TM Forum’s Digital Maturity Model offers telcos a digital transformation roadmap

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The TM Forum has given Asia-based members its first glimpse of a new Digital Maturity Model, a business tool to help telecoms players – and in fact any enterprise – get to grips with the requirements and processes of successful digital business transformation, and know when they’re getting it right.

The TMF is designing its Digital Maturity Model and Metrics – which the non-profit organization hopes to complete by May 2017 – for the simple reason that digital transformation is a hard and complex slog for most CSPs. One reason it’s difficult is because there’s no single way to go about that transformation, and it’s hard to devise an idiosyncratic strategy when the market landscape and the technology are evolving at accelerating rates.

What’s needed, says the TMF, is a common language and metrics to help companies align their plans with partners (and digital transformation is nothing if not partnership-driven), assess their progress and understand their competitive role in the ecosystem.

The five-layer Digital Maturity Model – which was showcased by TMF deputy CEO Nik Willetts on the first day of the TM Forum Live! Asia conference in Singapore Wednesday – is designed on the pyramid framework of Maslow’s Hierarchy of Needs.

At the bottom of the pyramid – the foundation for the model – is technology and security. The next level is culture, people and organizations, which must change from the status quo to a culture that encourages innovation on all levels of the business.

Third is the operations level, which requires a different approach to the backend (namely massive automation). Fourth is customers – i.e. analytics-driven customer-centricity, the ability to understand their behaviors and what they want.

And at the top of the pyramid: the willingness to proactively embrace open innovation and business agility.

Willetts said the Digital Maturity Model is meant to help telecoms players by helping them to visualize the transformation challenge before them, develop realistic plans, and understand how far along the transformation journey they are.

It’s also meant to make clear that digital transformation is about far more than new technology, he said.

“The problem is that everyone in the telecoms space is focused on the technology and not the ecosystem that it will serve,” he said. Taking 5G as an example, “we hear a lot about the technology but not the holistic changes needed for it to succeed. We don’t just need a 5G network, we also need a fifth-generation business model to go with it.”

“Platforms are where the profit is”

Willetts added that the digital maturity model reflects the current megatrends driving the need for digital transformation in the first place: unprecedented technology evolution (network virtualization, the IoT, etc), increased entrepreneurship and innovation, customer-centricity, instant gratification (everything is on-demand and omni-channel), the sharing economy and the shift of the value chain towards a platform economy.

The importance of the latter cannot be understated, Willetts said.

“Platforms are where the profit is,” said, citing Uber, Airbnb, Alibaba and Facebook as proof that the platform model is key to understanding where all this is going. “They don’t own or create anything – they just provide the platform to enable others to do those things, and then sit at the center of that ecosystem without controlling it.”

That, ultimately, is what CSPs are going to have to do as well – not to become mere digital service providers (DSPs) but also digital service enablers, where they are both a digital player and a platform provider that’s open to other players.

Put another way, Willetts said, telcos have to put themselves at the center of that digital ecosystem but without trying to own or dominate it. “They have to shift from the ‘ego-system’, where it’s all about me, and me dominating the market as much as possible, to an ecosystem that’s’ more collaborative – because ultimately it’s all about collaboration and platforms.”

Willets also spoke of the digital business operations side of the transformation equation, saying that while evolution is happening, it’s not happening fast enough. “We need to take more radical steps, because everything is moving so quickly.”

Willets cited examples of how digital-native companies like Amazon, WhatsApp and UK MVNO GIffgaff are outperforming CSPs on many levels. Amazon, for example, can set up a service in 11 seconds, compared to CSPs who usually take three to six months. And whereas CSPs employ thousands of reps for customer service, Giffgaff crowdsources its entire customer service – and its NPS is far higher than most CSPs.

“You can argue those aren’t fair comparisons, and that may be true,” Willetts said. The point is that this is the reality – this is shaping consumer expectations, and you have to deal with that.”

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