Digital Transformation is the Key to Monetization

By Rajesh Ghai, Research Director, Carrier Network Infrastructure, IDC

Faced with the triple challenges of commoditization, competition from new and old players, and the growing complexity of their infrastructure, communication service providers (SPs) globally recognize the need to digitally transform their infrastructure and business processes and build more customer-centric business models.

Indeed, digital transformation (DX) has become a strategic priority for SPs and is key to their ability to monetize their infrastructure. With DX, SP’s have an opportunity to redefine their role in the industry by enabling new business models, driving innovation, and supporting new customer experiences. Accomplishing this, leads to measurable improvements across key business and operational metrics, as IDC research (discussed later) shows. However, this is no small task. To succeed, SPs must evaluate every aspect of their business.

Recognizing the size and complexity entailed in the DX journey of a typical service provider, IDC worked with Cisco to simplify the DX process with the goal of making it manageable and measurable. The outcome of this research effort was the creation of a SP Digital Maturity Index. This DX maturity model (Figure 1) is designed to help SP’s:

• Identify their DX maturity level
• Compare their progress with industry peers
• Get essential guidance on how to progress to the next DX maturity level
• Measure potential business gains of advancing to higher levels of DX maturity

Figure 1

The research methodology followed by IDC to develop the SP Digital Maturity Index entailed three steps:
• Identify 7 domains in a typical SP environment.
• Split the seven domains into sub-categories reflecting simpler, executable bite-sized transformation action steps.
• Define a DX transformation scale for each of the sub-categories and domains to measure progress per domain. Progress for all domains is measured from the lowest level (Ad-Hoc) to the highest level (Pioneer).

Once the SP DX maturity index was developed, IDC conducted a comprehensive survey of 400 communications service providers worldwide. The survey asked respondents over 70 questions across 33 sub-categories in the 7 domains. The survey unearthed some interesting insights on the state of SP DX globally. Only 16% of SPs describe themselves as deployer or pioneer (levels 4 or 5) today and 28% planned to be at these levels in two years.
Next, IDC conducted in-depth interviews with 20 SPs at the highest levels of digital maturity (deployer or pioneer) to gauge the impact of their DX initiatives across key business and operational metrics. They not only reported (Fig 2) improved operational metrics such as reduced operational costs (down 49%) and process cycle times (TTM down 88%), but importantly also reported gains in key business metrics such as revenue (up 14%), profits (up 22%), customer satisfaction (up 30%) and retention (up 40%).

Clearly, moving up the digital maturity scale across all domains should be a key priority for SPs globally. The first step in this multi-faceted and complex journey is to assess where your organization stands today on all domains of your SP business. Start the assessment of your organization’s digital maturity, for a comparison with your SP peers, and receive essential guidance on how to progress to higher levels and measure potential business gains of advancing to higher levels of DX maturity.

For more information and insight on achieving DX maturity, download the IDC white paper sponsored by Cisco here.