By Maddie Walker, Managing Director at Accenture's Communications, Media and Technology practice
Communications operators face evolving customer demands, a converging industry and increasing competition from agile over-the-top competitors.
Disruption will continue to be the norm for operators as their traditional business model comes under assault.
Revenue and market erosion is gathering pace and as a result, operators are looking for new strategies to restore growth.
But to finance those investments, they must transform their cost base and change how they allocate resources.
Delivering great customer experience is a critical battlefront for operators in defending revenue and those companies that deliver satisfaction will have a massive advantage.
Yet they must do this in a continuously evolving landscape.
One example of change being driven by the convergence of the communications and media industries, and consumer demand, is the emergence of quad play, offering both new revenue streams but also increased operational challenges and a new type of competitor.
OTT providers are a big threat to the operators.
They deliver their services over IP networks, usually belonging to others which liberates them from making hefty network investments.
Meanwhile, the digital super platforms are adding capabilities to become operators in their own right putting further pressure on the traditional players.
In an effort to drive growth and efficiencies, M&A is also increasing throughout the industry.
Accenture believes the value of transactions will rise to $231.7 billion by 2019.
So the challenges are daunting, but they are clear and operators are still in the enviable position of owning the networks on which everyone's growth relies.
They can achieve long-term competitiveness by re-tuning their business model to growth, creating the outstanding customer experience of a trusted brand and running operations that create fuel for growth if they consider the following:
Establish a vision for growth
Given the shifting conditions created by all this disruption, operators must revisit their ambitions and revise their plans for long-term competitiveness.
The need to be trusted remains constant, but paths to growth must evolve to exploit ... not just defend against ... change.
A refreshed vision lays the framework of a growth programme and defines the savings needed to finance it.
With this new clarity, the whole business can see that savings are being made to fuel growth.
It's about much more than defensive belt tightening.
Companies that set a new vision combining growth and cost management are ready for real transformation.
When setting budgets, operators struggle to isolate areas they could reduce or eliminate.
A granular lens is needed to examine which spend is dedicated to activities that do not add value and define clearly what customers do value.
Crucially, it establishes a continuous process that allocates efforts and resources where they add the most value.
Budget holders must start from a zero base, justifying each item’s need and cost, while respecting policies and targets set by cost category owners.
Such detail supports a transparent way of creating a budget and helps procurement drive additional price savings.
Smart investing involves approaches tailored to gain greater value out of network and IT investment, typically representing 25 percent of operators’ overall costs.
The biggest drivers of that spend are operation support systems (OSS), mobile access and fixed core.
To compete with OTT providers who don’t have to deal with legacy systems, operators should make use of analytics platforms, migrate to a single IP network and work with partners to efficiently manage back office and infrastructure functions.
Reorganise or simplify to deliver better value for less cost.
Centralise, relocate and standardise, taking advantage of new technologies like robotic process automation.
Achieving a streamlined operation calls for starting at the end result, and working back from there.
This means beginning with the final customer, understanding their needs, and work backwards to ensure the right process is put in place to meet those needs.
Operators use three core levers to gain value from their operations: centralise, relocate and standardise.
They should also take advantage of new technologies such as artificial intelligence and robotics to automate back-office functions.
So in conclusion, for operators to sustain savings after the first year or two leadership should stay involved throughout, create a mind-set of shifting to productive spend, and create a cost transformational culture where the benefits of savings are clear for all to see.
In short, start at the top, act fast and measure… always think about growth.