Benelux Telecoms
Published 25/02/2020
Benelux Telecoms
It’s no secret that digital transformation is driving the agenda at telcos across Europe. Spend in Europe on technologies and services that enable digital transformation is expected to hit $378.2 billion in 2022 and at the TIP Summit in Amsterdam last year, Enrique Blanco of Telefónica, exhorted C-suite to move faster. “We cannot afford to take a conservative approach and simply wait for the sector to mature”. So is change happening fast enough?
Erosion of legacy revenue
The diagnosis about the industry has been clear for sometime. “Erosion of legacy revenue streams driven by over-the-top (OTT) competitors continues” says Tom Loozen of Ernst & Young’s Global Telecommunications Team. “[This will] force operators to consider new ways of remaining relevant to consumer and enterprise customers.” Proximus and Orange Belgium have both announced multiple large scale digital transformation projects with the end result that they will be radically different in structure and operation from their current state.
There are 2 key challenges: updating legacy technology and infrastructure; and more importantly getting employee buy-in on a potentially disruptive and emotionally stressful period of time.
5G network based future
From a technological perspective, the spiralling demands for mobility will be served by 5G networks based on a software-centric approach and open infrastructure, disaggregating hardware from software in the network. Vendor lock-in, which has stultified hardware innovation, should be a thing of the past, as Europe embraces open interfaces and common development standards, to deliver multi-vendor, interoperable networks.
Benelux telcos need to have a clear vison of what is the end goal of any digital transformation and what does good look like. McKinsey & Co have captured the essence of this: “Such a transformation encompasses both the digitising of core customer journeys and internal processes, as well as using data to drive real insights... This requires rewriting the genetic makeup of today’s telco to create a new, digital-and-analytics DNA.”
Uncertainty = doubt = resistance
The employee buy-in will be a harder and longer sell. It needs both a top down and bottom up approach to ensure that all employees buy into the ‘journey’ and they have a clear vision of what they will be doing in a digital telcoms structure. Any uncertainty will lead to doubt which will lead to resistance to change.
Digital operating model
Benelux Telecoms should learn from successes (and failures) from other industries. McKinsey & Co refer to the “digital operating model” that requires fundamental changes to working, culture, talent strategy, C-suite and employee buy-in, and the vendor ecosystem. Cross-functional, agile ways of working, which have been so successful in the European FinTech industry, such as the likes of Monzo et al - should be adopted by telcos wherever possible.
Former CEO of Proximus Dominique Leroy saw over the course of last year the recruitment of 1,250 hires and invested heavily in training and upskilling workers to meet the new demands of digital business. This is a great sign, and certainly a lesson which will have been learned from observing digital transformation across other industries.
Whilst hardware upgrades and capex will keep boards fretting, it will be less tangible cultural change of employee buy-in that will determine the real winners and losers of telco digital transformation
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