APAC Telcos Slow In Digital Transformation: Study

by CXOtoday News Desk    Feb 18, 2016


At a time when more and more industry verticals are leveraging digital to boost customer engagement and in turn bottomline, a new study reveals that highlights that telecom service providers in the Asia Pacific (APAC) are not transforming fast enough to meet the demands of today’s digital era.

This is indeed ironical because APAC is one of the largest and most promising telecom markets, but are plagued with a number of economic, political and business issues when it comes to deploying digital technologies.

Lack of digital strategy

Focusing on lack of digital strategy and skills among telecom service providers in this region, the study conducted by IDC on behalf of Amdocs states that nearly half (47 percent) of the decision makers predict that it will take their companies more than five years to transform. This is not fast enough according to 76 percent of respondents who believe that the communications industry will be outpaced by other industries, it says.

“Digital transformation is a critical enabler for capturing digital age opportunities and delivering the new world of customer experience. As digital transformation is made up of multiple projects and initiatives, companies in Asia Pacific fear timelines are slipping, and that they have serious concerns as to whether they have enough strategic focus and digital skills to transform fast enough,” said Jatinder Ahuja, head of India and South West Asia business, Amdocs.

The study also reveals some interesting findings which reflect that telcos in APAC should prioritize on digital transformation if they do not want to lag behind their global counterparts.

For example, according to the survey, 33 percent of service providers in APAC still do not have a digital strategy in place. While 90 percent of local respondents highlight the importance of having a chief digital officer (CDO) to lead and drive such a strategy, only 29 percent have one. Furthermore, 85 percent of the industry is still executing digital transformation projects as stand-alone initiatives without alignment to a broader technology roadmap or business strategy.

Need for the right digital skills

The study further reveals that 67 percent of respondents in APAC believe that the communications industry has strong technology capabilities but will find it difficult to implement and bring to market digital transformation projects quickly enough.

When asked what factor would most help their companies transform into digital service providers, having the right skills to create and implement digital transformation strategies were ranked first and second; the use of customer experience as a design principle for new products and services was the third most helpful factor.

All of these were well ahead of having the necessary financial capital, the respondents believe.

Getting the right partner

To deploy new digital capabilities and accelerate the pace of digital transformation, service providers are looking to share the challenge with partners, the study suggests. In the next 12 months, 43 percent of respondents in APAC say they will invest in managed services as part of their transformation in order to enable solutions for new areas.

In general, IT services vendors are ranked as the most valuable partners for the execution of digital transformation projects, ahead of specialist digital consultants (second).

Systems integrators ranked third together with third-party players specializing in standalone digital solutions. Strategy consultants ranked fourth together with managed services vendors and network equipment vendors ranked fifth. These findings suggest service providers are looking for partners who can deliver a wide range of expertise.

According to respondents in APAC, providing an omni-channel experience across services is the most critical capability for service providers’ survival in the digital age. Business agility ranked second most critical capability together with the ability to drive business innovation. Business agility also ranked second in terms of service providers’ digital transformation business priorities in the next 12 months (57 percent of respondents), with revenue from existing services ranking first (71 percent).

“The majority of service providers today are actively working to deploy digital technologies to improve their businesses, but this is happening without a unifying top-level vision and strategy. They are also telling us they are struggling to re-align processes and re-train staff at the same time, further delaying real business outcomes,” said Andy Hicks, research director, Telecoms and Networking, EMEA at IDC.

“They may be able to keep up with other service providers, but they don’t think they can keep up in the broader digital world unless they address gaps in digital strategy, skills and leadership. Our research suggests they will source professional services to bridge some of these gaps,” summed up Hicks.