Are You Prepared for Digital Transformation?

By: Shahin Arefzadeh, Ph.D.

In today´s competitive world, CSPs are facing a lot of challenges: digital transformation, IoT, AI, Blockchain, cryptocurrencies, automation, NFV, SDN, OpenSource such as ONAP –  just to name a few. On top of these new technologies, CSPs must also deal with a new type of competition from software web giants such as Google, Amazon, and Facebook. On the earning side, CSPs are facing customer loss and extremely high churn rates. For example, according to Forbes Verizon´s net decline in first three months of 2017 was about 307,000 postpaid customers. In a nutshell CSPs have to deal with very complex technical issues while they are simultaneously trying to adopt innovation and maintain business momentum.

While each of the technologies mentioned above could keep some technical executives up all night, the fundamental issues are more related to the nature of the business. On the business side, digital transformation is probably the biggest challenge for any executive. According to David Rogers from Columbia Business School, digital transformation is less about technology and more about changing strategy and leadership. Most decision makers believe they have to have a good understanding of technology before they could make a call on a company´s future direction. David Rogers states that the following elements have to be considered during any digital transformation approach: customers, competition, data, innovation, and value.

Each time we meet with our CSP customers, we can quickly recognize in which phase our customers stand within their digital transformation journey. Many CSPs have bought into the idea of providing more bandwidth hungry applications. Those are typically Video OTT such as Netflix or Hulu which are driving bandwidth consumption, but also in the examples of Belgacom or ATT, some CSPs are contemplating a complete supply chain of video content delivery from production to delivery.

Other CSPs are focusing purely on innovation and technology. The first question they would ask any vendor is: “How do you interact with open source and ONAP?” While open source and automation of NFV are hot topics on many minds, they are not dominant from business perspectives. The ISV community was always busy to present their Unique Value Proposition (UVP) and how to compare to other competitors in the market. The UVP of software vendors were ultimately the UVP of prospect customers. If customers had something unique to offer, their customers would stay with them not just because of the emotional loyalty. So one can argue, using open source may not always be the best solution to attract more customers, even it's compelling from an operational perspective. But having a unique value proposition can potentially give CSPs a better tool to influence the customer impact.