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From Telco to Techco – why collaboration is the key to billion-dollar growth

by maria
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By: George Glass, CTO, TM Forum

Complicated networks of legacy systems with reems of entangled code, all held together by increasingly outdated physical infrastructure has been the norm for telco operators for years. Telco IT managers recognise the issues and want to update their infrastructure, but challenges persist. TM Forum’s recent Digital Transformation Tracker Report shows how slow telcos are with their digital transformations, revealing that only 22% of Communications Services Providers (CSP) are ‘well along the way’ in the process.

It’s internal barriers such as a lack of aligned goals and management resistance that are the main reasons given for this inertia. Overhauling complex legacy systems can be time-consuming, expensive, and disruptive. Because of the challenges, CSPs (Communication Service Providers) are reticent to commit to large scale change. To make the shift to a tech-driven telco and captialise on a growing, multi-billion-dollar market, operators must embrace agility and adaptability. Which requires accelerating digital transformation efforts.

Out with the old operating model

The pandemic has shown how vital data is to industries like healthcare, energy & utilities and manufacturing and the advent of 5G gives telcos an opportunity to work with these industries to develop innovative systems and solutions that meet some of the world’s biggest challenges. However, the slow speeds and excessive costs of the current IT architecture prevents collaboration. Operators are continually making less money from consumer data offerings but currently lack the agility to take advantage of the substantial opportunities and revenue streams the B2B connectivity market offers.

To take advantage of these opportunities and meet the demands of their customers, CSPs need to fundamentally rethink their operating model and processes, speed of decision-making, culture, ways of working, and the systems that support them. A rapid and radical shift to an open, modern, software-based technology architecture that enables new operating and business models is needed; one which is, loosely coupled, cloud-native, rules, data and AI-driven; made up of standard components which can be easily procured and deployed, without the need for customisation.

This will enable CSPs to achieve the required concept-to-cash cycles, open new business models together with partners and operate with the cost point and flexibility the market requires. This new architectural approach alone, however, will not be enough. Currently, it can take 18 months for a CSP to launch a new product, and often within that time technology and market trends have already surpassed the product, dating it before its debut. But, what if CSPs could turn 18 months into 18 days?

The shift to cloud native

Companies that have made the shift to cloud native architecture have seen the benefits. Going cloud native enables businesses to significantly enhance the speed with which they respond to the changing demands of their customers and take advantage of new opportunities with ease.

A prime example of a company profiting from the shift to a tech-first approach is Microsoft. They drastically changed their business model from a company that sold software on discs to a SaaS and platform business with a hugely successful cloud service in Azure. Telcos that ignore the everything-as-a-service opportunities risk losing out on their share of over $400 billion of enterprise revenue that is currently out there for the taking. By re-architecting legacy systems to be cloud native and adopting a tech-first outlook, operators can unlock new revenue streams in B2B and service sectors that have been closed off until now.

To help telcos exploit these opportunities, TM Forum, and its members, conceptualised the Open Digital Architecture (ODA) to enable telcos to share and collaborate on their system components. ODA offers a blueprint and best practice model that all operators and telcos can design components around. With industry input from the companies that use it, ODA offers the benefits of cloud-native systems to operators without the transformation headaches. Vodafone UK has already used TM Forum’s collaborative technology to transform its customer experience offering and launch new products faster, increasing digital sales and automation while reducing costs.

ODA unlocks the collaboration the industry needs by simplifying and speeding up product roll-out and testing. The 18-month product development cycle that many operators currently endure can be cut to a mere 18 days, or less, through the cloud-native possibilities unlocked by ODA. Companies looking to enter new markets will no longer have to face the months, or even years, of complex work to ensure different countries’ interoperability. A telco in Japan will be able to enter a partnership with another in Denmark or South Africa and know their systems and components are compatible from day one. With ODA, we are looking at the end of the competition and the birth of collaboration for the telco industry, a shift that sets operators up for future-proofed success.

The future of telecommunications

In the last year, the ODA project has moved from concept to reality. With major operators such as Vodafone and Orange signing up to as early adopters and enjoying all the benefits this presents, and the component frameworks are now in the final stages of design. By being part of the process by which the common standards are defined, operators open themselves to learning from each other, as well as having input into what the future of telecommunications will look like. As the components are finished and launched, those who reach out and become early adopters will reap the benefits of agile, adaptable systems purpose built on ODA standards from the outset.

The next few years for telecommunications are endless with possibilities. As 5G is rolled out globally, the opportunities faster-than-broadband offer to businesses, from large manufacturers to disruptive retailers, are truly staggering. Cloud-native operability, achieved through Open Digital Architecture, gives operators the chance to work with businesses and seize the opportunities this moment presents. As ODA becomes the standard for telecommunications IT infrastructure, the onus is on operators to ensure they are part of the future, rather than miss the bus the rest of the industry is catching.

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