Are telecommunications companies really the best people to run their own technology?
The question may seem eccentric. Maybe even impertinent. Until you consider the major challenge for today’s telcos.
Because technology pales into insignificance compared to owning customer relationships.
As Don Peppers recently observed:
"If your mission as a telco is to create technology, you’ll wind up lost in the chaos unless you happen to get lucky and hit with a hot product. On the other hand, if you keep your eye on the customer and your goal is to constantly navigate toward providing your customers better value - providing more personalized, relevant services, anticipating customer needs better, generating more trustability - the capacity to be trusted by your customers to always act in their interest - you’ll get through the storm1."
Customer-centricity is key for telcos today because of an unprecedented pace of change in their marketplace and an unparalleled array of choice for the consumer.
Voice is becoming saturated and commoditised. Data is growing exponentially. Broadband offers almost instant connectivity almost everywhere. The global market for smartphones is predicted to grow 49.2% through 20112 – a phenomenon that indicates another important influencer for telcos: social media.
Social media must be considered as a key driver in this industry for at least two reasons.
First, as a demand driver for mobile devices. Secondly, as IBM3 point out, as a serious potential competitor to telcos themselves for “share of voice”:
Driven by high broadband penetration, maturing "social software" and readily available, affordable Internet-enabled multimedia devices, these sites and services are making inroads with enthusiastic users and garnering the attention of advertisers, consumer product companies and enterprises that are using social media to reach their customers, build brand loyalty and communicate with geographically dispersed employees, suppliers and partners.
Customers have more choice than ever in how they communicate. Not merely between a selection of one-to-one closed communication options across an infrastructure owned by a telecommunications organisation. But between multiple, many-to-many collaborative platforms across the open Internet.
Keeping pace is driving telcos to build partnerships that allow them to focus on the customer relationship whilst trusted partners focus on the network technology.
In the words of BT’s Director of Operations and Voice Business, Andrew Doddsworth:
“…rapid technology change has made long-term investment cases for operators very difficult. In the past, operators could rely on long-term use to ensure that large investments paid off. Today payback is less likely. Compare the lifecycles of the copper phone line and a mobile 3G network. With LTE (Long Term Evolution) just around the corner, it’s a challenge to get payback from 3G. This payback challenge has changed operators’ view of network investment and influenced their approaches to outsourcing. Operators need partners to complement their portfolios. No operator can go it alone anymore.” 4
Business processing and IT can benefit from exactly the same approach for exactly the same reasons.
And for a number of international network operators, Xchanging is already answering that call.