Software is "disrupting nearly every industry, fundamentally reshaping business models, changing the competitive landscape, and forever altering customer expectations," claims a recent Analysys Mason study in collaboration with Huawei. It illustrates how digitalization is reshaping the way businesses are being operated, and how in order to remain competitive, new operational models are required.
The paper suggests that communications service providers (CSPs) are "embarking on their own digital transformation journey to increase service agility and operational efficiency through infrastructure and operations transformation." The report provides insights into how software is changing the world, highlighting how the success of CSPs operations transformation hinges on a new software-driven operations model.
CSPs are moving towards operational models that support high levels of process automation to the point where predictive autonomous operations become the norm, the study suggests, which enables CSPs to automatically pre-empt and tackle service quality issues before they occur. CSPs need to continuously innovate, the report adds, and make their operations leaner and more efficient.
Based on extensive research across diverse industries, the paper explains how the current operations model severely constrains CSPs abilities to achieve the benefits of digital transformation and that to remain relevant in the digital era, the telecommunications industry must adopt a software-driven operations approach that has been instrumental in the success of major digital companies such as Uber, Google and General Electric (GE).
GE, a 125-year-old conglomerate with annual revenue of US$120 billion, is embracing cloud based technologies to transform towards a modern digital business, the report highlights. It has setup a separate business subsidiary called GE Digital to drive innovations, particularly in the industrial IoT domain.
The company has created a cloud based IoT platform called Predix, which was originally developed to drive the digital transformation within GE's own businesses across industries such as aviation and utilities. In FY 2016, the revenue of GE Digital grew by 16 percent to US$3.6 billion, and GE expected Predix related business to reach US$1 billion in 2017.
"The telecommunications industry is at a major tipping point; as operators embark on important digital transformation initiatives, with NFV/SDN, IoT and 5G still to come, the prevalent operational model and economics severely constrains them to achieve the benefits of these strategic transformation initiatives," said Anil Rao, Principal Analyst at Analysys Mason, and the author of the study.
"CSPs need a future proof software driven operations model that can not only support today's physical networks but also adapt as the infrastructure transitions to hybrid and virtual networks," Anil Rao added.
He suggests that the new operations model must be "underpinned by highly automated operational processes, enabled by analytics powered operations software platforms and supported by an operations workforce with the software skills to continuously enhance operational efficiency by developing automation as part of their daily duties."
The study also illustrates ways for CSPs to transform, whether they embark on the journey alone through a 'Do It Yourself' (DIY) approach or establish a partnership depending on the level of maturity of the vendor offer and the level of control and ownership that the CSP wants to retain in-house.
The paper includes a description of the various engagement options such as consultative led operations-as-a-service which relies on the partner to deliver the operations, based on agreed service level agreements using the partners' operations platform, supplemented with advisory and implementation services to transition to software driven operations.
Fostering digital transformation
Digitalization is not just about technology or digital, but more about changing business models and services to become more efficient and reliable, says Labib Matta, chief business officer at Dubai-based smart city consulting firm NXN (formerly neXgen), discussing the company's new software platform that's "driving efficiency across industries" in a recent interview with Telecom Review.
Organizations wanting to embrace digital transformation need a platform that allows them to see where improvements can be made to foster efficiency and innovation, Matta said. NXN's new DNX platform is an enabler of digital transformation across industries. Digitalization is the process of using digitization to change the processes of an organization to foster transformation. This process is known as DX which is where NXN got the term DNX.
"It's about changing the culture of an organization to be more agile and efficient," Matta told Telecom Review. "In order to achieve that, you need to tackle issues within the organization piece by piece so that you're able to manage it. To address that, we came up with our platform DNX – an enabler for digital transformation across industries. It's a platform that enables the development and roll out of digital services across multiple verticals in a structured and cohesive way."
This aligns with the Analysys Mason report's theory that the new operations model's success lies in its ability to quickly adapt to changing business and operational needs. In other words, the new model must allow rapid addition, modification and composition of relevant automation components and workflow processes for service changes or new service introductions. These combinational characteristics of agility and programmability are what make the new operations model unique.
NXN's DNX platform integrates data systems, sensors, and IoT devices into a single common area which the company then applies artificial intelligence (AI) to in order to generate predictive models and improve efficiency of services. NXN correlates the data coming from different sources and aligns the findings of that data with the organization's strategic vision.
"In order to deploy a DNX platform, we need it to align with the business objectives of the organization, and we need to consider how these objectives are going to be achieved by figuring out how the platform will fix problems that emerge from the analysis and help the organization to achieve better scalability and innovation," Matta said.
While organizations move to adopt more software into their business practices, the Analysis Mason report warns that increased use of software can expose an operation's platform to security vulnerabilities such as viruses, malwares, intrusions and unauthorized access control.
In 2017, ransomware attacks such as WannaCry and Petya caused significant business disruption at large enterprises and government agencies worldwide, wiping out millions of dollars of revenue and severely impacting day-to-day operations. Not all attacks can be prevented but to reduce the success rate of attacks, it is imperative that security is integrated into the platform development process from day one, the report suggests.
This should be coupled with the ability to quickly and continuously make patch updates for latest security threats, it adds. Security teams must be fully equipped with the tools and expertise to rapidly handle any security incidents.
But despite the risks, digital transformation of all organizations, including telecom companies, cannot succeed without a long lasting organizational and cultural change. Organizational culture, which is the common set of shared beliefs and values governing the people, is one of the key defining attributes of a company, and the hardest transformation to execute because people are generally resistant to change, suggests the paper.
"The new operations model presents CSPs with a tremendous opportunity to take a fresh look at their own organization structures," says the report. "To realize the benefits of software-driven operations, CSPs must move away from the prevalent bureaucratic organization structures and align themselves with the principles of lean and agile operations and delivering enhanced customer experiences."