PARTNER CONTENT: Service providers across the globe are deeply engaged in digital transformation, with many stating that becoming a digital service provider (DSP) is a strategic goal. Still, questions frequently arise regarding which factors will drive any digital transformation initiative’s success and how to measure progress. As we guide service providers, it is often because we look at these six areas or characteristics where positive change can be delivered that we achieve transformational success.
When we surveyed 100 service providers across five regions in late 2017, we found that not even 20 percent were conducting more than half of their customer interactions digitally. But it is relatively simple to justify the effort to improve digital interactions, as they are far less expensive than staff-oriented interactions and customers increasingly want digital self-service options. How well a service provider engages customers digitally and the degree to which it does are fair ways to measure whether a service provider is truly a DSP.
The digital era has accelerated market speeds and compressed launch cycles for new products. In our survey, fewer than 20 percent of service providers said they could launch a new service in a few weeks or less. We’ve found that success largely hinges on the ability to deliver the frameworks and tools needed to launch future services in just weeks. A 12-week delivery cycle for delivering a digital marketplace and bringing new, VNF- and partner-based services to market is fast, but should be a reasonable expectation. Thereafter, new services can be developed and introduced in far shorter cycles, particular with contributions from a healthy partner ecosystem.
A strategic technology partner’s responsibility is to deliver proven solutions that produce results. A partner ecosystem has the potential to provide a virtual service factory if it is delivered with a specific focus on commercialisation. This allows partners to innovate and solve unique challenges within a model that produces services that the operator can rebrand and roll out to customers. Our study found that 80 percent of service providers had no means to automate partner onboarding, a factor which greatly undermines a service provider’s ability to build a successful partner ecosystem.
Service providers that can roll out new services to customers must have the ability to monetise an increasing variety of business models, multi-party relationships, forms of value transfer and consumption models, all while enabling dynamic service control. Being a DSP, however, also means increasing the revenue contribution from these new models and the services derived from them. For example, cloud-based apps provided with partners contributed less than one-quarter of revenue for 95 percent of the service providers in our study.
Data-driven decision-making is increasing in prominence across many industries, but service provider adoption may soon produce a dramatic growth curve. Our study revealed that 90 percent of service providers plan to adopt predictive analytics within a year. Common objectives include creating more personalised and meaningful customer interactions, improving customer experience and enhancing customer journeys. But analytics are also becoming more widespread for optimising supply chains, automating virtualised services and determining prices. Using data effectively to improve key areas of the business is a trait that should be inherent to a DSP.
The incursion of digital technologies and methodologies is intersecting with service providers’ adoption of more virtualised network capabilities. Digital’s influence requires service providers to manage network and service infrastructure in more agile ways to support rising customer expectations for responsiveness and to enable rapid time-to-market for new services. Yet only one in 10 service providers will be able to run VNFs end to end this year. A DSP should be in the position to generate revenue from virtualised services. In fact, many of the best digital transformation success stories involve the rapid delivery of fully commercialised, VNF- based services. But a DSP must also be able to orchestrate across physical, virtual and cloud-based network domains and deliver services across increasingly hybrid network and customer environments.
Possibly the most challenging aspect of digital transformation is that the goal posts are always moving. Our infographic (pictured left, click to enlarge) asks service providers if they have become DSPs yet, but the definition of what makes a DSP will continue to evolve. The pace of new technology introduction means that any roadmap aims for an uncertain future and tries to anticipate unknown changes. By focusing on improvements in each of the areas mentioned above, however, service providers can begin to find success in digital initiatives and move more rapidly toward communicating, behaving and generating increasing portions of their revenue in digital ways.
– Ed Finegold, Strategy Director, Netcracker