Fast Tracking Telcos

PAT H F I N D E R R E P O R T : FA S T T R A C K I N G T E L C O S T O D I G I TA L T R A N S F O R M AT I O N EXECUTIVE SUMMARY The customer environment has shifted so rapidly to digital engagement – across the world and across industries – that many businesses that are dependent on legacy processes have been caught short. They face the question of how to quickly and efficiently transform themselves from slower, more cumbersome organizations into more responsive and dynamic ones. Telcos in particular, because they have often been seen as laggards in adopting advanced customer experience technologies, have a steep uphill climb. There is an inherent tension between the desire to deliver high-quality digital customer experiences (along with digitally consumed products) and the complex integration of back-office systems and processes telcos rely on. Although telcos have made billion-dollar investments in infrastructure, the customer support experience tends to be fragmented and decidedly not modern. The IT around the customer experience tends to be made up of legacy hardware and software. The development cycle is a traditional, yearly cycle, even as other industries move toward the more frequent – often multi-week sprints – release cadence of agile development. Telcos, with support from their vendor partners, need to find a way to deliver a more streamlined experience for customer management and retention. KEY FINDINGS • Customers want instantaneous help through social media, chat and mobile apps. • The IT landscape among telcos is made up of more legacy technology than in other industries. Larger telcos are generally slower to deploy new tools in updated IT stacks, and yet are typically high spenders on those tools because of high customer care volume. • There are viable new approaches in the marketplace that can enable more rapid and customer-friendly processes. • One agile methodology for coping with digital transformation – minimal viable product (MVP) – is especially relevant to telcos. MVP encourages quick deployment and feedback cycles to guide continuous improvement. Telcos can use it to create lean architectures that minimize the number of new systems introduced, along with the number of integrations needed. COM M ISSIONED BY M AT R IXX 3 PAT H F I N D E R R E P O R T : FA S T T R A C K I N G T E L C O S T O D I G I TA L T R A N S F O R M AT I O N The Transformation to a Digital Telco At the heart of digital transformation is the customer experience: Businesses today can interact more directly with customers through many channels – various applications, Facebook, Twitter and other social media sites. Telcos are ripe for disruption when it comes to customer experience. Although the mobile phones nearly everyone uses are constantly iterated with upgrades, there has been minimal progress in the way subscribers make payments and change services. In many cases, customers still have to call customer service to make changes to their service plans. Communication service providers (CSPs), in both mature and emerging markets, face competition from aggressive entrants. They must also deal with new kinds of customers, as well as find new methods for monetizing those customers. The foundations of the CSP industry have been rocked by more choices for subscribers, a low barrier to switching providers and rapidly declining differentiation between competitors. As empowered customers turn to digital contact channels, those in the telecommunications industry must reimagine their business and operating models to address the increased expectations of customers who desire more control, convenience and context. Customers value experiences and, in turn, often feel compelled to share their personal encounters. Experience, not products, will be the competitive battleground of the future. Yesterday’s world was about one-way customer interactions; today’s is about self-directed, on-demand two-way engagement anywhere, on any device, to ensure a positive experience. Customers want to communicate on their terms using their preferred channels. Depending on the urgency, nature and overall context of the situation, customers are choosing self-service more often to engage with telcos. As Figure 1 shows, customers want personalized, self-directed, instantaneous support. Incumbents that do not adjust to this new landscape will find themselves facing disruptive competition from new and traditional players. Users increasingly prefer to use their cellphones to facilitate interactions with telcos. They use mobile apps to make payments and use asynchronous customer service chat so that they spend less time waiting and can go about their day. Telcos can respond by offering mobile apps that provide customer support, and by offering flexible ways to pay bills and change data plans. Telcos trying to focus on customer retention while winning new business need to streamline their systems of engagement and provide accurate information to their customers. For telcos, a customer-centric methodology means that access to billing, sales and other systems should be instantaneous and updated in real time. COM M ISSIONED BY M AT R IXX 4

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