Covering Disruptive Technology Powering Business in The Digital Age

Written By: Ben Panic, Vice President and Head of Telco, Media and Entertainment – APAC, Red Hat

Internal and external pressures in the last decade have pushed service providers to begin transforming their processes and invest heavily in next-generation technologies such as 5G and edge computing. Yet, the traditional telco approach to partnerships and providing IT services has limited their ability to respond to customers swiftly and flexibly, who are increasingly demanding a partner capable of innovating and delivering new products and services fast.

Telcos realise that radically transforming their business model towards a technology company (‘techco’) model along with their IT investments, is critical if they are to better meet the needs of their customers.

One example is Telstra, who is taking active steps to move in this direction. The company is razor-focused on using technology such as APIs to better manage internal applications and create a modular foundation to improve agility. Its T22 programme focused on the rationalisation and simplification of network infrastructure, reduction of business model complexity, and digitisation of the organisation.

A Total Revamp of Telco Mindsets, Culture, and Approaches

We have observed that many telcos are working on a legacy approach where IT and network teams are risk-averse, work in silo, and have a lengthy product and service development process with strict verification criteria. All these ways of working hold back their ability to quickly bring new solutions to market. To increase their agility in responding to customer needs, telcos first need to change their approach to innovation across multiple areas including culture and skillsets, as well as product and service creation.

Consider switching to a DevOps approach prioritising speed, agility, and automation—while also increasing data sharing across all groups to enable faster learning.

Culture Is Key to Staying Ahead of the Curve

Adopting an entrepreneurial mindset will be integral to driving faster innovation cycles. By providing leaders with more autonomy to own their budget and product development timelines to meet pressing customer needs—and enabling them to function like a start-up, this gives them the ability to disrupt traditional technology timelines. They can also take greater risks than larger, more bureaucratic teams, an issue, which has historically stalled telco innovation.

Additionally, telcos can drive more disruptive growth by implementing agile horizontal teams where individuals can work across multiple groups instead of being isolated to specific siloes as this allows learnings to filter throughout the organisation. This consequently accelerates transformation efforts. They should also focus on upskilling the existing workforce, giving particularly strong stakeholders greater responsibility and autonomy to develop and manage their own solutions.

An Ecosystem Approach to Building Partnerships in New Industries

In the past, telcos have focused on developing deep relationships with network equipment providers (NEPs). These relationships are often exclusive and last many years, locking the telco into the innovation cycles of said partner. Hence, telcos should explore an ecosystem or multi-vendor model, working with a larger group of partners to allow for solutions that are built on best-of-breed components.

This would also enable them to increase the flexibility of their networks and avoid the rigidity that often comes with strict vendor lock-in. Cloud native is essential for this, enabling operators to scale and upgrade their networks more easily. Leveraging open source technology is also a critical element of this strategy, as it complements a virtualised architecture by allowing a huge community of developers to create new and innovative solutions running on off-the-shelf hardware. MyRepublic used cloud and open source to avoid vendor lock-in, improving their ability to meet short-term demand changes with greater flexibility, scalability, and availability. They also reduced hardware costs by 30% and cut year-on-year total cost of ownership by double-digit percentages.

A Powerful Model When Done Right

This model is particularly powerful when customer needs are changeable, their budgets are limited, and time-to-market is shorter than in traditional markets. As customers demand ever more specific requirements on their network, an ecosystem approach allows the telco to produce the environment for the customer to provision their own service.

Additionally, given that telcos in APAC are focused on B2B and, in some cases, specific verticals to generate revenues outside connectivity—building ecosystems of sector-specific partnerships can help expand growth areas. An example is SK Telecom, who is focused on developing its AR/VR and metaverse capabilities, having launched platforms such as ifland and Jump, while building partnerships with content developers, such as ViveStudios.

Ecosystems enables operators to latch onto the expertise generated by a vertically orientated ecosystem of independent software vendors (ISVs), managed service providers (MSPs), developers and start-ups. Even for those operators who are focused on protecting their core comms or developing a more horizontal play, the vertical opportunity is imperative across domains and requires the telco to designate resources to establishing internal groups and, importantly, solution ecosystems.

Change Is a Business Imperative

To ensure their long-term survival, telcos must make far-reaching changes to the way they structure their business and interact with customers. Moving away from a model that has served them well for such a long period of time will be a long process blighted by numerous growing pains, but it is essential they invest in a future which will see them traverse up the value chain and realise the B2B opportunity.

The first task telecoms operators must do is define their ultimate goal and systematically socialise this across the business. When this is clear, objectives can be set with appropriate KPIs to measure against, cascading from the highest-level goal to individual’s roles.

The final focus areas are about technology and how to use it to its full potential. It is almost a given that telecoms operators will continue to evolve the underlying technology. The most prominent challenge is ensuring they have the skills and expertise in place to make use of this, plus be able to maximise its potential even with external partners and customers.

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