Why the operating model matters?
In my experience digital can represent a range of capabilities, both technical and commercial. Hence in an effort to not figuratively “boil the ocean” this piece takes an outside-in approach by focusing on the underlying operating model of a telecommunications service provider, which I believe is key in establishing a sound digital strategy. The following quote by Box CEO, Adam Levie I feel aptly summarizes the significance of the operating model – “An app is just a manifestation of the digital process and if the underlying process hasn’t been digitized an app doesn’t change that”.
Figure 1: An eTOM Oriented Generic Service Provider Operating Model
Simply put, an operating model outlines how the People, Processes and Systems in a company enable the delivery of its products and services. The illustration above is a typical example of a service provider’s operating model today – it shows a core set of Processes that are supported by a mix of People (in functional departments) and Systems during the sell, build and run phases of a product or service lifecycle. A key feature of a digital operating model in comparison to a traditional operating model is that, a greater number of Processes are supported by Systems as opposed to by People, in fact McKinsey & Company outline this as a tenant of an operating model in a digital world. To illustrate, consider the case of Uber, a digital leader that has successfully transformed the traditional Process of booking taxis by placing a much greater reliance on Systems – something possible only recently through the availability of digital–grade technology.
Identifying the key processes for digitization
Taking into account the principle established in relation to an operating model in a digital world, it implies being a digital player demands transitioning key Processes onto Systems (digitizing them). The obvious question then becomes – which Processes should service providers focus their digital efforts on? In my experience, though there are a number of current service provider Processes that may be digitized, the relative value of doing so is dictated by a service provider’s operating model. That said, at MATRIXX our customers leverage our platform to successfully enable these Process transitions in a number of instances – the following are some key examples cited via the technical capabilities that enabled the Process transitions as well as the relative benefits derived in each case.
Real-Time Usage Reporting, Offer Purchases and Customizable Subscriber Thresholds
By providing subscribers with up to the millisecond usage reporting and the ability to purchase add-ons and configure thresholds in real-time, service providers empower subscribers with a reliable and trusted digital channel. This in turn drives a significant proportion of subscriber interactions away from People processes and on to compelling and low cost System processes. Enabling such a transition allows service providers to not just realize the commercial value of a lower cost to serve, but it also leads to a reduction in complaints and escalations, as well as to a significant increase in NPS℠!
Personalisation and Real-Time Contextual Offers
Providing subscribers the ability to customize products and services to fit their requirements and the ability to target subscribers with real-time contextual offers replaces People oriented sales processes enabled by call centres and retail stores. The ability to interact with subscribers in such a manner not only leads to a lower cost to serve, but it can also be a more convenient means of engagement for subscribers. Further, these capabilities enable an entirely new revenue stream via sachet (mini) offers – 1 hour of free Spotify data anyone? Offers such as these, which may not have previously been commercially viable due to the comparatively high cost to serve, are now completely viable via a System Process!
Digital Subscriber Communities
Digital leaders such as Facebook and LinkedIn have demonstrated the value of subscriber communities, in my view communities are also an effective tool in driving stickiness, and thereby subscriber loyalty. That said, in a digital world subscribers expect the ability to manage and customize their communities via digital means, i.e. not via the traditional call centre and retail store Processes – really, when was the last time you contacted LinkedIn to add a new contact? In addition to the significant operational efficiencies service providers derive via such a capability, the capability also enables service differentiation which has a direct impact on market share.
Key Task Automation
Transitioning People Processes on to Systems need not be limited simply to subscriber facing Processes. Technical capabilities such as virtualization, cloud, test automation and zero downtime associated with digital-grade platforms can significantly reduce the delivery, operational and maintenance overhead incurred by service providers. By transitioning these People oriented technology Processes onto Systems, service providers incur lower operational and capital costs and also gain a substantial time to market advantage, which in turn enables a delivery process that is both agile and iterative – another key digital tenant.
In contrast to the service providers in the instances cited here above who have effectively leveraged the benefits of a digital economy by taking an outside-in operating model approach and focusing on key Processes, I often come across service providers who believe that becoming a digital player is a matter of simply building a shiny new technology stack – essentially focusing on a technology driven inside-out approach. Though time will no doubt reveal the more effective approach, I believe that an approach that focuses on key operating model processes and the technical capabilities necessary to digitize them will yield service providers much better results.