed IT systems. These vertically siloed IT capabilities are not adequate for digital age, where there is a need for more horizontal Omni-channel enabled and 3rd party open IT architecture.

For Telcos, transitioning to Digital Operator, is not optional anymore, it has become a matter of survival

© Souhail Haddaji, Taming Digital Transformation and Customer Experience New Normal imperatives: A Strategic Blueprint For Telcos, TMForum, Nice France, June 2015

Telecommunications is among 3 most impacted industries by digital disruption

Projected Digical transformation by industry through 2025

Source: Bain 2014

Digital transformation is key for telcos new positioning

Source: Analysys Mason

Traditional Telco Business model under pressure Telcos Strategic Responses to Industry new Dynamics

The objective of this presentation is to propose for Telcos, a Digital Transformation strategic blue print to help structure and align the efforts required across the organization

Clearing CFOs reluctances: show me digital transformation ROI !

Digital leaders get better financial results than their industry peers

Compared to their peers, digital leaders enjoy stronger revenue growth

Several rigorous and independent research confirm that, compared to their peers, Digital leaders display a healthier financial metrics

Source: MIT Sloan and Capgemini Consulting (2013) Source: Harvard Business Review (2015)

Content

1. Digital Disruption: Telcos at crossroads

2. Digital Transformation: A Strategic Blueprint for Telcos

3. Building Customer Intimacy: The first building block

4. Customer Experience New Normal: Omni channel, real-time, Self-service, Digical Mashups

5. From Information Technology to Business technology: CIO’s role in transition

6. Journey to Digital Operator: Organizational Implications

7. Conclusions and Outlook

Structure, Processes, Metrics, Talent and Culture

Networks

Telcos digital transformation: a high level target blue print

Bi-Modal IT

Horizontally layered and de-siloed organization,powered by Digital savvy and engaged talent

Digital Governance

Dig

ital

Go

vern

ance

Dig

ital

Go

vern

ance

Customers

OCS, PCRF

SDN, NFVAccess Networks:

xG, Fiber, Wi-Fi

Integration APIs

Core BSS/OSS

Applications aware Network services

3rd

PartiesCloud

Enablers

Customer Intimacy(from data to customer contextual Knowledge)

Digital and Physical (Digical) mashups of Customer

Experience

Customer CentricValue Propositions

Omni channel enabled customer facing channels

Big Data Analytics., Real Time

Decisions & Recommendations

Digital Experience Delivery Platform

Customers segments, Value Propositions, Customer Experience and Channels

IT as a Commodity

3rd

PartiesCloud

Enablers

External Partners

External Partners

Telc

os

and

3rd

exte

rnal

p

artn

ers

co-c

reat

ion

of

valu

e p

rop

osi

tio

ns

to c

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om

ers

Telc

os

and

3rd

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artn

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co-c

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© Souhail Haddaji, Taming Digital Transformation and Customer Experience New Normal imperatives: A Strategic Blueprint For Telcos, TMForum, Nice France, June 2015

Legacy

Digital BuildingBlocks

Exposed APIsExposed APIs

Content

1. Digital Disruption: Telcos at crossroads

2. Digital Transformation: A Strategic Blueprint for Telcos

3. Building Customer Intimacy: The first building block

4. Customer Experience New Normal: Omni channel, real-time, Self-service, Digical Mashups

5. From Information Technology to Business technology: CIO’s role in transition

6. Journey to Digital Operator: Organizational Implications

7. Conclusions and Outlook

Telcos’ journey to digital operator must start from their ultimate compass: their customers !

Building Customer Intimacy

- Empowered by technology, today customers know more than their service providers about their products and services, pricing, and reputation.

- Telcos need to develop a healthy obsession with their customers: their needs; their aspirations; what interactions frustrate theme most, the ones that delight them.

- Customers should be at the heart of every decision organization makes and every dollar invested.

- Key building bloc : “One common and shared Customer Reality”

- How ? by collecting and normalizing the various flow of customer data, generated across various touch point, and building a common, shared and actionable customer knowledge.

“One common and shared Customer Reality “

Source: McKinsey, 2014

Content

1. Digital Disruption: Telcos at crossroads

2. Digital Transformation: A Strategic Blueprint for Telcos

3. Building Customer Intimacy: The first building block

4. Customer Experience New Normal: Omni channel, real-time, Self-service, Digical Mashups

5. From Information Technology to Business technology: CIO’s role in transition

6. Journey to Digital Operator: Organizational Implications

7. Conclusions and Outlook

Online moved from cost effective sales channel, into main sales channel for Telcos

Customer experience “new normal”: Omni-channel enabled, 3rd

party co-created, real-time personalized and Digically mashups

Wh

o h

as a

cce

ss t

o c

ust

om

ers

qu

eri

es

?

