The report comes from PwC (“2017 Telecommunications Trends: Aspiring to digital simplicity and clarity in strategic identity”). The report observes that ‘simplification’ for too many telecoms companies means cost-cutting in order to boost profits. This can be effective in the short-term but it isn’t the endgame. Instead, the report asserts, simplification should be about reducing the number of services offered to customers.
This process is not straightforward and should be undertaken with thorough research. The services that remain should be essential; sufficiently distinctive that customer loyalty is established; and future-proof in terms of being digitally based. They also need to follow where businesses are heading, such as the transition to cloud services.
Telecoms companies also need a reputation that it is centered around something distinctive, such as the ‘quality of service’, or ‘cybersecurity’, or ‘leading the digital way’. Strategic identify is important. To achieve this new job roles might be required, including cybersecurity experts and those schooled in digital and network analytics.
Cost-benefits of simplification
The simplification process comes with costs. It requires flatter structures and the space to take risks with different services or with pitches to different sectors. This also needs to come with a corporate culture change for there is little value in altering role roles if the mindsets remain the same. An alternative analysis by Strategy& says that too many telecoms firms are “weighed down by legacy IT systems, outmoded organizational structures, and corporate cultures that are simply not up to the demands of the digital paradigm.”
According to an assessment by venture capitalists Bain, simplification also leads to better business efficiency and lower operating costs. Telcoms firms that simplify their portfolio see lower operational costs in call centers (such as fewer calls and more calls right the first time) and within sales channels (leading to faster transactions, and more sales more through digital channels).
Case studies for simplification
One company that receives special mention for its simplification is Free Mobile, which is a French subsidiary of Iliad. The company has a distinctive ‘no-frills’ business model. For Free Mobile, the move to simplification involved using customer service kiosks located in retail areas to reduce the costs of expensive premises and the use of the Internet for its marketing campaign. In addition, the company does not market its own smartphones, instead customers use their own smartphones to switch to the Free Mobile network (and in return receive competitive tariffs). The model has been successful and Free Mobile provides wireless services to 13.14 million subscribers (as of July 2017).
Other operators have significantly lowered costs by focusing on interacting with customers digitally, thus reducing management overheads and the costs of operating multiple retail and service outlets. Another strategy, favored by MycomOSI is to adopt simplified architectures and link together customer, service and network layers through so-called ‘umbrella platforms’ that manage all vendors, technologies, domains, products and services.
These examples show how rationalization and simplification can pay dividends for the Telcoms firms operating in the increasingly complex marketplace.
