Telecommunications business transformation: framework and recommendations

The objectives of this paper are to study the transformation of mobile businesses and propose a transformation framework to help a mobile network operator to implement the successful transformation.

International Journal of Management (IJM) Volume 7, Issue 1, Jan-Feb 2016, pp 50-60, Article ID: IJM_07_01_005 Available online at http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=1 Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com ISSN Print: 0976-6502 and ISSN Online: 0976-6510 © IAEME Publication TELECOMMUNICATIONS BUSINESS TRANSFORMATION: FRAMEWORK AND RECOMMENDATIONS Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara National Broadcasting and Telecommunications Commission (NBTC), Thailand ABSTRACT Fueled by the convergence of mobile broadband, the Internet and growing demand for real-time access to information, technology is disrupting all areas of businesses Disruption is strong across all industries and transforming traditional products and services, including business models With the rapid migration to Internet protocol-based services, it is driving pervasive disruption throughout the mobile industry ecosystem The mobile industry is now poised to be the next major disruption Therefore, telecommunications business success requires organizations to be more resilient, adaptive and creative in order to invent new business models and transform their internal processes The successful business transformation will directly drive significant customer and service initiatives and make investment in ICT and related industries More importantly, mobile operators are finding themselves in increasingly intense competition with the Internet-based service providers, the so-called over-the-top (OTT) players Faced by increasingly unpredictable competition, the mobile network operator is confronted with a new threat of business disruption To manage this threat, successful mobile network operators will have to adapt their strategies and transform their business models to meet a vast array of disruption and new market conditions The objectives of this paper are to study the transformation of mobile businesses and propose a transformation framework to help a mobile network operator to implement the successful transformation To achieve the objectives of the research, this paper uses both primary and secondary qualitative data to create the business transformation framework and strategy Key word: Telecommunications, Framework, Strategy Business, Transformation, Mobile, Cite this Article: Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara Telecommunications Business Transformation: Framework and Recommendations International Journal of Management, 7(1), 2016, pp 50-60 http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=1 http://www.iaeme.com/IJM/index.asp 50 editor@iaeme.com Telecommunications Business Transformation: Framework And Recommendations INTRODUCTION By the end of 2016, the study in [1] predicted that smartphone subscribers will increase over 46% of the global population, significantly driven by a major adoption in Africa and Asia More than 4.8 billion people globally will use a mobile phone and consumers will utilize more streaming and on-demand services on mobile devices Mobile data traffic has grown exponentially in the past five years and there is still far more growth in the future [2] The growing usage of video-on-demand services and other rich multimedia content is going to rise the mobile data traffic and continuing to grow dramatically for the rest of this decade [3] Forecasts of annual global mobile data traffic by several researches are illustrated in Fig.1 Figure Annual global mobile data traffic (in Exabytes) Source: GSMA Today, mobile network operators are finding themselves in increasingly intense competition with the Internet-based service providers, the so-called over-the-top (OTT) players The OTT service providers are small and large corporations such as Google, Microsoft, Facebook, Amazon, YouTube, or Line They have been very fast in matching telecommunications ecosystem in terms of services and revenue over and bypassing the mobile network companies The OTT service providers have successfully managed to position themselves worldwide in various services through the Internet such as gaming, on-demand and streaming services, cloud-based management, video, and messaging [4] However, revenue and traffic of the mobile network operators are unbalanced in an increasingly data-dominant services as shown in Fig.2 [5] Indicated in [6], the paper reported that streaming video is already growing over 50% of total traffic http://www.iaeme.com/IJM/index.asp 51 editor@iaeme.com Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara Figure Revenue and traffic are disassociated in an increasingly data-dominant world Source: Nokia-Siemens; IBM Institute for Business Value analysis Digital disruption innovates rapidly and radically changes market share For an example, WhatsApp’s severe impact on the global text messaging market makes a powerful lesson for the mobile industry (see Fig.3) WhatsApp was bought by Facebook in 2014 However, Facebook is not only making the disruption on the telecommunications industry The company is extending the service to the person-toperson (P2P) payments via Facebook Messenger to WhatsApp’s 800 million users [7] Figure How WhatsApp Disrupted an Industry To achieve the objectives of this research, this paper is organized as follows Section explains the research methodology A review of business transformation including key drivers to achieve a successful implementation is presented in section Results of the research and discussion are described in section The conclusion is provided in the last section http://www.iaeme.com/IJM/index.asp 52 editor@iaeme.com Telecommunications Business Transformation: Framework And Recommendations RESEARCH METHODOLOGY The objectives of this research are to propose the Business Transformation Framework and provide recommendations to develop a business model of an efficient mobile network operator It is intended as a quality research based on in-depth interviews and supported by inputs of secondary data culled from academic papers, business and best-practices reports made by respectable reference sources Its primary data will come from in-depth interviews of distinguished experts in related fields under the following research framework as illustrated by Fig.4 Figure Research framework The respondent profiles of our subject matter experts are shown in Table We classified