What Telecoms CEOs Really Said at MWC
Digital Transformation Was The Theme Song of This Year’s Mobile World Congress.
As published in RCR Wireless.
Good news: every telecom company now has a “Go Digital” strategy. The challenge? Few have a real plan to make smart use of new digital strategies, and fewer still are reporting real results from massive “digital” investments. At MWC last week, we hosted over 80 meetings with executives from 50 telcos from EMEA, APAC and North and South America. Here are five common views and themes I heard from the C-suite at some of the world’s largest and most innovative communications and media companies:
Theme #1: We are facing our toughest decade ahead. “Digital” is reshaping an industry dragged down by regulators, torn apart by OTT players and dismissed by customers, most notably, millennials. 5G promises mean billions of new investment. Worldwide, financial results in the sector are disappointing: revenue growth is a whopping 4%, EBITDAs have dropped from 25% to 17%, cash flow margins halved to 8%. New technologies and social media are wiping out the once lucrative voice and messaging businesses. Flanker brands are driving down margins. All while telecoms are saddled with billions in legacy software and network investments, and entrenched management teams who don’t (or can’t) move at the same speed as their colleagues who are departing in droves to join agile, new-tech competitors. Customers are leaving, or if they are staying, they are paying much less. Star employees are quitting to join the new cloud and digital firms. Shareholders are pulling back, and boards are demanding results. It’s a tough time to be a telecom CEO.
Theme #2. We are entering our most glorious transformation since 2G. Digital is no longer relegated to the CIO team — it’s now a board-level topic. “Go Digital” presents to telecoms the opportunity to rebuild their market, reimagine their systems and create killer offers for both consumer and business customers. Group Chief Executive of Communications, Media & Technology at Accenture Bob Sell said it best: “Telecoms have the opportunity today to leverage their scale and make it a benefit, not a burden.” By going digital, telecom operators can improve their profits by as much as 35 percent, according to a recent Mckinsey study. But it’s just not a sales and marketing play, this “Go Digital” agenda. Telecoms must hit right at the core. Omnichannel isn’t just a for “systems of engagement” anymore. To deliver a unified experience, AI-assisted care and enable end-to-end digital processes, telecoms executive need to rethink their entire stack. And act. Good news is that today’s digital technologies enable telecoms to deliver immediate experience changes to customers, while they are changing out the core systems underneath. Monolithic stacks and hostage-taking approaches by entrenched tech vendors are getting smashed, eroded and weakened in favor of agile, cloud and digital technologies. And that makes for an exciting time for telecom executives who have the courage and mandate to drive to a realized Telco 2020 vision.
Good news is that today’s digital technologies enable telecoms to deliver immediate experience changes to customers, while they are changing out the core systems underneath.
Theme #3: We’re not a telecom anymore. Not a single executive I met at Mobile World Congress referred to themselves as a “telco.” Telco 2.0s are media, technology, consumer, engagement and (insert your favorite new buzz word here) companies. It’s more than a brand reposition — it’s an investment strategy: in acquisitions, in talent, and in the future. ARPU isn’t the core financial metric anymore when sizing up against the cloud leaders (Amazon, Microsoft, Google, Salesforce) or the customer innovators (Facebook, Uber, LinkedIn). Many telecoms have already established operating divisions in the media, IT services, financial services and utilities sectors. Some have recently forged partnerships with cloud leaders including Amazon, Salesforce, and Google established analytics and infrastructure alliances with transformation leaders like Accenture and IBM, and have initiated end-to-end customer transformation projects with the latest mobile and cloud software like from my firm, Vlocity. These telecoms will be delivering digital, platform-based offers that can be conceived, bundled, priced and launched in a matter of hours. Not months. HOURS. And beyond telco. For telecoms that can innovate their scale and platforms fastest, they will become the go-to brand for offers in industries that do not (such as utilities, government services, and media).
Theme #4: We’re hiring. The message in the C-Suite is outreach when it comes to digital talent. The “telco of the future” needs digital innovators today. Telstra CEO Andy Penn has made hiring tech talent a top objective in the company’s new agenda. If you’ve spent your career building digital apps in a tech hub like London, Boston, Tel Aviv or Silicon Valley, you’re in hot demand by telecoms now. CEOs realize they cannot “go digital” without digital capabilities in-house. But “Creative” and “CapEx” have not historically gone hand-in-hand. Hence CEOs are worried they won’t attract the best talent. Money alone doesn’t attract the brightest (see how Salesforce’s culture makes it a best place to work for tech talent), and today’s digital innovator demands an agile, collaborative and learning environment. CEOs need to change their culture from the top and foster a mindset of experimentation, risk-taking, and customer-centric innovation. All while creating an exciting brand that attracts both customers and employees, as John Legere as done at T-Mobile.
Theme #5: R.I.P. IT. Today’s telecom’s IT department is transforming into a digital delivery platform. If you are not currently sunsetting redundant platforms, breaking up overlapping functions and systems, automating processes, and wiping out bloated vendor maintenance contracts, you are behind and destined to lose. The digital transformation cuts all the way to your IT backbone including network automation, server deployment, and load balancing. Yes, going digital will impact your load balance operations. Over the past few years, it was the telecom CMO that adopted the title of “Chief Digital Officer.” Why? Because digital was equated with online (where the customers kept going), and the marketing folks at telecoms cared the most as they lost share to the OTT innovators. Now the CIO is also a CDO or CIDO. Whatever the title, digital is the new agenda beyond “information” or “technology.” Now boards and CEO and COOs are sitting with their CIOs and CTOs and CDOs, in the same room, and asking: “can you tell me who does what around here?” when it comes to going digital.
CEOs need to change their culture from the top and foster a mind-set of experimentation, risk-taking and customer-centric innovation.
Ask your own CEO and COO about these themes from MWC. Most see the glass half full. Despite the headwinds of declining margins and share, 5G investment capital calls, OTT threats, flanker brands, legacy systems drag, regulatory handcuffs and “too big to be nimble” challenges facing telecoms, the executives I met at MWC could not be more optimistic, and excited, about where they are taking their companies. By starting with the customer and working back all the way into their core systems and networks, the most innovative leaders are driving a “go digital” vision and strategy, tearing up the old playbooks, infrastructures, and approaches, and leading with an innovation agenda that they see will attract top talent, happy customers and higher shareholder returns in the years to come.