Source: McKinsey

Digital disruption widely expanded boundaries of traditional Customer Care

Source: Roland Berger

The entry of Free, a simple, online-only mobile telecom service in France, forced competitors to follow suit, driving online sales of mobile plans

In today’s age of customer, power already shifted from firms to connected customers powered by Technology and social networks

Omni-Channel : Customers want to start , cross, and finish their journey from the channel of heir choice

Expose internal capabilities to 3rd parties to create a customer value fabric open eco-system

Bi-Modal IT

Customers

Integration APIs

Core BSS/OSS

3rd

PartiesCloud

Enablers

Customer Intimacy(from data to customer contextual Knowledge)

Digital and Physical (Digical) mashups of Customer

Experience

Customer CentricValue Propositions

Omni channels

Big Data Analytics., Real Time

Decisioning & Recommendations

Digital Experience Delivery Platform

Customers segments, Value Propositions, Customer Experience and Channels

IT as a Commodity

3rd

PartiesCloud

Enablers

External Partners

External Partners

Telc

os

and

3rd

exte

rnal

p

artn

ers

co-c

reat

ion

of

valu

e p

rop

osi

tio

ns

to c

ust

om

ers

Telc

os

and

3rd

exte

rnal

p

artn

ers

co-c

reat

ion

of

valu

e p

rop

osi

tio

ns

to c

ust

om

ers

© Souhail Haddaji, Taming Digital Transformation and Customer Experience New Normal imperatives: A Strategic Blueprint For Telcos, TMForum, Nice France, June 2015

Exposed APIsExposed APIs

Content

1. Digital Disruption: Telcos at crossroads

2. Digital Transformation: A Strategic Blueprint for Telcos

3. Building Customer Intimacy: The first building block

4. Customer Experience New Normal: Omni channel, real-time, Self-service, Digical Mashups

5. From Information Technology to Business Technology: CIO’s role in transition

6. Journey to Digital Operator: Organizational Implications

7. Conclusions and Outlook

CIOs need to build trust, by handing over more power to business to move IT from a “bottleneck” to a trusted business partner

Digital leaders display a high level of confidence of teams in organization’s technology knowledge and skills

In the transition to Digital, CIOs need to build trust and handover power to business across multiple interactions

Source: Harvard Business Review (2015) Source: J.Ross MIT (2015)

CMO-CIO power couple relationship improved overtime, the challenge is to extend this effectiveness to the new triumvirate: CMO-CIO-CDO

Source: Accenture (2014)

Network architecture also needs to evolve toward more agility with the introduction of NFV and SDN, to support digitalization

Investment in SDN and NFV is expected to grow by an impressive 51% ~66% CAGR until 2023

Investment in SDN and NFV deployment is under the way at aggressive rate

Content

1. Digital Disruption: Telcos at crossroads

2. Digital Transformation: A Strategic Blueprint for Telcos

3. Building Customer Intimacy: The first building block

4. Customer Experience New Normal: Omni channel, real-time, Self-service, Digical Mashups

5. From Information Technology to Business technology: CIO’s role in transition

6. Journey to Digital Operator: Organizational Implications

7. Conclusions and Outlook

A key challenge for Telcos transitioning to digital operator is to move from product centric structures to a customer centric organization

Source: McKinsey 2014

Organizational silos, legacy processes and cultural resistance to change are among key barriers to successful digital transformation

Source: Harvard Business Review (2015)

Digital leaders and laggards perspective on barriers to successful Digital business development

Cultural alignment on digital transformation vision and objective is key

Lack of understanding, skills gaps and resistance to change can severely hinder digital transformation efforts

Source: MIT Sloan and Capgemini Consulting (2013)

Digital transformation is risky but clear vision, vibrant communication, explicit accountabilities and engaged employees can triple the odds of success

Source: McKinsey (2015)

Content

1. Digital Disruption: Telcos at crossroads

2. Digital Transformation: An End Game Framework for Telcos

3. Building Customer Intimacy: The first building block

4. Customer Experience New Normal: Omni channel, real-time, Self-service, Digical Mashups

5. From Information Technology to Business technology: CIO’s role in transition

6. Journey to Digital Operator: Organizational Implications

7. Conclusions and Outlook

Conclusions and call for action1. Telcos business model is under tremendous pressure: value chain positioning threatened by OTTs; power shifted

from firms to customers; core services matured leading to slow/negative growth; IT infrastructure is not

adequate for digital age. Thus, Digital transformation is not an option anymore; it has become a matter of

survival for telcos.

2. Digital Transformation is hard and risky, but clear strategy, vibrant communication; clear accountabilities and

employees engagement can triple the odds of success.

3. The first step of digital journey starts with Telco’s ultimate compass…its customers, to build intimacy. The

Second building block is Customer Experience “new normal” for digital age: Omni-channel enabled, 3rd party co-

created, real-time personalized and Digically mashups.

4. To build capabilities to support the above, telcos CIOs need to transform IT through a bimodal regime, and

expose internal capabilities to 3rd parties, for customer value co-creation. On the soft side, CIO needs to build

trust by handing over more power to business CXOs, with a special attention to the effectiveness of relationship

within triumvirate CMO-CIO-CDO.

5. Vertical organizational models were very effective during acquisition intensive past decade. But are not adequate

for digital age. They need to evolve into delayered, collaboration oriented horizontal structures.

6. Telcos, like any other organizationally large and complex systems, suffer from entropy which pushes things in the

direction of less order rather than more. Thus, a rigorous yet just enough governance, is key to constantly steer,

this life-saving journey, toward the Digital operator end game.

7. IoT, M2M, Cloud, Smart-cities, location based services offer significant growth potential for Telcos who will

succeed in their digital transformation journey toward a customer value fabric open ecosystem.

© Souhail Haddaji, Taming Digital Transformation and Customer Experience New Normal imperatives: A Strategic Blueprint For Telcos, TMForum, Nice France, June 2015

Thank you for reading!

Your comments are welcome @Souhail.haddaji@du.ae

Souhail HaddajiVice President Product Development at du (Dubai)

TM Forum, Nice France June 2015