subject matter experts into four categories depending on their area of expertise in Telecommunications, Economics, Strategic Management, and Marketing The total number of subject matter experts or respondents is 12 with from each key focus area Table Interviewing experts and key focus Area of expertise Numbers Telecommunications Economics Strategic Management Marketing Inputs from the in-depth interviews will be processed and analyzed together with secondary data which will be summarized into a preliminary draft conclusion to be forwarded to the 12 experts for further comments with an intention of streamlining them into a shared common direction The version assessed and scrutinized by the 12 experts will then be adopted as a basis for formulating a business transformation framework with a guideline for implementing key points to ensure efficient and successful transformation for the mobile network operator TRANSFORMATION OF MIBILE BUSINESSES The digital services are increasingly integrating cross-industry applications, services, and business models Innovative digital services based on mobile connectivity, social http://www.iaeme.com/IJM/index.asp 53 editor@iaeme.com Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara media, OTT services and big data are driving consumer demand, creating job opportunities and making the national economy more competitive [8] Mobile network operators will benefit from having an opportunity to expand their function in the value chain [9] To gain sustainable competitive advantages and drive growth, mobile network operators need to transform their traditional business model by replacing a new generation of network services with open and agile digital platforms [10] This change includes interacting with customers; monetizing network assets; innovating new services; and creating new value chains [11] Partnership, network capability, and flexibility will become key success factors for the new business model of mobile network operators The operators need capabilities to co-create new services and share revenues with their partners and adapt to their customer requirements If customer requirements on a market disruption, an operator must be able to shift to another market and develop a new service strategy The operators must act quickly and sustainably to take advantage of any opportunities which arise [12] Fig.5 shows the framework of positioning opportunities for telecommunications companies which is explained in detail in [12] Figure Positioning opportunities for telecommunications companies Source: Detecon As referred to the reference [13], there are three drivers that must be considered for network transformation, cost efficiency, customer experience, and business innovation as shown in Table To be successful therefore, operators must leverage upon their cost, customer and innovation to drive competitive differentiation in established markets and position for extending beyond traditional mobile operator boundaries to embrace new markets and industries http://www.iaeme.com/IJM/index.asp 54 editor@iaeme.com Telecommunications Business Transformation: Framework And Recommendations Table Three drivers for network transformation Driver Actions/Solutions Cost Efficiency Run a financial analysis and make decisions on reorganization Implement PLM/GTM to launch new P/S efficiently Network redesign (core, transport, access, NOC) Systems optimization, convergence, migration Customer Experience Network upgrade/modernization Customer experience model implementation Loyalty and churn Operational excellence Business Innovation Develop new business models/marketing strategy product catalog Implement data mart, analyze usage information, implement up-selling, crossselling, and customized marketing actions and promotions Simplify network and operations, enhancing flexibility, scalability and reducing technology dependency In this paper, we adopt the theory of enterprise transformation from the research in [14] The transformation in [14] is addressed as following: "Transformation is driven by value deficiencies and involves examining and changing work processes This examination involves consideration of how changes are likely to affect future states of the enterprise Potential impacts on enterprise states are assessed in terms of value consequences Projected consequences can, and should, influence how investments of attention and resources are allocated The problem solving and decision making abilities of management, as well as the social context, influence how and how well all of this happens." The transformation framework from [14] can be demostrated in Fig.6 Figure The transformation framework defined by [14] http://www.iaeme.com/IJM/index.asp 55 editor@iaeme.com Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara Table summarizes the relationships among initiatives in six thrust areas with the state, work, value, and input constructs defined above The detail of the relationships of initiatives to Enterprise Model is explained in the reference [15] Table Relationships of Initiatives to Enterprise Model Enterprise Input Transformation Method & Tools Work Processes Enterprise State Enterprise Output How to represent, manipulate, optimize, and portray input, work, state, output, and value for the past, present, and future of the enterprise Emerging Enterprise Technologies How emerging enterprise technologies are likely to impact work, state and output, and the strategy/policy implications of these impacts Organizational Simulation How work processes affect state and the experience of the state of and enterprise Investment Valuation How investments of financial resources Organizational Culture & Change Best Practices Research Affect value generated, e.g., options created How value priorities drive work processes, affect organizational culture and change, and thereby influence state and output How past and current approaches to and changes of input, work, state, and output have impacted subsequent enterprise value creation, for better or worse RESULT AND DISCUSSION After collecting and analyzing data from the interviews to create a transformation framework to achieve the objectives of the paper with a guideline on strategy and implementation that will contribute to following results: A Transformation Framework The result of the research conducted in accordance with the methodology detailed in Section shows that almost all experts agreed to adopt the internationally and academically accepted principles dealing with enterprise transformation referred in [14] Furthermore, the process of the 10-step implementation