MOBILE OPERATORS NEED A DIGITAL TRANSFORMATION
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MOBILE OPERATORS NEED A DIGITAL TRANSFORMATION Saahil Malik Karthik Ramakrishnan
Mobile Operators Need A Digital Transformation
AN IN-HOUSE STARTUP CAN BE THE KEY TO CHANGE
With the spread of digital technology, consumers have grown enamored with digital content
and gadgets, turning companies that cater such products into some of the most successful
ever. In contrast, telecom providers helped trigger the explosion in digital services but often
go unnoticed, which puts them at risk of losing control over their customer relationships
and, as a result, customer-driven profits.
One reason telcos are often overlooked is because there is a traditional focus on technology
assets and capex management — at the expense of high-impact product design that will
grab consumers’ attention. But digital connectivity has made users’ needs paramount.
We think they are better served by a digital business model that enables the creation of
attractive digital products and experiences. As an example, that means faster IT releases,
employees leveraging agile working principles, and greater use of analytics to deliver
personalized experiences. It is especially important to use such a model now, after the
COVID-19 pandemic accelerated the digitization of all activities, both work and leisure.
Exhibit 1: Comparing traditional telcos against digital telco leaders
Selected areas of comparison Traditional Digital
Share of advertising spend
on digital
Share of requests solved using
an unassisted chatbot
Digital customer service vs.
total customer service
Share of internal FTE work under
agile working principles
0% 100%
Time-to-market of IT rollouts can
be monitored across systems
No Yes
Average operators Leading digital operators
Source: Oliver Wyman Digital Telco Index
The change will likely not come naturally to incumbent telcos, but some startups within
the telecom sector have been successful by applying a digital business model to the sector.
Circles.Life, for example, was launched in December 2016 and it says it now has five percent
of Singapore’s market. It currently expanding its base in Australia, Taiwan, and Indonesia.
© Oliver Wyman 2Mobile Operators Need A Digital Transformation
A quick way for an incumbent telecom company to act like a startup is to set one up in-house —
a lab of sorts that operates separately from the legacy organization. This unit moves quickly,
developing new products and then rapidly testing the market’s appetite for them. Following
this, it can pollinate the legacy business to effect a digital transformation for the whole
organization. There are three conditions for an internal startup such as this to be a success:
Having a short-term target, using agile working principles, and operating with autonomy.
HAVING A TARGET
Examples of a short-term target include creating a new customer experience, refreshing
the core brand, digitizing back-office operations, or carring out a proof of concept for a
new IT system. If the target is to attract a market’s young, digitally savvy customers to a
digitized platform, the first step is to conduct a market scan of the target demographic.
Doing so will likely determine that a relevant mobile data service would need to include a
seamless, real-time, unassisted digital experience. The service would let customers feel in
control of the product through flexible features such as the ability to buy and cancel services
from their mobile phones. A minimum viable product can then be defined and serve as a
target for the development process.
Circles.Life understood that digitally savvy consumers were less interested in price and
more interested in having convenience, transparency, and control. By freeing consumers
from these pain points, the company was able to differentiate its proposition. It set a target
of building an end-to-end digitized platform optimized for flexibility and customization.
Circles.Life manages the entire value chain — logistics, billing, and a rapid digital
onboarding process.
AGILE PRINCIPLES
To build products quickly, the unit should use agile working principles of the digital world.
In the past, software development followed a standard procedure: objective, followed by
design, and then implementation. Agile software development, in contrast, is flexible. Teams
work in a series of sprints: Over a period of several weeks, a new product or functionality
is developed and deployed, and feedback is received. This process is repeated to deliver
a succession of incremental improvements. These improvements lead to the creation of
a minimum viable product at a much faster pace than traditional procedures, and can be
used later for continued development and upgrades.
Circles.Life applied this principle by consolidating feedback from customers and internal
stakeholders iteratively at the end of each sprint to come up with new features and
improvements to the platform.
© Oliver Wyman 3Mobile Operators Need A Digital Transformation
AUTONOMY
To maximize its potential, the in-house startup needs to operate with a new mindset. To
nurture this, it should be given autonomy and allowed to operate at arm’s length from
the legacy organization. That implies making it into a separate business unit — and even
a different legal entity — with the freedom to make important decisions on branding and
pricing. At the same time, it will be able to leverage some of the parent’s procurement
systems and processes in order to reduce costs.
