Hotspot 1: Cost Reduction
- Telecom operators in Europe drastically change their cost-reduction strategies in order to survive
- Telecoms operators indicated that they could be wasting up to 20% a year in capital expenditures
- Telecom companies may raise tariffs to pay for spectrum costs
Challenging economic environment and single-digit revenue growth are forcing Telco clients to focus on cost containment and cost reduction efforts. Increasing operational expenses (OPEX) and capital expenditure (CAPEX) further aggravate margin pressure for existing and new businesses. Communication service providers (CSPs) need to consolidate business processes, reduce cost and commit to targeted outcomes aligned to business value. Clients need to undertake certain steps to transform OSS/BSS operations to best practice operating models, build expertise in revenue and billing assurance services to identify and resolve upfront challenge of revenue leakage and fraud issues; optimise supply chain to reduce costs and unlock the value on the balance sheet to optimise cash and investments. They need access to skilled global resources and analytics experts to improve forecasting accuracy to optimise debt and cash management.
Hotspot 2: Operational Agility
- Only 27% of the global CSP executives believe they are successful in realizing economies of scale
- 56% of global CSPs do not believe their current approach toward global integration will succeed
Competitive pressures from over-the-top (OTT) players force CSPs to respond and adapt quickly and cost effectively to changes in strategy, market demands, and new business models. To expand into new markets, CSPs need to improve operational flexibility and centralize back office functions to scale in and out of markets effectively and orchestrate winning service offerings effectively through standard approach. IBM is uniquely placed to collaborate with clients, reinvent business processes, offer consulting expertise aligned to eTOM framework to enrich customers’ experience, reduce cost and often reveal innovative streams of revenue.
Hotspot 3: Profitable Growth
- Fitch: South/SE Asia Telcos’ profit margin will decline due to competition in 2015
- Vodafone working on 5-year plan to return Telco to profitability
- Telecom companies count $386 billion in lost revenue to Skype, WhatsApp, others
Revenue, profit and ARPU pressures are exacerbated by constrained credit markets, accelerated commoditization of traditional voice services, rise in data services without commensurate revenue growth and competitive pressures.
CSPs must improve working capital efficiency and free cash flow to invest in new capabilities. They need to invest in cloud, social and mobile technologies and channels to meet customer expectations and; extensively collaborate with employees and business partners. Investment in big data and analytics can help CSPs gain a consolidated view of the business, enable new services and new revenue sources to optimize capital and increase customer profitability.
Hotspot 4: Increasing Consumer Influence
- 83% of telecom CEOs identified customer insights as the most critical investments
- 56% consumers use social media as a source of information to evaluate CSPs and their products/services
- 40 percent, of consumers always/often tell family, friends and peers about negative provider experiences.
Consumers are seizing control in an environment where only 18% of people trust information from companies. Customers expect always-on service everywhere which result in high churn rates and downward pricing pressure.
With rise in power and influence of consumers, CSPs need to adopt different ways to engage digitally, improve trust and transparency. Ability to improve collaboration, personalize customer engagement, create compelling consumer experiences e.g. unbundled and on demand capabilities can help CSPs reduce customer churn and provide more relevant products and services.
Hotspot 5: Data Explosion
- By 2016, mobile traffic will grow to 18 exabytes/month and 70% of that content will be video
- 85% of CSP respondents say that the use of big data & analytics creates competitive advantage for their organizations
Explosive growth in data usage and bandwidth puts unprecedented demand on current network capacity. If unaddressed, mobile operators will face significantly higher cost and additional network capacity required, would almost double network OPEX. CSPs need to limit the expected rise in network cost and adopt efficient ways of handling data. Two key areas of application are the use operational data to generate analytic insights to model business scenarios and develop forecasting capabilities to optimize cash and investments; and consumer data to get a deeper understanding of the consumer, undertake effective segmentation and develop better service options customized to unique needs.
Today BPO services providers like IBM and process experts are working with global CSPs’ across multiple areas and helping them:
- Deploy order to cash analytics across the revenue assurance and credit function to reduce suspense by 15%
- Centralize payment system and enable seamless integration to front-end systems to improve payment experience
- Drive finance and procurement transformation to reduce cost and standardize operation across the enterprise, increasing efficiency and consistency
- Improve learning management processes, reduce cost, and improve customer satisfaction
- Support business needs to grow and expand by improving the time to fill positions and reduce dependencies on third party search firms