from [16] will be applied in the proposed framework Accordingly, the research results will help us propose a transformation framework as illustrated in Fig.7 http://www.iaeme.com/IJM/index.asp 56 editor@iaeme.com Telecommunications Business Transformation: Framework And Recommendations Figure The proposed transformation framework The proposed framework composes of four key inputs that enable companies to align their digital transformation efforts under architecture vision, business architecture, mobile architecture, and IT architecture A clear vision helps to frame in people’s understanding a picture of how the company will transform in the future One of the major components to drive the transformation is 'Monitor digital behaviors and develop customer adoption' which the mechanism of the component can be demonstrated in Fig.8 This component deals with the integration and interaction between operational processes and customer-facing processes We adopted this model from the reference [17] Figure Monitor digital behaviors and develop customer adoption http://www.iaeme.com/IJM/index.asp 57 editor@iaeme.com Settapong Malisuwan, Dithdanai Milindavanij and Noppadol Tiamnara B Recommendations and Discussions A variety of credible secondary sources are applied in this research focusing on evidence-based approach The results of analysis from these sources are concluded as following: Mobile network operators need to redefine strategies for diversifying their services while improving their network cost structures As well as seeking new profitable revenue opportunities, they need to create more parties becoming involved in the service delivery value chain To innovate their service delivery, operators will need to transform their legacy infrastructure to flexible network and open IT infrastructure [18] At the same time, more and more parties are involved in the end-to-end service delivery chain Moving to an all-IP LTE network enables operators to create flexible and simplified networks, which reduces cost, decreases latency, and improves reliability LTE is important for operators for two main reasons then First, it will increase the e ciency of their entire network Second, it will make their operations easier and less expensive to manage LTE changes the telecommunications ecosystem on two main reasons First, LTE and LTE-A increase spectral efficiency of the mobile network Second, it will make their operations easier and less expensive to upgrade and manage Mobile, social network, Big Data, Analytics and cloud technologies interact with each other, thus creating the innovative services for operators and will enable customers cost effectively [19] As mobile network operators have evolved using an integration of these technologies, platforms, vendors, and standards, their transformation now requires a variety of capabilities, expertise, knowledge and skills The pressure is on mobile network operators to establish new sustainable business models and revenue streams to improve their position in the contentto-consumer value chain, create a more profit from escalating over-the-top (OTT) video traffic Mobile network operators are focusing to play a role on OTT players to determine whether to compete or co-operate that goes beyond carrying the data stream There are four approaches to developing a content strategy as following [20]:     Retail content portal: Manage for content through relationships with producers; host and deliver it to consumers subject to pay-per-view) or sponsorship (advertising) Content host: In this strategy, the network operator depends on other companies to obtain content for distribution, fulfill retail relationships or both The network operator acts as a provider of a Content Delivery Network (CDN) This way can be considered as monetization strategy Critical adjunct services for content delivery: This strategy focuses on content policy management and parental control The services in this category include identity management, digital right management, location-based services Premium paths for content delivery to consumers: The services in this strategy offer expedited delivery or special Quality-of-Service (QoS) to content as an extra-cost option, paid either by consumers or content providers http://www.iaeme.com/IJM/index.asp 58 editor@iaeme.com Telecommunications Business Transformation: Framework And Recommendations The type of a content strategy and model is defined by various factors, but the most significant are regulatory requirements set by the jurisdictions where carriers operate CONCLUSION Mobile Broadband Internet is the key driver to create digital transformation Telecommunications business helps to integrate different industries together and create new value chains and opportunities that traditional businesses cannot offer As Mobile Internet advancement continues to eliminate the distance and time barriers, markets will emerge, develop and be disrupted faster than ever before The battle for mobile industry will drive technology convergence and redefine the ICT landscape Mobile network operators are transforming their current infrastructure, operations and businesses to dominate their competitors and survive in the ICT industry Innovation, harmonization, and customer focus are key elements of transformation Transformation is fundamentally about change, related to people, processes, strategies, structures, and competitive dynamics In this paper, a review of business transformation including key drivers to achieve a successful implementation is presented The proposed transformation framework for a mobile network operator presented in this research is based on the theory of enterprise transformation which is explained in details Recommendations in some important aspects are described in this research REFERENCES [1] [2] [3] [4] [5] [6] [7] [8] [9] Predictions 2016: The Mobile Revolution Accelerates, 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http://www.iaeme.com/IJM/index.asp 60 editor@iaeme.com ... editor@iaeme.com Telecommunications Business Transformation: Framework And Recommendations RESEARCH METHODOLOGY The objectives of this research are to propose the Business Transformation Framework and provide... http://www.iaeme.com/IJM/index.asp 58 editor@iaeme.com Telecommunications Business Transformation: Framework And Recommendations The type of a content strategy and model is defined by various factors, but... processes, affect organizational culture and change, and thereby influence state and output How past and current approaches to and changes of input, work, state, and output have impacted subsequent