DTT Section 1: The Respondents Speak- Where Are CSPs On Their Journeys?

TM Forum, the industry association driving digital transformation through collaboration, released the results from its third bi-annual Digital Transformation Tracker (DTT). Carried out from June to August 2018, the global survey of more than 200 communications service providers (CSPs) and their technology suppliers tracks the progress of the telecoms industry’s digital transformation. Here’s a summary of Section 1, that describes where CSPs are on their path to digital transformation.

Digital Transformation Tracker (DTT) gathers results from 66 unique companies operating in 40 countries, and 76 suppliers from 39 unique companies. Read the full overview on TM Forum’s survey results here.

Getting There

During the past 18 months, TM Forum’s Digital Transformation Tracker surveys have shown that the digital transformation is making steady progress. The survey also indicates that communications service providers (CSPs) are confident about the prospects for their businesses and the telecoms industry.

The challenge CSPs face is to bring all digital transformation initiatives together in a coherent approach and create key performance indicators (KPIs) that meet the varied requirements and timetables of different departments and divisions.

Most digital transformation projects fail, but CSPs are confident they there can be exceptions to the rule.

Suppliers Have A Different Idea

The story is different with suppliers. In previous surveys, half of all vendor respondents were reasonably confident that their CSP customers would carry out successful transformation programs, but now just one in three believes CSPs will succeed.

In DTT 2, TM Forum identified culture, organization, and leadership as the main obstacles to transformation. However, they also stated that suppliers’ confidence is eroding because of CSPs’ slow progress on network virtualization and software-defined networking. Both are being held back by the immaturity of virtualized network capabilities.

The Industry As A Whole

About 40% of CSPs and vendors believe that revenues will either be flat or will stagnate over the next two to three years. A similar proportion expects the industry to experience gently increasing revenues, while 12% of vendor respondents and 17% of CSPs are expecting solid revenue growth.

Platform Business Models Gain Wider Support

Operators worldwide are starting to embrace platform approaches to monetize the internet of things (IoT) and 5G. One of the questions made to CSPs in all DTT surveys refers to their goal as part of their digital transformation programs. The graphic below shows a significant increase in the number of CSPs aspiring to become platform providers during the last six months.

As 5G and IoT services demand lower-cost pricing models, tailoring to suit specific verticals and global scale, CSPs are embracing platforms to meet the varying demands. They must decouple and expose services and capabilities in an open environment, which means building platforms connecting ecosystems. These platforms need to support multiple business models simultaneously, with CSPs deriving revenue from other members of the ecosystem as well as end users.

Platform business models can be enabled by network transformation. In these new open digital ecosystems, non-linear partnerships among multiple stakeholders are replacing the traditional supplier-buyer value chain, with CSPs, software suppliers, systems integrators, and consultants working together to deliver solutions to vertical markets – especially to exploit 5G’s B2B2X use cases.

The idea is that large suppliers could become global platform providers bringing orchestration, artificial intelligence, and other capabilities, with multiple CSPs providing federated global network services. All parties need to work out their contributions and new business models in this world if CSPs want to capture some of the value that will otherwise continue to be seized by hyperscale internet companies.

To access the full report, refer to TM Forum web page.

If you would like to read a full summary of each part of the report, go to:

  • Overview
  • Section 2
  • Section 3 (coming soon)
  • Section 4 (coming soon)
  • Section 5 (coming soon)

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