Every year consultants at Northstream gaze into their crystal ball and predict a few trends or developments for the telecoms industry in the next 12 months.
You can check out their full list here. One of this year’s predictions caught our eye in particular, so we asked CEO and Founder of Northstream, Bengt Nordstrom to expand on the theme of how operators can take “operational efficiency” to the next level.
The year of transformational change
Operational excellence has been high on the operator agenda for some time, but at Northstream we believe the magnitude of change will reach new proportions, as all quick wins and easy initiatives have already been exploited. We see a clear trend of transformational initiatives coming up, addressing the difficult areas of operator operations – such as BSS – in a more comprehensive way.
We are constantly looking at market performance and it’s our view, that in many markets, top line growth is slow at best. It is clear that the growth in the number of mobile subscriptions is slowing down and that certain markets have already peaked. At the same time, there is no significant ARPU growth and the revenue from M2M/IoT, although growing, has had limited top line impact so far.
What is growing however, is the customer’s appetite for data, and their demands and expectations of digital services. Operators are faced with having to invest substantially to keep up with each other – extending coverage, densifying networks, acquiring new spectrum, re-farming old spectrum and deploying new technologies like VoLTE and VoWiFi. What’s more, “patching” legacy networks to serve new business models will simply not deliver enough improvement.
To sustain margins and meet return on capital requirements, operators will have to look to implement initiatives that increase operational efficiency. More than ever before, this means transformational change in operating models, in organisational structure, and in the streamlining of processes and systems support to allow for responsive adaptions to changing market conditions and customer requirements.
In all this, we see the transformation of BSS legacy as critical, but very challenging. It must be driven from a sales and marketing perspective with simplification and streamlining of the customer offerings as a starting point.
Other transformational initiatives will include various forms of network sharing and we believe many operators will build capabilities to maximize benefits from the outsourcing of selected tasks, based on strategic intentions and value creation potential. Others will explore divestments of non-core assets. We will also see some operators go even further to benefit from synergies between fixed and mobile, both on a sales and marketing context and in an operational context.
We have recently seen a lot of transformation initiatives among operators that have been unfulfilled. In our mind, this has mainly been due to unnecessary disconnects between the top-down management commitment/approach and the bottom-up detailed analysis of what it would take for successful execution.
Another reason is that the scope for the transformation has been too wide and complex to effectively manage. To achieve significant and sustainable transformation effects, it will be more important than ever to ensure “bottom-up” understanding, involvement and buy-in from the organisation in the implementation stage, backed by full CxO commitment, and top-down management drive with the mandate to avoid scope creep and dilution of effects.
In 2016 and going forward, Northstream believes that operators will realize the importance of this approach to achieve transformational change and we will see fewer bound-to-fail big bang type of programs.