By transforming into technology companies, operators gain the best chance of succeeding in the digital future
By Ari Banerjee, SVP Strategy, Netcracker Technology
Communications service providers have had to be resilient over the past few years. A global pandemic made it clear that they are so much more than just a commodity, but rather lifelines and an essential means to keep people connected. While that trend has continued, CSPs are still dealing with business and other pressures that will require big changes beyond just providing connectivity in order to capture new revenue and business opportunities and remain vital to the digital future. This will require telcos to become technology companies (techcos).
Besides the desire to adopt hallmarks of technology companies, such as Agile methodologies, in order to become more flexible and make rapid changes, telcos are also thinking about the transformation to techcos from a business standpoint. Telcos have historically had to spend more in CapEx for their infrastructure, which does not always yield the revenues that services and other areas might. As a result, telcos have relied heavily on technology partners for development, thus hamstringing their own efforts to create in-house and realize the subsequent benefits.
Driving new value by being able to take on more of this development themselves is a priority for telcos that are facing competition from companies that provide a better online and customer experience.
Challenging New Market Conditions
Today's telcos are in the middle of a transition to agile, cloud-native networks hosted on a mix of partner cloud platforms and their own. As such, they do not just want to find a way to work with technology companies — they want to become technology companies. After making significant Capex investments, telcos still tend to rely on partners and other external players to create new products and services rather than bringing these functions in house. But making this shift will be vital as telcos face a new set of challenges, including new entrants to the market such as cloud providers, OTT companies and infrastructure players; the high costs of building out fiber and deploying 5G; and a lack of efficiency and agility.
Instead, telcos are looking for opportunities where they can capitalize on their infrastructure and buildouts rather than handing over that access to competitors, capturing business and revenue that are currently being lost to other entities. This journey from telco to techco will also bring advantages, such as allowing telcos to more easily innovate; simplify, streamline and increase automation; and collaborate at scale much more effectively.
Telcos will need a game plan and the right solutions in place to take advantage of the opportunities of becoming technology companies.
A Critical Opportunity
This evolution to becoming techcos will require telcos to develop specialist knowledge and skills in technologies such as cloud, artificial intelligence and machine learning. They need to be proficient in developing or co-developing their own code and inserting it into partner solutions. It will also require new operational concepts like Agile development and DevOps. They need to enable customer-led joint development projects, provide a co-creation platform for developers and be able to collaborate with partners at scale with Open APIs. In short, telcos will need to be more innovative and less reliant on outside help.
They will also need to collaborate inside new ecosystems, within groupings of related companies that work together to deliver new services to customers. This kind of transition means a major shift in culture, organization, partner management and internal automation. Co-creation is now a must-have requirement for modern IT environments. CSPs are looking for partners who will support their deeper dive into IT and cloud solutions, enrich their joint development setup, upskill on co-creation and allow them to balance between outsourcing and self-sufficiency.
To achieve these goals, telcos will require a transformation, especially of their IT systems, which includes bringing in an open, standards-based, modular and cloud-native foundation that supports intelligent orchestration, automation and a modernized, consolidated BSS/OSS.
Netcracker Digital Platform (NDP) accelerates digital transformation by giving telcos the tools they need to become less dependent on external partners by fostering internal innovation and driving business growth. It is available in a SaaS delivery model on any hyperscaler platform. The platform gives telcos the chance to be B2B2X enablers at the center of complex partner ecosystems across exciting new industry verticals. In addition, it provides CSPs with the skillset, tools and autonomy to develop, onboard and configure new technology, services and features. NDP provides the right technology foundation to help CSPs take the next step in digital transformation to become techcos and redefine themselves for what’s ahead.