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As more Digital Transformations fail, what’s the alternative approach?

As we get close to TM Forums ‘digital Transformation world’, I had a conversation with a customer recently regarding the different approaches CSP’s adopt to Digital Transformation and which worked best in practice.

As far as approaches go, a common one is the big bang, swap out everything approach which involves taking legacy process and how we used to do thing and digitise all this. Typically, these are organisation wide transformation, costing hundreds of millions of euros and taking three to five years. Our experience tells us that they are expensive, slow and often fail to deliver on the original scope. Transforming legacy systems is hard. McKinsey have reported that 70% of all transformation projects fail. As long ago as 2016, Openet surveyed 112 operators on Digital Transformation and BSS. 68% personally knew of large scale BSS transformation projects that failed.

Nearly three years on from these research findings, I wonder have operators recognised and acted on the insight that a different approach to this big bang transformation is required? Often referred to as an adjunct strategy by either replacing a specific piece of the IT eco system to deliver digital capability, or deploying it on a separate IT stack which can operate in parallel to the legacy IT systems. 

There’s some well publicised deals over the last few years with large operators starting long term BSS digital transformation projects that will take 5 years and cost $100M+. Operators cannot afford not to react to market challenges and opportunities just because their BSS system is getting a 5 year digital overhaul. Operators don’t have the time to wait till their BSS transformation is completed. They need to offer digital services now and enable personalisation so they can upsell new services. They need to run real-time, automated platforms that can help them make money from new digital services and get on board quickly with the new business models that are developing, and they need to do it quickly. But at the same time, the large scale BSS transformation project can’t go any quicker. A Plan B is needed. This is another reason why having a Plan B that delivers digital capability goes in as a Greenfield site, to run alongside the transformation project makes sense. These projects can be delivered for a fraction of the cost of a large scale BSS project.

It seems what may be the defining element of the debate on how best to approach Digital Transformation, is speed to market. Operators won’t have the luxury to undertake 3 to 5 year project and not address the need to respond to market dynamics. This will be accelerated by emergency of the much hyped 5G and the new commercial models required to deliver service in partnership between operators and enterprises.   

Another factor identified by TM Forum research in October 2018 is the RFP process isn’t the best fit for fast delivery of digital capability in an ever developing world. It’s found that most CSP’s and Vendors don’t consider that typical RFP process fit for purpose, as it take up to year and is very resource intensive to procure technology, systems and services. With this timeline the market has often moved on from the original requirement sought. While no one alternative methodology can be clearly identified as the winner to replace the traditional RFP process, it’s clear from both Vendors and CSP’s that something needs to change.

I’m sure the debate will continue on how best to undertake digital transformation and the supporting business process needed to facilitate these strategies. The upcoming ‘Digital Transformation World’ will no doubt feature lot of discussion on these topics and if you’re there, why not pop over to the Openet stand 310 where we would welcome the chance to chat through our approach to effective Digital Transformations. See you in Nice.