Without such autonomy, the competing priorities of the main telco business might stop the
digital unit getting the resources and management focus it requires. Autonomy also makes
it easier to develop a culture and mindset centered on the customer and to hire people
with the right capabilities and experience, typically from other digital players. As an actual
startup, Circles.Life was inherently autonomous, with an independent IT stack, a separate
team and digital process, unencumbered by constraints from any incumbent telecom
company. It took the opportunity to expand its services, offering insurance and ticketing
services on its online platform.
Exhibit 2: How Circles.Life supports incumbent telcos to launch and operate
a digital proposition
Traditional telco Circles.Life operates separated from MNO
Legacy systems Independent technology stack
• Microservices based front-end (website & mobile app) & backend systems
(eKYC, charging, policy control, billing & payment, CRM, martech tools,
data lake, analytics engine & personalization services)
Large/Siloed teams Autonomous team
• Agile & nimble “expedition teams“ organized around specific focuses, like
growth or customer experience
Legacy processes Digital centric processes
• Processes are designed to automate almost all critical steps in customer
lifecyle journey, leaving only exceptions to be handed manually
Source: Oliver Wyman analysis
© Oliver Wyman 4Mobile Operators Need A Digital Transformation
FROM DIGITAL STARTUP TO LARGE-SCALE CHANGE
For a large telecom provider, the launch of a successful digital unit is not the finish line.
One way the startup unit can contribute to the overall success of the operator, is by
competing for customers, and perhaps retaining those which might otherwise migrate
to other providers. An effective startup unit might differentiate itself through a B-brand
to target a segment the main brand might not focus on — this approach has the dual
advantages of diversifying the product portfolio while also defending the main brand
against other digital attackers. But the ultimate goal is to digitize the parent company.
In order to offer the same level of service as a digital native, the parent company will
also require a mechanism to transfer knowledge.
Exhibit 3: Transference of learnings from digital startup to parent company
Transfer digital learnings
Digital telco Parent company
Operational support/governance
Source: Oliver Wyman analysis
Learnings could include technical implementation using agile processes; how to launch
and scale a community; and the use of digital channels to optimize advertising impact.
Such knowledge might cascade effectively from the digital startup to the parent company
via topical learning programs. More-formal structures could include a digital center of
excellence in the startup to foster digital talent, who would then transfer to the legacy
organization. In all these channels, the parent company needs to measure progress
continuously: Both the startup’s progress towards its objectives and the flow of learnings
to the legacy organization.
© Oliver Wyman 5Oliver Wyman is a global leader in management consulting that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, and organization transformation. For more information, please contact the marketing department by phone at one of the following locations: Americas EMEA Asia Pacific +1 212 541 8100 +44 20 7333 8333 +65 6510 9700 AUTHORS Saahil Malik Karthik Ramakrishnan Partner Principal Saahil.Malik@oliverwyman.com Karthik.Ramakrishnan@oliverwyman.com Copyright ©2021 Oliver Wyman All rights reserved. This report may not be reproduced or redistributed, in whole or in part, without the written permission of Oliver Wyman and Oliver Wyman accepts no liability whatsoever for the actions of third parties in this respect. The information and opinions in this report were prepared by Oliver Wyman. This report is not investment advice and should not be relied on for such advice or as a substitute for consultation with professional accountants, tax, legal or financial advisors. Oliver Wyman has made every effort to use reliable, up-to-date and comprehensive information and analysis, but all information is provided without warranty of any kind, express or implied. Oliver Wyman disclaims any responsibility to update the information or conclusions in this report. Oliver Wyman accepts no liability for any loss arising from any action taken or refrained from as a result of information contained in this report or any reports or sources of information referred to herein, or for any consequential, special or similar damages even if advised of the possibility of such damages. The report is not an offer to buy or sell securities or a solicitation of an offer to buy or sell securities. This report may not be sold without the written consent of Oliver Wyman. Oliver Wyman – A business of Marsh McLennan www.oliverwyman.com
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